Short answers, pulled from the story.
Gross domestic product is a monetary measure of the total market value of all final goods and services produced within a country during a specific period, usually a year. It is often used to measure the economic activity of a country or region. Its major components are consumption, government spending, net exports, and investment.
The modern concept of GDP was first developed by Simon Kuznets for a 1934 U.S. Congress report. In that same report, Kuznets warned against using it as a measure of welfare. The earlier concept traces back to Sir William Petty, who devised it to calculate the tax burden during warfare between the Dutch and the English between 1652 and 1674.
GDP can be determined in three ways that should theoretically give the same result: the production approach, the income approach, and the expenditure approach. The expenditure formula is Y equals C plus I plus G plus net exports, where C is consumption, I is investment, and G is government spending. According to the U.S. Bureau of Economic Analysis, the expenditure component source data are generally considered more reliable than the income component data.
GDP defines its scope according to location, while gross national income, also known as gross national product, defines its scope according to ownership. GDP measures product produced within a country's borders, whereas GNI measures product produced by enterprises owned by a country's citizens. Gross national income equals GDP plus income receipts from the rest of the world minus income payments to the rest of the world.
Nominal GDP is the raw current figure, while real GDP is adjusted for changes in the value of money to account for inflation or deflation. The factor used to convert GDP from current to constant values is called the GDP deflator. Nominal GDP is useful for international comparisons using current exchange rates, while real GDP makes year-to-year comparisons more meaningful.
GDP is criticized because it does not account for income distribution, externalities like pollution, non-market transactions such as unpaid household work, or quality improvements in new products. Simon Kuznets warned in his 1937 report to Congress that the welfare of a nation can scarcely be inferred from national income. Robert F. Kennedy argued it measures everything except that which makes life worthwhile.
After the Bretton Woods Conference in 1944, GDP became the main tool for measuring a country's economy. The United States switched from GNP to GDP in 1991. China officially adopted GDP in 1993, having previously relied on a Marxist-inspired national accounting system.