Question

Identify the two major ways economic growth is measured.

Answer 1

Specific measures may be used to measure economic growth, such as the Gross National Product ( GNP) and Gross Domestic Product ( GDP). Gross Domestic Product calculates the value of domestically manufactured goods and services. Gross National Product calculates the value of nation-generated goods and services (GDP) and foreign investment income.

The gross domestic product is the logical extension of monetary expenditure measuring economic growth. For example, if a statistician wants to understand the steel industry 's productive production, he just needs to monitor the dollar value of all the steel that entered the market over a given time. Combine the outputs of all sectors, calculated in terms of spent or invested dollars, and you get total production. It was theory, at least. Unfortunately, relative efficiency is not necessarily measured by the tautology that expenses equal to sold-production.

Anyone of a certain age may recall learning as an economic indicator of the gross national product ( GNP). Economists primarily use GNP to learn about the overall income of citizens of a country over a given era, and how citizens use their money. GNP measures total income accruing over a specified amount of time to the population. Unlike gross domestic product, it does not take into account income that accrues to non-residents within the territories of that country; like GDP, it is simply a measure of production, and it is not meant to be used as a measure of a country's welfare or happiness.