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We often hear the abbreviation "GDP' in our daily lives in the news or in statistics and we assume we know it but today we are going to do our best to define it, demonstrate it, explain it and illustrate it so that we can understand it to a good depth just like any statistician out there. We shall also show how it relates with economic growth of a country.

I hope you enjoy our write up as much as we do.

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The video above from statistics Canada explains in basic terms the definition and meaning of Gross Domestic Product or GDP. It mentions that GDP is a country's "report card" and it's used to track the size and growth of an economy from year to year so that a high GDP indicates high economic growth of a country. It tells us hundreds of surveys are compiled from Canadian businesses, the government and households to gather information relevant to determine this statistic. It mentions that;

GDP = Output value - Intermediate consumption

I chose this video because it uses the most basic English to explain such a sophisticated topic in Economics so that even the most naive person about the subject can understand. I found the calculation of GDP very useful.

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Description of visuals

Gross Domestic Product - GDP for short - can be thought of as an overall grade on the economic report card of a country or region.
(A school report card is shown.)
It's one way to measure of the size and growth of the economy. For example, if the year-to-year GDP is up 3%, this means that the economy has grown by 3% over the last year.
(Under the "remarks" section of the report card, the text "Gross Domestic Product (GDP) is increasing" is shown. The word "increasing" is underlined, and the line is drawn across the page to form a line chart. The line chart indicates a 3% increase.)
In order to determine the GDP, economists at Statistics Canada compile a massive amount of data including information from hundreds of surveys that are completed by Canadian businesses, the government and Canadian households.
(The line from the line chart becomes an "X" that is drawn into a check box on a survey. The top of the survey reads "Hundreds of Statistics Canada Surveys filled out by Canadian Businesses, Government, and Canadian Households.")
Several methods are used to determine the GDP. One of the most direct methods is called the "value-added approach." To explain it, let's start with our standard definition of GDP, which is " the value of output less intermediate consumption plus any taxes less subsidies on products not already included in the value of output."
(The survey crumples up into a paper airplane and flies into a classroom. Inside the classroom, a chalkboard is shown with the definition of GDP written on it.)
You might find that definition a little hard to follow. So let's break it down with an example. For this example, let's also assume that the " taxes less subsidies on products not already included in the value of output" is equal to zero.
(A line is drawn through this section of the definition.)
Alright - let's say you have an automobile assembly plant. Every year, the plant produces all sorts of cars. The total worth of all the cars produced annually in the factory is $1,000,000.
(A conveyor belt is shown, with a car being assembled by robotic arms. The conveyor belt has the text "$1,000,000 worth of cars.")
That $1,000,000 in the production of cars is considered to be the output.
(The chalkboard shows the text "output = $1,000,000 worth of cars" )
Let's return to the definition. GDP is the value of output, in this case the value of the cars, less intermediate consumption.
(The definition is again shown on the chalkboard.)
So, what is intermediate consumption?
(The car that was just assembled drives down the road and then drops into a machine labeled "$700,000 worth of car parts." The machine then produces boxes labeled "car parts.")
Well, let's say the automobile assembly plant needs to purchase $700,000 worth of car parts from the motor vehicle parts manufacturing industry before it can fabricate the $1,000,000 worth of cars. The $700,000 worth of car parts is considered to be To return to the definition again, GDP in this case is the output of $1,000,000 worth of cars, intermediate consumption. less the intermediate consumption, which is $700,000 for the car parts.

So, in our example, $300,000 is considered to be the GDP of the car assembly plant.
(The chalkboard shows the equation of output ($1,000,000 worth of cars) minus intermediate consumption ($700,000 worth of car parts) equals output ($300,000).)
But the story doesn't end there. Let's look at the motor vehicle parts manufacturer that produced the parts for the assembly plant. In order to produce the parts, it first had to purchase steel from the steel mill. Before that, the steel mill had to purchase the iron ore from a mine, and so on.
(Images of a welding in a steel mill and an iron ore mine are drawn on the chalkboard.)
Each of these industries involved in the process, harvesting the ore, making the steel, making the car parts etc. has its own output and intermediate consumption, which also means that each industry has its own GDP.
(Images to represent each industry appear on the chalkboard. Numbers appear in front of them to reflect their respective GDP amounts. The steel mill and the iron ore mine each have a GDP of $200,000, while the car parts manufacturer and the car assembly plant each have a GDP of $300,000.)
The GDP values of each of these industries must all be added together to reflect the total GDP of the economy. So, although the GDP of the automobile assembly plant is only $300,000, the GDP attributed to the entire economy would be much higher. In fact, it could actually be closer to, well, $1,000,000.
(A plus sign is drawn between each number on the chalkboard, they are then combined to make $1,000,000.)
To summarize, in the example that was just illustrated, we identified 4 industries that were included in our little economy. Those industries were the automobile assembly industry, the motor vehicle parts manufacturing industry, the steel manufacturing industry, and the iron ore mining industry. The sum of the value added of each industry gave us the total GDP for the economy.
(Each of the four aforementioned industries are shown again, with their respective GDP measures. They are added again to make $1,000,000.)
Gross Domestic Product is the metre stick of the economy. Broadly, when it's increasing, the economy is said to be growing. If GDP is slowing down or negative, it can be an early sign of recession. That's why we take great care to provide Canadians with access to accurate, up-to-date GDP data. You can learn more about GDP at www.statcan.gc.ca.
(As the camera retracts from its close-up on the chalkboard, the website URL is shown. The website address fades to black, and the Canada wordmark fades in.)

