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It is the total value of output of goods and services produced in an economy over a given period of time, say one year. This definition of Gross Domestic Product (GDP) shows that in order to arrive at the GDP (Gross Domestic Product), we…
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.
This was comprehensive account of what GDP or Gross Domestic Product is. 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. Similarly, these people also say that the country with the higher GDP is enjoying a higher level of economic well-being. However, one should always remember that sole GDP figures alone do not tell us about the economic well-being of a country. Although these numbers are important but when studied alone without any supporting data, one cannot predict whether the country is enjoying economic wellness or it is facing low standard of living.
Suppose that a GDP of country increases by 20%/ Many people will say that the country will now enjoy great economic well ...
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