GDP → anything the country makes INSIDE the country
GNP → anything the country makes ABROAD (in another country)
GNP → anything the country makes ABROAD (in another country)
Nominal vs. Real GDP
Nominal GDP → how much GDP has increased BEFORE inflation
Real GDP → offsets inflation
GDP per capita → “nation’s GDP divided by it’s population”
What are the downfalls of GDP?
Real GDP → offsets inflation
GDP per capita → “nation’s GDP divided by it’s population”
What are the downfalls of GDP?
Environment vs. GDP
GDP, as the primary indicator of growth, it helps us now how much a country has developed in terms of value of all goods and services produced in an economy. Nevertheless, GDP only takes in to account the economic activity that is paid for; in other words, that make money.
So for example, if a company cuts trees in order to make paper, GDP will show the value of the paper and not take in to consideration the environmental degradation and its effects.
So for example, if a company cuts trees in order to make paper, GDP will show the value of the paper and not take in to consideration the environmental degradation and its effects.
“… The usual methods of calculating GDP make destroying the environment look good for the economy.”
Factors like environmental degradation are some of the most important elements that should count to see the total growth of a country. In "Naked Economics," Charles Wheelan shares how China's GDP has grown in the past decade, however it has cost environmental degradation big time.
Green GDP: "evaluates the true quality of economic growth by subtracting the costs of environmental damage."
Green GDP: "evaluates the true quality of economic growth by subtracting the costs of environmental damage."
Recessions are economic downturns, which occur when the GDP goes down. But, when does this usually happen?
What can affect GDP?
If a country suffers from a natural disaster, this would most likely affect the GDP of the country because of the money that has to be invested to repair any damages. This may also occur with a disease or even terrorism.
Source: Chapter 9 - Naked Economics
If a country suffers from a natural disaster, this would most likely affect the GDP of the country because of the money that has to be invested to repair any damages. This may also occur with a disease or even terrorism.
Source: Chapter 9 - Naked Economics