- G.D.P – Gross Domestic Products
The 3 alphabets which generally show the progress of a country (economy) over a period of time.
So what is the meaning of Gross Domestic Products?
Gross domestic product is a monetary measure of the market value of all the final goods and services produced in a specific time period, often annually. (Wikipedia)
How is G.D.P measured?
It is measured in 3 ways
- Total Income
- Total Production
- Total Expenditure
A change in G.D.P will reflect the change in economical condition of a country. Where a positive change shows growth and negative change show problems (obviously).
Sounds like a fair thing. But why did I just title it as not a good indicator?
Well let me explain.
For starters the G.D.P of a nation is calculated by the government of the respective nations. Hence, the numbers can be played up as there is no entity to cross check it.
Secondly, there is a catch in this system. For instance lets consider 2 friends (You & I).
Let’s say we both buy houses next to each other (the houses are identical in every way). Now, we rent our houses to each other at a monthly rent of 1 million dollar (since, this is only an example). We pay each other a million every month making the result as 0(zero). We continue this for an year. Sounds meaningless right? But its not because we both just increased our G.D.P by 24 million dollars.
Well, there is a lot to rant about G.D.P as such. This blog is more about the things you will not usually read on many sites.
I hope you liked the read, in case you didn’t I am sorry but there is no dislike button, you can always use comments though.
By Bhavik Gandhi December 14, 2019
Easy Economics 