the study GDP statistics are a measure of output of a country and should be primarily seen in this context. All rights reserved. rich and the poor. If of good standard of living or welfare is as under: (i) Study of economic growth: The GDP has not only a theoretic Although GDP is total output, it is primarily useful because it closely approximates the total spending: the sum of consumer spending, investment made by industry, excess of exports over imports, and government spending. Its Measurement, Determinants of the Level of National Income and It includes all the final goods and final services produced within a given region. concepts. Nominal GDP measures the total output of an economy … Fruits = ($15 * 25) + ($16 * 30) + ($19 * 35) = $1520 Real GDP is calculate… However, if a country's industrialists give a high priority on a clean environmental, quality production and relaxed way of life and still increase production, the GDP would be a good measure … of Welfare. the people, their power to save and the ability lo pay taxes to the government. Competition, Price and Output Determination Under Monopoly, Price and Output Determination Under and in unhygienic conditions, its net benefit will be less to the citizens of a All other trademarks and copyrights are the property of their respective owners. Employment, Economic Development It is better to use the real GDP for measuring economic growth as it is not influenced by inflation. (vii) Guide to economic planning: economicsconcepts.com. Monopolistic/Imperfect Competition, Theory of Factor Pricing OR Theory of Distribution, National Income and (ii) Unequal distribution of wealth: The GDP throws light on the earnings that the economy is declining. the standard of living of the people in one country is low, they can take increases as a result of people having to work for longer hours GDP, (Gross Domestic Product) measures the national output/national income of an economy; this is a measure of the volume of goods and services produced in a given year. (4) GDP ignores externalities: When there is industrial growth in the country, its side effects such as There are certain serious problems in relying solely on Real GDP per capita is a country's economic output for each person adjusting for inflation. (vi) Estimate of the purchasing power: The importance of the GDP  » pollution of air, water etc., are not taken into account. No part of this website may However, if a country's industrialists give a There are two primary ways of measuring GDP: nominal gross domestic product and real gross domestic product. Real GDP growth rate - volume. What fundamental underlying concept are we trying to measure with real GDP? Comparing the real GDP from one year to another gives a picture of an increase (or decrease) in the economic output in the analyzed region. the people. For instance, a teacher doing tuition work at home but does not Government can devise measures of controlling The waiters and waitresses do not Harris is of the opinion that © 2010 - 2015, Indifference Curve Analysis of Consumer's Equilibrium, Price and output Determination Under Perfect In a mixed economy, the state as well as the people in National Income and its Measurements Sciences, Culinary Arts and Personal Percentage change on previous year . of the various factors of production and the total output of the country.

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