Gross Domestic Product (Gdp) Is the Broadest Measure of Output for an Economy.

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Week 2 Discussion Post2: Gross Domestic Product (GDP) is the broadest measure of output for an economy. However, GDP does not perfectly measure well-being of a nationand its citizens' welfare. Discuss what GDP is and what it measures? Discuss what the shortcomings (limitations) of GDP as a measure of well-being and welfare of a nation are? posting1) Antonio GDP stands for Gross Domestic Product and it represents and estimated value in economic terms of a country’s total output at a particular point in time. It is used to measure the total value of goods and services in a country. There are four components that are looked at when computing GDP; personal cption, gross private domestic investment, government purchases and net exports (Rittenberg & Tregarthen, 2009). By combining the all of these components or expenditures, one can calculate a country’s GDP (Petroff, 2002). The bottom line for GDP is that it is a tool used to see how whether a particular economy is doing poorly or well. There are two types of GDP; Real GDP and Nominal GDP. Both still measure the value of goods and services, but the difference is that in Real GDP, the effects of price changes are excluded (Rittenberg, et al, 2009). Basically, Real GDP is adjusted to account for inflation. There are some limitations in using Real GDP. For instance, estimates and revisions can cloud the true picture of an economy’s GDP. Future estimates must be revised, and information for those estimates is collected from only a few sources due to time constraints. Thus, revisions have to be made and can lead to estimates of economic activity that are much more different than those given previously (Rittenberg, et al, 2009). Another limitation is in services provided. These services are not easily measured and therefore cannot give a true picture of GDP. Household production is another limiting factor.
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