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. …
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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. ...
studied alone without any supporting data, one cannot predict whether the country is enjoying economic wellness or it is facing low standard of living.
There are a number of reasons why we cannot rely solely on the GDP figures and need comprehensive sets of data to determine the economic wellness of the country.
Suppose that a GDP of country increases by 20%/ Many people will say that the country will now enjoy great economic well being or its residents will be better-off. However, this is not true. In order to determine the net of economic wellness, we need to take into account the population growth rate as well. If population growth rate is 25%, then we can clearly conclude that people will be worse-off by this increase and there will be a net-decline in the standard of living of people living in this country. So, it is not GDP that matter, but it is the real GDP that tells us about the economic wellness of a country. Real GDP takes into account the population and it is the measure which tells us about the economic wellness of a country.
Similarly, what if an increase in GDP is because of the increase in inflation. Inflation increases the price of everything and because of this the value of GDP increases. This type of increase in the value of GDP because of inflation is also not very good as economic wellness and people's standard of living is directly related to the physical quantity of goods being produced and not the quantity. So, we need to taking into account the inflation factor also and adjust the nominal GDP with inflation factor to arrive at the real GDP and only this way we can tell whether or not the country is enjoying economic wellbeing or not. A good way to counter this problem is calculating per capita income. Per Capita income is calculated by diving
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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).
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).