This website uses cookies to ensure you have the best experience. Learn more

Explain What Is Meant By Gdp And How It Is Measured

1416 words - 6 pages

GDP is a way of quantifying the amount of activity in, and thus the size of, an economy. It is therefore a way of assessing the total worth of an economy and thus its total output. This is particularly relevant for assessing how an economy is growing (or contracting over time) and thus GDP measurements over a number of years can be very useful for assessing an economy's performance over that period, particularly in terms of the level of economic growth that it has experienced. It can also be used to compare the relative sizes of different economies, and it can be used to compare the relative economic performance therefore of different countries; especially when it is down-scaled to take account of a country's total population (GDP per capita) to give a fair comparison between countries.It is important to note that GDP only includes the total domestic production of an economy (as opposed to GNP which includes the total output of a country's businesses and people even if they are over-seas, even if their profit and investment is fully focused on the local economy). This is the output of the home economy of a country and thus excludes over-seas enterprises that may be taking place. In a world which is increasingly globalising and in which Trans-National countries are becoming increasingly important, this can be significant in some cases. For example Japan has many over-seas enterprises; particularly car-factories which often locate in the EU to produce cars for the EU there at a lower cost inside tax barriers imposed by the EU. However, these companies act somewhat as a drain to these EU economies and a boon to the Japanese economy as they send back considerable profits made to Japan to be used in further investment rather than directing money earned into the economy where the factory is located. In effect, consumer spending in the EU countries is still sent to the firms as expenditure for their services, but it is Japanese firms that the money is being sent to: it is foreign spending boosting the Japanese companies and thus indirectly their economy. These external monies earned over-seas are excluded from Japan's total GDP figures as they are not domestic output, but this over-seas output is still a significant output by Japanese companies which earns monies for usage in Japan. The inverse is also true: GDP includes foreign companies which have produced in a given country; even though goods used by the company may be imported and profits leaked from the country the company is in to the country the company is from.GNP minus GDP yields the net foreign factor income, which is the output represented by foreign activity. This number can be positive or negative depending on whether a country invests more over-seas or more over-seas countries invest in it. Sometimes, net foreign factor income is not significant because overseas profits and foreign profits made domestically may offset each other pretty well. But where much of a country's economic activity...

Find Another Essay On Explain what is meant by GDP and how it is measured

With reference to a relevant example(s), explain what is meant by the term 'folk devil' and discuss how this may or may not influence the public perc

2238 words - 9 pages for a re-evaluation of their control and ability to protect. In earlier times, they influenced public perception of crime by manipulating the news to make it appear as there is no real societal issue, just a select group that have an issue. Folk devils took responsibility off of the public and placed it on a few outliers and on the government meant to prevent incidents and protect people from things like Clacton fights. The folk devils soon

Question: Define what is meant by an economic system. Explain how Australia's economic system attempts to solve the economic problem

1609 words - 6 pages extremes of how these questions may be answered - the planned and the market economies. This does not fully exist in reality though.Different economies handle the economic problem in different ways depending on what type it is and how it operates. In a planned economy, there is social ownership of resources, which are controlled by the state (communism). A central bureau or group of people who fix prices to encourage or discourage consumption

What is meant by identity?

788 words - 3 pages IntroductionPart (a)In this essay we will discuss what is meant by identity and why it is important. How identity is different from personality and how much engagement is needed on our part when our identities are formed.Who we are is not given in advance but it emerges in a number of different forms. These forms of identity are never fixed but several are in play (Woodward, 2004, p16). Many aspects of identity derive from childhood experiences

What is Meant by Religion?

2007 words - 8 pages answer to these supposedly unavoidable questions, and carry on. This is the most difficult chasm that separates the religious from the non-religious, and it is often apparent that no amount of discussion can convince the two different kinds of people to even believe that the other is telling the truth. What is possible, however, if for everyone to know how it feels to be told by another person that their position is disingenuous. So while I

Explain what is meant by the biosphere and ecological diversity and give examples of some major biomes

2057 words - 8 pages shown in Figure 1, as this helps in finding out the type of biological communities that are most likely to develop in that particular area. Biomes are classified in various ways, however the different types are best discussed under seven categories. Although biomes include associated animal life, they go by the name of the dominant vegetation and the physical conditions, since it is these two that influence the characteristic diversity of animal

Explain what is meant by verification and falsification, in the context of religious language? Evaluate their criticisms of religious language

1844 words - 7 pages people understand what God is, or say anything about God that is definitely true.St. Thomas Aquinas thought that it was indeed possible to talk about God in a meaningful way: by using analogy. Aquinas rejected univocal and equivocal language when talking about God. He suggested Univocal language were words are used to mean the same things in all the situations where they are used e.g. black board, black hat and equivocal language were words are used

Explain fully why it is essential for organisations to continually train and develop their employees. How can the benefits you describe be measured?

