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Economics of Social Issues 21th Edition by Charles Register ,Paul Grimes
Edition 21ISBN: 978-0078021916Economics of Social Issues 21th Edition by Charles Register ,Paul Grimes
Edition 21ISBN: 978-0078021916 Exercise 1
GDP measures the total value of production within an economy during a specific time period. What adjustments must be made to GDP before it can be used as a rough measure of social well-being?
Explanation
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Gross domestic product (GDP):
Gross domestc product (GDP) is defind as the total market value of all the final goods and services produced within the physical boundary of a nation at a particular time period.
GDP as a measure of social well-being:
There are mainly two adjustments of GDP that are required before it can be employed as a rough measure of social well-being. They are listed below:
Adjusting GDP for inflation:
Sometimes, GDP may be doubled, even though the production of goods remains the same. This change in GDP is due to inflation. To remove the effect of inflation each year, the price levels of GDP are replaced with the price of the 'base' year. In percentage terms, the price index for each year is derived by dividing each year's price level by the base year's price level and multiplying it with 100.
Adjusting GDP for population:
The adjustment of GDP made for dissimilarities in population requires that GDP should be divided by the population of the country, that is, the per capita GDP. This method gives a rough quantification of its citizen's average well-being.
Gross domestc product (GDP) is defind as the total market value of all the final goods and services produced within the physical boundary of a nation at a particular time period.
GDP as a measure of social well-being:
There are mainly two adjustments of GDP that are required before it can be employed as a rough measure of social well-being. They are listed below:
Adjusting GDP for inflation:
Sometimes, GDP may be doubled, even though the production of goods remains the same. This change in GDP is due to inflation. To remove the effect of inflation each year, the price levels of GDP are replaced with the price of the 'base' year. In percentage terms, the price index for each year is derived by dividing each year's price level by the base year's price level and multiplying it with 100.
Adjusting GDP for population:
The adjustment of GDP made for dissimilarities in population requires that GDP should be divided by the population of the country, that is, the per capita GDP. This method gives a rough quantification of its citizen's average well-being.
Economics of Social Issues 21th Edition by Charles Register ,Paul Grimes
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