What is GDP Essay Example | Topics and Well Written Essays - 1000 words

What is gross domestic product - Es consecrate ExampleSo, it is very essential to have a gross domestic product for a country compute over a definite time period. In order to further justify the definition, I will take the example of Qatar. The GDP of Qatar is the total regard as of output of goods and services produced at bottom Qatar over a period of time. The definition of GDP includes all the production done by local anesthetic residents and resources owned by the residents of Qatar and also by foreigners and foreign resources owned by non-residents of Qatar. GDP shadow be measure by three methods and each method should give the same answer. It can be careful 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 Qa tar 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 Qatars production.It is often considered by people that fix GDP figures are enough for telling the scotch well-being of a country. For example, the people who say this purse their claim on the fact that any changes or increase in the GDP is signal of advantage 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 touchstone 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. I n order to determine the net of economic wellness, we need to take into mark 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, that it is the real GDP that tells us about the economic wellness of a country. Real GDP takes into news report 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 peoples standard of living is directly related to the physical quantity of goods being produced and not the quantity. So, we need to taking into bill the inflati on 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