Question

Practical Application: Make a list of the dollar value of everything you consumed during the last three days. Then figure out the percentage that isn't conounted in our GDP. Don't forget home-cooked meals, pirated music, and other goods and services are not counted.

Answer 1

GDP mainly means the value of goods and services produced in the country. It can be calculated as follows-

GDP = Consumption + Private Investment + Spending by the Govt + Exports - Imports.

GDP includes the value of goods and services which are produced during the year and thus all the items of precious year were excluded. Also all the illegal things are also excluded while calculating GDP.

List of things that were consumed yesterday are as follows-

Home cooked meals, Pirated music, Mobile phone, Notebook, Stationary, Car, Books, Internet, T.V., Illegal software download etc.

Among the above mentioned things Pirated music and illegal software will not be included while calculating the value of GDP as Pirated music is illegal and doesn't form part of GDP. Also if any item is purchased during the previous year but consumed in this year that specific itme will laos be not included.

Of the things mentioned above pirate music accounts for approximately 2.6 billion dollar earnings lost to the music industry due to pirated music and approximately 42 percentage of softwarre downloaded is illegal.