Gdp Should Really Stand for Grossly Deceptive Product” the Economist What Does Gdp Actually Measure?
GDP should really stand for Grossly Deceptive Product” The Economist What does GDP actually measure?
When discussing about the economy of one country, people often talk about “Gross Domestic Product (GDP). However, there are a number of disagreements among economist about the value of GDP. Therefore, this essay will discuss whether or not GDP is an ideal measurement of the development of a nation. It first explores the term GDP and ways to measure it. The essay then compares GDP with Gross National Product (GNP) and Human Development Index (HDI).
According to Mankiw (2011), the value of all final goods and services in the market produced within a country in a given time span is defined as GDP. Through this definition, there is only one measure of all the value of the economic activities for a range of products, and both goods and services are included in GDP at their market value. Nevertheless, comparing the value of one product to the other is not always easy, for example it is difficult to say if an orange is more valuable than an apple as different consumers value a good differently. It is important to have criteria to differentiate the value of different goods and services. Hence, the market price was introduced in order to identify the volume of customers who are able to purchase particular products.
To measure GDP by using the market value helps to include a wide range of commodities in the market. Not only are common items such as food, clothes and other living necessity but also the housing services included in the market value. By measuring GDP this way, many business activities like market rental housing reflect the market value and become indicators of the market. Moreover, volume of owner-occupied housing can be used to measure the market rental value of a country. Nevertheless, according to Abel et al (2008), although this measurement of GDP encompasses a number of goods and services, it still does not cover some products like which are
When discussing about the economy of one country, people often talk about “Gross Domestic Product (GDP). However, there are a number of disagreements among economist about the value of GDP. Therefore, this essay will discuss whether or not GDP is an ideal measurement of the development of a nation. It first explores the term GDP and ways to measure it. The essay then compares GDP with Gross National Product (GNP) and Human Development Index (HDI).
According to Mankiw (2011), the value of all final goods and services in the market produced within a country in a given time span is defined as GDP. Through this definition, there is only one measure of all the value of the economic activities for a range of products, and both goods and services are included in GDP at their market value. Nevertheless, comparing the value of one product to the other is not always easy, for example it is difficult to say if an orange is more valuable than an apple as different consumers value a good differently. It is important to have criteria to differentiate the value of different goods and services. Hence, the market price was introduced in order to identify the volume of customers who are able to purchase particular products.
To measure GDP by using the market value helps to include a wide range of commodities in the market. Not only are common items such as food, clothes and other living necessity but also the housing services included in the market value. By measuring GDP this way, many business activities like market rental housing reflect the market value and become indicators of the market. Moreover, volume of owner-occupied housing can be used to measure the market rental value of a country. Nevertheless, according to Abel et al (2008), although this measurement of GDP encompasses a number of goods and services, it still does not cover some products like which are