It’s time now for another edition of what you need to know about basic economics. Today, we look at Gross Domestic Product, or GDP. If there is one figure worth knowing in economics, it would probably be GDP – the biggest economic statistic of them all, because Gross Domestic Product is the measure of a country’s entire income. It is the most widely recognized measure of a country’s economic strength and performance. Gross Domestic Product measures two things: the total income of a country and its total spending. Across an economy, income and expenditure equal each other. If you pay a dollar for a soda, that money, your expenditure, instantly becomes someone else’s earnings. GDP measures both goods (such as food) and services (such as a haircut), and it includes invisible items, such as housing services, which is  the amount people pay to live in their homes, whether they rent or buy. The main exclusion is anything produced by the informal economy. This includes trade in illegal goods, which is thought to account for almost one-tenth of the economy in developed countries. GDP also does not include constituents of products. For instance a car engine would not be counted as a separate item from the finished car of which it is a part – unless the engine is sold separately. GDP measures the value of anything produced within a certain country. So, if a US company owns a factory in Mexico, that factory’s output contributes to Mexico’s GDP, not ...