Tracking Economic Growth: A Correlation Analyse on the Determinants of Gross Domestic Product

Abstract Gross Domestic Product (GDP) is the most important measure of economic activity in a country. It represents the total value of all goods and services produced in a particular country in a given period. GDP can be calculated using three methods, namely, the production approach, the income approach, and the expenditure approach. In this paper, we will focus on the Expenditure Method. The Expenditure Method of calculating GDP involves adding up the total value of all final goods and services purchased by the four groups of spending agents: households, firms, government, and foreign buyers. The purpose of this paper is to discuss how the components of GDP using the Expenditure Method influence GDP. Specifically, we will explore the relationship between each component of GDP and GDP as a whole, considering also the impact that inflation has on the real growth of the economic activity, and which is the real trend of this macroeconomic result indicator.