Question

In: Economics

a) Define GDP. What does it measure and track? Why do countries report GDP? b) Suppose...

a) Define GDP. What does it measure and track? Why do countries report GDP?

b) Suppose you are given the following information about the New Zealand economy, with the values in billions of Dollars. What is the GDP of New Zealand?

Personal consumption $680

Private investment $370

Government expenditure $430

Exports $710

Imports $295

c) Discuss 2 transactions that are not included in the calculation of GDP and provide an example for each.

Solutions

Expert Solution

1.

GDP in simple terms is the final production value of goods and services in an economy over a given period of time

It is generally measured on quarterly or yearly basis

Change in real GDP value is called as economic growth

So many countries record it for the overall developing figure and have an idea that where the economy is going and what are the lacking factors that the economy should work upon

It is generally made up of four components that are personal consumption, net investment, government spending and net export

Where net export the difference of export and import

B.

C.

GDP is a very popular term across the world but it lacks so many important factors that can give more accuracy to this figure

These factors can be carbon footprint index, Gini coefficient index, happiness index etc because on just one factor of GDP we cannot say that the people living inside the country are are truly utilising their resources in the most optimum way


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