Gross Domestic Product ( Gdp ) Essays

798 Words May 29th, 2016 4 Pages
Gross Domestic Product
Gross Domestic Product (GDP) is a metric produced by the Bureau of Economic Analysis, and used for classifying and quantifying the financial well-being of nations. It seems GDP is the gold standard for measuring success of the world’s economies, but is it enough? One might question the attributes of success and determine the need for a more comprehensive tool.
Mankiw (2015), defines GDP as “the market value of all final goods and services produced within a country in a given period of time” (p. 198), such as monthly, quarterly or annually. The process used in calculating GDP classifies all goods and services produced in the economy into one of four components, the summed total of each component can also determine average GDP per capita by dividing the nation’s total market value by the number of people in the economy. Mankiw (2015), illustrates the formula for calculating GDP of an economy as follows: Y = C + I + G + NX, where Y is GDP, C represents consumption activity, I is investment activity, G represents government expenditures and NX signifies net exports, or domestic exports minus domestic imports. Mankiw (2015), identified and explained the four components of GDP as consumption, investment, government purchases and net exports. Consumption includes all household spending for goods and services produced and legally available for sale such as food, energy, clothing, education and healthcare to name a few. Consumption affects each of us in…

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