ECO/372T: Principles Of Macroeconomics Wk 1 Discussion

Wk 1 Discussion – GDP [due Day 3]

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Respond to the following in a minimum of 175 words:

GDP is a strong measure of the health of the economy, and it’s among the most important and widely reported economic data.

·        In your own words, summarize nominal GDP.

·        Discuss the limitations of gross domestic product (GDP) as a measurement tool.

·        What is the difference between real and nominal GDP?

·        Locate an online news article that discusses impacts to GDP in some way. Summarize the article and explain its relation to/impact on GDP.

·        Cite your sources.

Nominal GDP is GDP computed at current market prices. GDP is the monetary worth of all completed products and services produced inside a country’s borders in a specific time period. Contrary to real GDP, nominal GDP takes into account price changes brought on by inflation or a rise in the overall level of prices.

GDP of a nation measures the monetary value of the products and services generated in a specific year.

Y = GDP if

P represents price.

The letter Q stands for the quantity of products or services.

As a result, by definition,

The formula for the nominal GDP is Y=P.Q. Simply put, this suggests that the GDP is measured in terms of money. Nominal meaning in monetary terms.

Impact

The Gross Domestic Product (GDP) is a measure used to assess a nation’s economic health. It is a measure of the total value of all commodities and services produced within a nation’s boundaries during a certain time period. GDP may be used by economists to assess whether a nation’s economy is expanding or contracting.

Four supply factors—natural resources, capital goods, human resources, and technology—directly affect the value of products and services provided. GDP growth refers to a rise in GDP’s rate of growth, however the factors influencing each component’s rate of growth are quite diverse (BOLDEANU, 2015).

References

BOLDEANU, F. T. (2015). The main determinants affecting economic growth . Bulletin of the Transilvania University of Braşov.