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What is GDP? - Essay Example
Pages 4 (1004 words)
GDP stands for Gross Domestic Product. It is the total value of output of goods and services produced in an economy over a given period of time, say one year.it is not a necessity that high GDP figures always signal economic well. …
So, it is very essential to have a GDP for a country calculated over a definite time period. In order to further explain the definition, I will take the example of Qatar. The GDP of Qatar is the total value of output of goods and services produced within Qatar over a period of time. The definition of GDP includes all the production done by local residents and resources owned by the residents of Qatar and also by foreigners and foreign resources owned by non-residents of Qatar. GDP can be measure by three methods and each method should give the same answer. It can be calculated by the output method. In this method, the value of total output produced in Qatar is its GDP. It can also be calculated by the income method. Since selling of output results in income for sellers, therefore in this method GDP is calculated by adding up the income of all people working in Qatar. Similarly, the GDP of Qatar can also be calculated by using the expenditure method. Since, income for one person is expenditure for others, in this method the GDP is calculated by adding up all the expenditures spent on Qatar's production.
It is often considered by people that sole GDP figures are enough for telling the economic well-being of a country. For example, the people who say this base their claim on the fact that any changes or increase in the GDP is signal of improvement in economic well-being. ...
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