GROSS DOMESTIC PRODUCT THE YARDSTICK OF AN ECONOMY’S’ PERFORMANCE
What is. the gross domestic product? GDP is the name we give to the total market value. of the final goods and services produced within a nation during a given year. It is . the figure you get when you apply the measuring rod of money to the diverse’ goods and services-from apples to zithers-that a country produces with its land, .labor, and capital resources. GDP equals the total production of consumption and, investment goods, government’ purchases, and net exports to other lands The gross domestic product (GDP) is the most comprehensive measure of a nation’s total output of goods and service .. It i the sum of the dollar. values of consumption C). gross investment (I). government purchase of goods and services (G), and net exports (X produced within a nation during a given year In symbols.
GDP = C+ J + G + X
GDP is used for many purposes, but the most important , one is to measure the overall performance of an economy. If were to ask an economic historian what happened during the Great Depression, the best short answer would be: . n 1929 and 1933, CDP fell from $104 billion to $56 billion. This sharp e in the dollar value of goods and services produced by the American my caused high unemployment. hardship, a steep stock market decline, Origin bankruptcies,bank failures, riots, and political turmoil.
Similarly, if you were to ask what was unusual about. the 19905,a macroeconomist might reply The 19905 were the longest economic expansion in the nation’s history, From 1992 to 2000, GDP grew steadily. increasing by 37 percent with.falling unemployment. stable inflation, and rising stock market prices,
We now discuss the elements of the national income and product accounts. We start by showing different ways of measuring GOP and distinguishing real from nominal COP. We then analyze the major components of GOP. We conclude with a discussion of the measurement of the general price level and the rate of inflation.
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