Hi there! This article is related to Gross Domestic Product in short GDP which is a key measure of a country's economic performance.
It represents the market value of all goods and services produced within a country's borders over a specified period, usually a year.
GDP is often used as an indicator of a country's economic health and growth, and it's influenced by various factors such as consumption, investment, government spending, and net exports.
Calculating GDP involves adding up the total value of all goods and services produced in a country. This is done by summing up the value of all final goods and services produced in each sector of the economy, such as agriculture, manufacturing, and services.
GDP can be calculated using three methods: the production approach, the income approach, and the expenditure approach.
The production approach sums up the value of all goods and services produced in the economy, the income approach adds up all income earned by the factors of production, and the expenditure approach sums up all spending on goods and services by households, businesses, and the government.
For example, if a country produces $10 billion worth of goods and services annually, its GDP is $10 billion. However, GDP does not consider the quality of life, environmental sustainability, or income distribution within a country.
GDP remains a crucial tool for policymakers and economists to measure economic growth and performance although it has restrictions. By tracking changes in GDP over time, policymakers can identify trends in the economy and make informed decisions about monetary and fiscal policies to manage economic growth and stability.
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Book Reference:
Mankiw, N. G., & Taylor, M. P. (2014). Economics
GDP is a really great number for people who only care about money and power.
As you said, it doesn't measure anything real.
Further it is tainted by govern-cements who like to pad their numbers. As in, adding the expenditures of govern-cement to the total (counting the money twice)
And lets say you were counting toasters.
ToasterDP
In the beginning when few have a toaster and many want one, the TDP would be high and go higher as more factories to produce them opened up. Then, when everyone had a toaster, the TDP would drop to a tenth of that number, just maintaining toasters numbers.
But if you were the govern-cement, you would not want to see the TDP numbers fall, so you would start adding things into TDP that shouldn't be there.
Then TDP becomes a stupid measurement, one that shouldn't be used. Just like GDP has.
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Countries with higher GDP the more development the country is and more economically strong.
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Can GDP can be as measure of lifestyle of people.
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