2563 words - 10 pages not only concerned with the more cerebral aspects of a company: it has as much to do with a company's ability to deploy its resources profitably into new markets, say, as its ability to translate new ideas into products or services. (R.booth)For the individual, in order to secure a higher rate of wage and secure employment it is likely to invest in training and development by himself or herself. Educational qualifications are the means for the

What is meant by "industrialisation by invitation" and did it lead to economic development in the region?

698 words - 3 pages fluctuation.http://sta.uwi.edu/nlc/2008/documents/Girvan_Lecture_full.pdfWhat is meant by "industrialisation by invitation" and did it lead to economic development in the region?Industrialisation is the process of social and economic change whereby a social group is transferred from a manual labor based structure to a more technologically driven society and where the economy gains much more capital via manufacturing industries. Caribbean economies have

What Exactly is Meant by World Hunger?

1546 words - 7 pages What exactly is meant by world hunger? Famine is associated with death, starvation, or excess mortality. There are different types of hunger that are measured in several ways. People who do not consume enough calories to sustain minimum physiological needs for an active life are considered undernourished. Undernourishment can lead to disease or irreversible damage. Then there are people who are malnourished, meaning that considers what is

What is meant by 'international security'?

2502 words - 10 pages When one is trying to establish what is meant by a term such as 'international security' it is important to consider that such a term will be viewed in numerous ways and to differing levels by many within domestic and national levels and in particular at international or multilateral level. What is important to understand is that by the very flexibility with which 'international security' can be interpreted the methods to which it can be applied

What is meant by the learning organisation?

894 words - 4 pages Learning Objective. These are systems thinking, personal mastery, mental models, shared vision, and team learning.Systems thinking is to provide a view of issues by mapping interconnected parts of common processes in the organisation and allow people a deeper understanding of the possible causes of problems, helping them to see how to change systems more effectively.Personal mastery is about assisting people to achieve their potential through the

Similar Essays

Explain What Is Meant By The T

1254 words - 5 pages Explain what is meant by the term ?an economic model? and outline a model of price and output determination in a free market. Examine the effect of a change in real disposable income on equilibrium price and output.An economic model or theory is a simplified explanation and analysis of economic behaviour. It allows us to predict, and therefore intervene, if we do not like the outcome of a possible chain of events.Theories and models are mainly

Explain What Is Meant By The Term 'social Construction' And Consider How It Has Been Used To Further Our Understanding Of The Concept Of Identity

1162 words - 5 pages According to social construction it is through social interactions that people "act and react in relation to others, through these social interactions we learn what is acceptable and what is not. Over time these rules become internalized within us, and eventually become an unconscious part of our lives and our identity. It is the aim of this essay to explain what is meant by the term 'social construction' and how social construction has

Tqm. "Finding The Balance Between Cost And Quality" Discuss This Statement And Explain What Is Meant By It

2001 words - 8 pages Before we look closer into the subject, first we must look at exactly what is meant by quality and cost.Quality is the totality of the attributes of a good or service that meet the requirements of the buyer or customers. The materials which make up the product, the design and the engineering of the product, product performance, reliability and durability are all important characteristics of the "quality package", which ultimately influence

Describe What Is Included In Each Of The Components Of Gdp. (You May Exclude Government Spending.) Explain How Each Component Of Gdp Is Influenced (And Why) By Other Variables In The Economy

511 words - 2 pages spending is determined by expectations of future revenues, costs, and economic conditions. If people begin spending more, businesses will have incentives to increase production capabilities. To do this requires investing. Thus, as output (GDP) increases, investments increase. At high interest rates, businesses will be less likely to invest; borrowing becomes more expensive and the opportunity cost of taking money out of the bank is greater because