Importance Of Gdp The Measure Of Economy

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Gross domestic product (GDP) is a measure of the economy that measure the value of services and goods that UK produces with in a given period. This gives an indication of how healthy a country’s economy is. Some, for example J. Steven Landefeld (1999) discusses the importance of GDP being the measure of economy, whereas, Joseph Stiglitz (find date) argues the weakness as it doesn’t include the country’s overall happiness. This essay will analyse the relevance and the limitation of GDP being the measure of economy. Additionally, Compare GDP against GNI as they are both a measure of the economy but consider different aspects of the economy. Finally, in the conclusion the relevance of GDP per capita will be summarise as to whether or not the limitation is worth overlooking when considering the right method of measuring the economy.
Gross domestic product (GDP) is the total value of all goods and services produced in the economy during a specified period of time, such as a year or quarter. Improvements in the economic well-being of individuals in any society cannot occur without such an increase in real GDP. Real GDP per capita is real GDP divided by the number of people in the economy. When real GDP per capita is increasing, then the well-being- or the standard of living- of
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Overall, this distorts the final figure. It also excludes underground activities such as drugs, which in some countries take up a large proportion of earnings. The shadow economy in Mexico accounted for 25% of GDP in 2012, and employed around 60% of the working population which amounted to 31 million people. Another exclusion is the sale of used goods, such as a second hand car. GDP measure the final goods only as this car will only be accounted for

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