Can someone please explain GDP to me?

I have a book here, which will explain it better than I can.

‘GDP can be calculated in three different ways, which should all result in the same figure. These three methods are illustrated in the circular flow of income in figure 13.2. The first method of measuring GDP is to add up the value of all the goods and services produced in the country, industry by industry. In other words we focus on firms and add up all their production. This first method is known as the product method. The production of goods and services generates income for households in the form of wages and salaries, profits, rent and interest. The second form of measuring GDP, therefore, is to add up all these incomes. This is known as the income method. The third method focuses on the expenditures necessary to purchase the nation’s production. In this simple model of the circular flow of income, with no injections or withdrawals, whatever is produced is sold. The value of what is sold must therefore be the value of what is produced. The expenditure method measures this sales value. Because of the way the calculations are made, the three methods of calculating GDP must yield the same results. ‘

Sloman - Ecomomics 6th Ed.

In other words they all equal one another, and they can be each used to calculate GDP.

So to calculate using the expenditure method this is used:

GDP = private consumption + gross investment + government spending + (exports − imports)

which should help your understanding.

‘Let’s say a country produced a lot of goods and services, does that make them better then a country that produced less goods and services.’

It’s not just about the physical quantity of goods and services, but their value too, but essentially, yes. So a higher GDP is obviously better. It depends on other factors though, such as your population. Obviously country A might have a higher GDP than country B, but that doesn’t mean the citizens of country A are more wealthy, for the GDP per capita (per person) may be less in country A. So you have to split it up per capita. If you’re comparing countries internationally you might want to use GDP ppp, which takes into account exchange rates also.

If you want to look at how well a country is doing, check out its growth figures. So that is how much its GDP is increasing year on year.

‘And then again, what about population size? Does that affect GDP?’

Yes, fundamentals of economics, a country is made up of its scarce resources, ie land, labour, capital and enterprise. GDP is essentially a total of the productive worth of every person in the economy, so population size is very important. The USA isn’t even the richest country on earth if you look at GDP per capita, its might comes from its huge population who have relatively high standards of living. Although there are countries with bigger populations with a smaller GDP, such as China. China has a GDP (ppp) per capita of $5,970, the US $47,440. China has a population of 1.3 billions, the US 300 million. If you do the rough calculations you will find the US economy to be twice the size of China’s, and this is confirmed if you do a search for total GDP ppp for both countries. The USA is richer in total GDP, despite China’s population being some 4 times larger. So population plays a key role, but it’s not the be all and end all.

I feel I may have confused you :)

This is all a bit complicated and I fear I haven’t explained it very well. I’d recommend some basic text book, should help your understanding.

if there’s anything else let me know.