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Gross Domestic Product - GDP for short - can be thought of as an overall grade on the economic report card of a country or region. (A school report card is shown.) It's one way to measure of the size and growth of the economy.

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Image #1 - Comparing US and Canada GDP over the years.

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Image #1 - Comparing US and Canada GDP over the years.

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The image above compares the trend of GDP per capita of Canada and US over the years dated with data from as old as 1960. In this image, we notice that there have been very few instances when Canada surpasses or even gets equal to US' GDP and US has been leading for the most part and in the last decade, it had led by a significant difference valued in hundreds of billions of dollars.

The reason I chose this image and this comparison specifically is because am quite shocked that Canada which is even larger than US with vast resources and expertise in all sectors is significantly behind the US. There are definitely other factors mainly political which come into play for this case, but I believe the day will come and Canadian economy and GDP will skyrocket as it deserves to.

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Answer 1

The most shocking fact we came across during our research was that most of the investments in Canada are filled by foreign direct investment mostly done by the US and that's why we find that six of the ten biggest companies by revenue on Fortune's list of the world's largest are American or Chinese i.e Walmart, Amazon, Apple, State Grid, Sinopec etc while the top Canadian firm Brookfield ranks no. 158. We honestly had no idea.

Answer 2

A real time example of how we relate with the GDP is about paying our rent.

This was elaborated in video #3 where we learnt that how the current expensive housing in Canada affects the GDP. The video explained that as Canadians strive to buy houses or even pay rent (for us), they consequently end up remaining with less income and hence not being able to invest in businesses in the country hindering economic expansion and GDP at the same time.

Answer 3

We think the most important thing to pass onto a friend is;

We would tell them to take their time to study an economy of a country very carefully in regards to GDP and its economic state and studying its trends over the past years before making a decision to invest especially if it's going to be a multi-million or billion dollar investment.

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The Statistics Canada website delivers and writes a fill report about the GDP of Canada as of Feb 28, 2025 showing that it rose by 0.5% in the third quarter and 0.6% in the fourth quarter. It associates this GDP growth to higher household consumption expenditures. Investment is one of the hugest determinants for economic growth and GDP and its elaborated in here that Business investment in non-residential structures rose by 0.7%, building construction 1.6%, machinery and equipment 4.2% by the fourth quarter.

I chose this website because it gives exquisite and precise data (number and graphs) about the current GDP in real time. I learnt about the crucial economic sectors that contribute to our GDP in Canada.

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The Daily — Gross domestic product, income and expenditure, fourth quarter 2024

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Real gross domestic product increased 0.6% in the fourth quarter, after rising 0.5% in the third quarter. Growth in the fourth quarter was driven by higher household final consumption expenditures and increased exports and business investment. Drawdowns of business inventories and higher imports moderated the overall growth.

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This video presents main speaker Pierre Cleroux, chief economist at the Business Development Bank of Canada talks about the GDP report of Canada in the fourth quarter. He associates the GDP surge by 2.6% as of February 2025 to have been determined by lower interest rates and increasing real estate investments. He further declares that this statistic was tentative pending the uncertainty that would arise from the tariffs by president Trump and informed us that the first quarter report on the GDP in 2025 would show the impact by the tariffs.

I chose this video because it presents real time and real world application/use of the theoretical concept of GDP that are discussing. If there's one thing I learnt, the higher the production in a country, the higher the GDP and the better the economy.

#Note: A good bit of the video also talks about inflation however we only focused on the economic growth and GDP part since that was our topic of discussion.

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Video #3 - Economic Growth/Crisis of Canada.

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Video #3 - Economic Growth/Crisis of Canada.

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This video dives into an analysis of Canada's economic crisis in the recent years highlighted by the housing crisis with Ontario having the highest percentage change of house prices of 151% over the past decade.

