Explain what is meant by GDP and how it is measured

GDP is a way of quantifying the amount of activity in, and thus the size of, an economy. It is therefore a way of assessing the total worth of an economy and thus its total output. This is particularly relevant for assessing how an economy is growing (or contracting over time) and thus GDP measurements over a number of years can be very useful for assessing an economy's performance over that period, particularly in terms …

…activity, useful for monitoring events like the Great depression. One can also see that economies tend to be cyclical: they tend to have periods of economic growth, a recovery with a boom at the top, and they tend to follow that into a recession and eventually a slump in the long-term. Nearly every economy follows such a cycle, and often they follow it together as each country's economy is interlinked for a number of reasons.