Additional Resources

  1. News Release: Gross Domestic Product [webfeeds.brookings.edu]
  2. Gross Domestic Product: An Economy's All [0-imf.org.library.svsu.edu]
  3. Bea Regional Economic Accounts [go.lib.purdue.edu]
  4. U.s. Bureau Of Economic Analysis (bea) [jhsearch.library.jhu.edu]
  5. Regional Data [aese.psu.edu]
  6. Measuring The Economy: A Primer On Gdp And The Nipas [employees.csbsju.edu]

Definition

Gross domestic product is a monetary measure of the value of all final goods and services produced in a period. Nominal GDP estimates are commonly used to determine the economic performance of a whole country or region, and to make international comparisons. Nominal GDP, however, does not reflect differences in the cost of living and the inflation rates of the countries; therefore using a GDP PPP per capita basis is arguably more useful when comparing differences in living standards between nations.

Gross Domestic Product

Modern economies are run by complex systems of formulas and methods. Since the birth of the Industrial Revolution, countries throughout the world have been turning to one particular means of measuring their overall economic growth.

This measurement has most famous come in the form of the Gross Domestic Product (GDP). A nation's Gross Domestic Product is simple the monetary value of all the goods and services it produces within its borders in a defined period of time. Most often, GDP is measured by "quarters" in the business world, and annually on a national level.

For a government, it is important to measure one's own government outlays, private and public consumption, investments, and amount of exports incurred on a yearly basis.

By using the formula GDP = C + G + I + NX, any person may calculate the Gross Domestic Product of a country or another situation that they desire.

Without this formula, or the measure of GDP itself, all nations throughout the world would be unable to indicate the economic health of their country. In almost every single major survey or evaluation used, Gross Domestic Product is used to measure the standard of living within a nation's borders. These results are fairly accurate, as the measure of GDP is uniform from country to country.

Besides from evaluating the standard of living, Gross Domestic Product measurements are also sure ways to discover the production rates for a nation during any given year. These evaluations are highly accurate, and can even be adjusted to current inflation levels to compare current GDP years with those of the past. This allows for GDP's to be compared by percentages to any given quarter or period of time.

Recessions are often discovered using the measurement that a GDP provides. By comparing a succession of years, or another similar long span length of time, a nation's level of economy and productivity can be ascertained. Those nations whose comparisons show a increasingly developed downward slope, or stagnation, are most likely entering into a period of recession.

Gross Domestic Products do not come without their critics, however.

Many critics state that a measure of GDP only takes official statistics into account, and never any unofficial, or "underground", economy that might be taking place within a nation's borders. These unofficial economies can be in the form of black-markets, under-the-table employments, but also any transactions that might take place without the knowledge of the government itself (such as selling an item online). Ever since GDP first came into use in the year 1937, it has been an integral part of our modern system of economics. Although it has had its critics and its skepticisms, the measure of Gross Domestic Product as an official evaluation of a nation's overall standard of living and production rates is here to stay. With innovations each year taken by governments throughout the world, the measure of a country's Gross Domestic Product has increased in accuracy and specificity.

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