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GDP

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Jeewanshu Uttam
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6 views7 pages

GDP

Uploaded by

Jeewanshu Uttam
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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GDP

Gross Domestic Product (GDP)


GDP is the market value of all final goods and services
produced within a country in a given period of time.(usually one year)

Y = C + I + G + NX
Y= GDP
C= Consumption
I = Investment
G= Government Purchases
NX = Net Export ( i.e. Export – Import)
Consumption: spending by households on goods and services,
with the exception of purchases of new housing

Investment: Spending on capital equipment, inventories and structures,


including household purchases of new housing

Government purchases: Spending on goods and services


by local, state and federal governments

Net Exports: Spending on domestically produced goods by foreigners (exports)


minus spending on foreign goods by domestic residents (imports)
Real vs Nominal GDP
Nominal GDP: The production of goods and services valued at current prices

Real GDP: The production of goods and services valued at constant prices

GDP Deflator:
A measure of the price level calculated as the ratio of
nominal GDP to real GDP times 100

𝑵𝒐𝒎𝒊𝒏𝒂𝒍 𝑮𝑫𝑷
GDP Deflator = X 100
𝑹𝒆𝒂𝒍 𝑮𝑫𝑷
Nominal Real GDP (Rs)
Price of Quantity of Price of quantity of GDP (Rs) In constant
Commodity commodity Commodity Commodity (In current prices (year GDP
Year A (Rs.) A B (Rs.) B prices) 2010) Deflator
2010 1 100 2 50 200 200 100
2011 2 150 3 100 600 350 171
2013 3 200 4 150 1200 500 240
GDP Deflator is one measure that economists use to
monitor the average level of prices in the economy and
thus the rate of inflation.
Is GDP a Good Measure of Economic
Well Being?

➢ GDP Does not measure the health

➢ GDP does not measure the quality of education

➢ GDP does not measure the beauty of our poetry

➢ GDP does not take into account of our intelligence,


integrity, courage, wisdom or devotion to country

However, it is argued that


A large GDP does infact help us to lead a good life.

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