The high prices put Canadians in a spot where they spent most of their wealth/resources in buying homes rather than investing in business as a share of the GDP hence limiting economic expansion.

This has led to most of the investments in Canada to be filled by Foreign Direct investment mostly done by the US.

And that's why we find that six of the ten biggest companies by revenue on Fortune's list of the world's largest are American or Chinese i.e. Walmart, Amazon, Apple, State Grid, Sinopec while the top Canadian firm Brookfield ranks no. 158.

I chose this video because it fully elaborates the financial crisis Canada faces other than the surface knowledge we know about high rent prices i.e. it explains the cause, its implications and Canada's full potential if this were dealt with. I found all the stated statistics in here very useful for a future entrepreneur.

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The Problem with Canada’s Economy | Canadian Economy

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Video 4 - Speculating Canadian economy & GDP with the 25% tariffs.

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Video 4 - Speculating Canadian economy & GDP with the 25% tariffs.

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In this video guest speaker Randall Bartlett, the deputy chief economist at Desjardins says the 25% tariffs are projected to trigger a recession in 2025, higher unemployment rates and higher inflation.

This is sequentially going to cause a big challenge for the Bank Of Canada in terms of contending with the negative shock to GDP and inflation.

The speaker continues to explain that in the worse case scenario the federal government has room to increase fiscal stimulus targeted to support a transition to a new economic equilibrium especially to the industries that were hit hard.

I chose this video because it discuses a few possible solutions that Canada could take action to neutralize the economic impact.

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25% tariffs will cause recession by mid-2025: Desjardins

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This website "Trading Economics" says the GDP in Canada is worth about 2000 Billion US dollars as of 2024 and it shows the contribution of each industry to the GDP i.e. agriculture, construction, manufacturing, mining, transport, public administration, etc.

We notice that Canada's GDP was lowest in 2020 over the years and that was obviously associated with the Covid 19 events.

I chose this site since it shows real time and up to date GDP numbers in comparison to other years and other industries making it very reliable for all resources and data about the subject.

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Canada GDP | 1960-2019 Data | 2020-2022 Forecast | Historical | Chart | News

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The Gross Domestic Product (GDP) in Canada was worth 1740 billion US dollars in 2019, according to official data from the World Bank and projections from Trading Economics. The GDP value of Canada represents 1.44 percent of the world economy.

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Website #4- Unemployment as a factor in economic growth. 

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Website #4- Unemployment as a factor in economic growth. 

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This is the official Government of Canada website and it presents a "Canadian economic snapshot" where it presents the current structure and trends of the economy, the pandemic and recovery from it and finally an economic by region. It further shows the unemployment rates that hit their highest number in over 40 years because of the 2020 pandemic but have been steadily reducing since then.

I chose this website it contains more basic data such as day to day, month to month data, graphs and charts to better portray the extent of every factor that contributes to the GDP of Canada.

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From: Innovation, Science and Economic Development Canada

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From: Innovation, Science and Economic Development Canada

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website #1 - What is GDP?, Types, Calculation

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website #1 - What is GDP?, Types, Calculation

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This website introduces us to this concept of GDP, explains the types of GDP, how its calculated, why it is important to entrepreneurs.

According to the website, Gross Domestic Product(GDP) is an indicator or the standard measure of the economic output of a country. The numbers of this statistic are released by month, quarter or per year. The write up on the website further associates and differentiates GDP and GNP, mentioning that GNP accounts for product sold locally and internationally whereas the GDP only accounts for the international market. Mentions the types of GDP as Real, Nominal, GDP per capita and Purchasing power parity GDP.

It elaborates the methods for calculating GDP (income, expenditure and production method).

It further mentions that entrepreneurs and investors use this GDP data the most since they need to assess the economies across different borders before committing to invest time and resources n to different businesses.

I chose this site since it used the most basic, readable and understandable text to explain a concept topic so that even a high school student can get it.

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Understand gross domestic product, how it is calculated and what it tells about the economy.

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This image shows the percentage contribution of industries in Canada to the GDP and economic growth of the country. As we can see above, the service industry has always been the biggest contributor to the GDP and its percentage contribution has increased and as of 2020, it contributes to more than two thirds of the GDP.

The graph on the right of the image still indicates that the biggest part of the Canadian population works in the services industry as of 2020.

I chose this image since it talks about two factors (employment and GDP) that contribute to an economic status of a country.

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Just a simple appreciation to you Ms. Harpreet.

I have genuinely enjoyed this course and infact I looked forward to those 2 hour lectures every Friday.

I have learnt a lot, exactly what I expected and I have learnt it from such a well grounded and humble person like you. I have honestly been inspired to become a better person. Its been a pleasure.