A few days ago
A little question about GDP.?
hi guys, im doing an economics assignment and i have just these two little questions left.
b. What cautions must be applied when comparing a nation’s GDP from one year to another?
c. Can we use GDP as a reliable economic predictor? Why or why not?
i’ve searched my whole text book and can’t find them. If anyone knows please tell me.
Thanks a lot to anyone who answers! 🙂
Top 2 Answers
A few days ago
Favorite Answer
1) Main caution would be purchasing power of money varies in different proportion for different goods. I.E. over the past 80 years the GDP per capita of the United States if measured by purchasing power of potatoes, did not grow significantly. But if it is measured by the purchasing power of eggs, it grew several times.
2) GDP ignores volunteer work (linux, wikipedia etc..), does not take into account black market or bartering, child rearing and housekeeping have no value, for cross-border comparisons one should especially regard whether it is calculated by purchasing power parity (PPP) method or current exchange rate method, Oilproducing countries may sustain high GDPs without industrializing, this high level won’t be sustainable when the oil runs out.
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4 years ago
i might say it has the capture-up consequence. additionally remind you purely because of the fact a rustic has slightly GDP, it would not propose it is unfavourable because of the fact some countrys have an underground economic gadget. They make maximum of there funds from merchandising unlawful stuff like drugs yet regrettably unlawful aspects isn’t counted in GDP.
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