Essay on Economic And Economic Impact On Economic Growth And Welfare
All reports or information regarding the United States’ economy revolves around Gross Domestic Product (GDP). GDP is used for measuring economic growth and welfare. This paper explains GDP by definition. It also reveals that economic welfare cannot be calculated by measuring GDP. Is GDP the best measurement to use in calculating economic growth and welfare and what is it lacking?
What is GDP?
Gross Domestic Product (GDP) is used to measure economic growth and welfare in a country. It measures the output of goods and services produced by labor and property within the United States during a year. The measure is used to analyze the health of the economy and set economic policies. GDP is a measure of raw economic activity, but is not a complete picture of economic progress. When first designed, GDP was not intended to become the only measurement used in analyzing the economy, but that is what it became. Economic welfare could not be measured by GDP (Fasolo, Galetto, and Turina, 2013, p. 634). Its purpose was to determine the maximum production and consumption of people without undermining the capacity to produce and consume the same amount in the future (Fasolo, Galetto, and Turina, 2013, p. 634). The purpose of economic policy is shaped by maximizing GDP growth.
The formula for GDP calculation is: GDP = Consumption + Investment + Government Spending + Exports – Imports. This gives the monetary value of all final goods and services within the United States. It is…