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GDP (Gross Domestic Product) : Abhishek Shukla Mba (It) Iiita

GDP (Gross Domestic Product) Abhishek Shukla MBA(IT) IIITA GDP is a measure of the income and expenditures of an economy. It is the total market value of all final goods and services produced within a country in a given period of time. The Measurement of GDP Output is valued at market prices. It records only the value of final goods, not intermediate goods (the value is counted only once). It includes both tangible goods (food, clothing, cars) and intangible services (haircuts, house

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81 views13 pages

GDP (Gross Domestic Product) : Abhishek Shukla Mba (It) Iiita

GDP (Gross Domestic Product) Abhishek Shukla MBA(IT) IIITA GDP is a measure of the income and expenditures of an economy. It is the total market value of all final goods and services produced within a country in a given period of time. The Measurement of GDP Output is valued at market prices. It records only the value of final goods, not intermediate goods (the value is counted only once). It includes both tangible goods (food, clothing, cars) and intangible services (haircuts, house

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Abhishek Shukla
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GDP

(Gross Domestic
Product)

Abhishek Shukla
MBA(IT)
IIITA
GDP is a measure of the income and
expenditures of an economy.
It is the total market value of all final
goods and services produced within a
country in a given period of time.
The Measurement of GDP
 Output is valued at market prices.
 It records only the value of final goods,
not intermediate goods (the value is
counted only once).
 It includes both tangible goods (food,
clothing, cars) and intangible services
(haircuts, housecleaning, doctor visits).
 It includes goods and services currently
produced, not transactions involving
goods produced in the past.
 It measures the value of production
within the geographic confines of a
country.
 It measures the value of production that
takes place within a specific interval of
time, usually a year or a quarter (three
months).
The Components of GDP

GDP (Y ) is the sum of the following:


 Consumption (C)
 Investment (I)
 Government Purchases (G)
 Net Exports (NX)

Y = C + I + G + NX
The Components of GDP
 Consumption (C):
 The spending by households on goods and
services, with the exception of purchases
of new housing.
 Investment (I):
 The spending on capital equipment,
inventories, and structures, including
new housing.
The Components of GDP
 Government Purchases (G):
 The spending on goods and services by
local, state, and federal governments.
 Does not include transfer payments because
they are not made in exchange for currently
produced goods or services.
 Net Exports (NX):
 Exports minus imports.
Real versus Nominal GDP

 Nominal GDP values the production


of goods and services at current
prices.
 Real GDP values the production of
goods and services at constant prices.
GDP Deflator
An accurate view of the economy
requires adjusting nominal to real
GDP by using the GDP deflator.
 The GDP deflator measures the current
level of prices relative to the level of
prices in the base year.
 It tells us the rise in nominal GDP that is
attributable to a rise in prices rather than
a rise in the quantities produced.
GDP Deflator

The GDP deflator is calculated as


follows:
Nominal GDP
GDP deflator =  100
Real GDP
For example, suppose a country's GDP in 1990 was
$100 million and its GDP in 2000 was $300 million; but
suppose that inflation had halved the value of its
currency over that period. To meaningfully compare its
2000 GDP to its 1990 GDP we could multiply the 2000
GDP by one-half, to make it relative to 1990 as a base
year. The result would be that the 2000 GDP equals
$300 million x one-half = $150 million, in 1990
monetary terms. We would see that the country's GDP
had, realistically, increased 1.5 times over that period,
not 3 times.
GDP Growth Rate Of India
Thank You

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