Question

Discuss why it is desirable for a country to have a large GDP.

Answer 1

The large GDP is the indicator for the good , healthy economic growth within a nation .

When an inflation is not an issue within a nation specially then a growth of GDP is desirable for workers and businesses . When the growth of GDP in an economy is going down or low , it indicates that the economy is performing poorly or moving towards a poor situation . A GDP is a visual display of monetary values of goods and services produced in the nation and changes hands in a country within some time periods like 6 months or a year or so . In it they also include the non-market output such as defense or education services etc . provided by the government .

unpaid service at home or work by volunteers and underworld market activities are some of the economic activities which are not included in GDP as they are difficult to calculate or measure . Whereas baking breads for the sales to the customers as a business is to be included in GDP but baking the same bread for personal consumption is not included . But purchasing the ingredients for baking a bread do serves there contribution to the GDP .

There are three different way for the better understanding of GDP The production approach , The expenditure method , The income approach .

Production approach - In which the value added on production by deducting input cost from total sales of finished goods .

The expenditure method - Its the total sum of the value of consumer purchases , like food , cloths , electricity or medical services .

The income approach - in this there add up incomes generated through productions .