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phiwong t1_jeec11l wrote

It is a measure of the economic activity (production of goods and services) within a country. It isn't necessarily very precise if a country has a large black market or barter trade. It can be used to gauge the size of an economy and is somewhat indicative of how productive and the potential income levels of the citizens.

Method of calculation is complex - broadly it can be calculated by adding the income of all the participants or alternatively by measuring the expenditure of all the participants - netting out exports and imports.

Is it important - yes as a broad macroeconomic indicator. It is a simple measuring stick but any deep analysis of an economy requires much better economic data (GDP is too broad and simple). But it isn't super important otherwise and certainly not much importance for everyday people doing everyday things.

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RhynoD t1_jef4idw wrote

To add some clarity:

Gross - total amount before factoring losses or costs. If you own a store selling widgets and you sell $5000 worth of widgets one day, that's your gross sales. But, you have to pay your employees, pay your electric bill, and order more widgets to sell. All that costs, oh, $4000 for that day. Thus, you get net sales of $1000 ($5000-$4000).

Domestic - having to do only with your own country. So, like, Amazon does a lot of business overseas and that counts towards their gross sales, but that money isn't coming into the USA so it isn't part of the USA gross product.

Product - generic term for all of the value of everything made or sold.

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