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As per the UN system, presentation of statistical record of GDP is the basic requirement for receiving financial loan or World Bank aid. The positive change in the GDP level, after consuming such loan is an indication that the financial aid has really helped the country.
Around a few decades back, the military might was an indicator that displayed the country’s superiority and well-being perfection. However, now it is the economic independence and power, which has taken this place. Hence, an administrator or chief executive of any country is judged by the change in GDP levels that the person could manage, while heading the affairs of the country. During 1930s and 1940s, Gross National Product (GNP) became the tool to measure the country’s progress and prosperity level. GDP has carried this legacy to measure the nation’s living standard in terms of Gross Domestic Product.
GDP is a good tool to analyze any country’s output and consumption data. This gives an indication of the goods produced in that country along with the rate of consumption of these goods by the people of specific country. However, this measurement was more accurate during the days when different nations had closed economy. With globalization, the world trade has received new boost, which encourages almost all nations to throw open its economy. This has resulted in synchronization of world economies. Hence, GDP can now be seen as a tool that measures economic prosperity of any nation in terms of change in the volume of trade conducted by the country within a specific period.
However, GDP does not take into consideration the amount of domestic work for calculating the figures. The early inventors of GDP like Simon Kuznets and John Maynard Keynes did not take into account the amount of work done for doing different domestic chores like dish washing or laundry and
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It can be regarded as the size of the economy. More often than not, GDP is usually expressed as a comparison of the earlier quarters or year. For example, if he year to year GDP is up to 4 % this is then perceived to mean that the economy grew by 4% over the last year.
The fiscal crises of 2007-2008 provide the prospect to re-evaluate our considerations for prevention of crises in the future. All monetary crises are at core bank flows, since bank debt of any kind is vulnerable to abrupt exit by bank arrears holders. The crisis raises concerns for crisis hypothesis.
Over the last few years, although there are quarterly fluctuations, there is a general downward GDP trend. Looking at annual real GDP, one can see a downward trend from 2.7% in 2006 to a slightly lower 2.1% in 2007 to the almost flat growth of .4% in 2008.
Calculating development in terms of per capita GDP leads to a distorted view of the developmental status of nations and their populations. As a case in point, one may refer to the fact that according to this statistical measure, Qatar, Kuwait and the United Arab Emirates rank as the second, fourth and fifth most developed nations in the world, and Equatorial Guinea as the ninth (IMF, 2008).
This in turn leads to spurt in volume of production of goods and services at all levels to cope which firms need funds for working capital and capital expenditures. However there has been always this controversy of whether a company can borrow at all instead of sourcing the required funds through equity capital.
According to the report the way income is distributed in the economy is a measure that can be used to gauge the quality of life, because that shows how many people receive what percentage of the income that is being generated within the economy and how many people receive an income that is below the average.
The country with the highest GDP is Saudi Arabia with $587 billion. As compared to the countries of Arab League the GDP of Italy is $2.164 trillion, the GDP of France is $2.734 trillion, GDP of Germany is $3.55 trillion, GDP of United States $14.83 trillion, and GDP of Japan is $5.773 trillion for the year 2011 (CIA Fact book, 2013).