Question

1.Discuss how we measure output (GDP) in the U.S. Define the different components of GDP and how each contributes to our measure of output. Compare and contrast nominal GDP and real GDP.

2.Utilize a sustainability lens to critically analyze GDP as a measure of economic progress. (i.e. discuss how policies that use GDP as a measure of economic progress are likely different from policies that use a more broadly defined measure that subtracts out economic "bads" and adds in social measures (like health and education statistics).

Answer 1

The GDP is the money value of all final goods and services produced with in the domestic territory of the country. There are there ways to mmeasure the GDP of a nation and that are expenditure method, product method and the income method. In the expenditure method the GDP adds up the market value of all final gooods and services ina economy ina single year, the expenditures include consumption expenditure, investment expenditure, government expenditure and the net exports that is exports minus imports. The next method is the product method or the value added method. In this method the gross value of output from all estimated, then the intermediate consumption sucha as cost of raw materials, supplies and services used in the production is derived then the gross output is reduced by intermediate consumption. The next method is the income method in this method, all the income made by the households are added together.

There are four components of GDP and they are consumption expenditure, investment expenditure, government expenditure and net exports. The component of consumption spending measures the money value of all goods and services purchased by the households and non profit organiszations. The investment expenditure means additions made to the physical stock of capital during the a period of time: The investment includes building of machinery, construction of factories and offices and additions to a firm's inventories of goods. The next one is the government expenditures, this component summarises government spending on goods and services. It includes the purchase of goods by the government and wages and salaries paid by the government. The last one is the net exports, the net exports is calculated by the deducting the import from export.

The nominal GDP is the aggergate market value of the economic output produced with in the domestic territory of the country. The rel GDP is the total output produced in a given period, adjusted according to the general price level in the economy. The rel GDP is the inflation adjusted GDP and the nominal GDP is with out the effect of inflation. The real GDP depends upon the base year prices and the nominal GDP is based on the current year prices.

The GDP is the money value of all goods and services produced with in the domestic territory of a country during an accountig year. It is a comprehensive measure covering the production of consumer goods, government services and investment goods.   it is inaccurate to say that GDP does not capture wellbeing. It captures at least the wellbeing that results from the production of goods and services. Indeed, when statisticians quantify the goods and services produced, they take into account their utility to the consumer.