Lesson 2ª

 

 

 

 

 

 

    

 

 GROSS DOMESTIC PRODUCT

Gross   Domestic   Product   represents   the  amount  of  goods    and  services  a
county   produces   during   a   whole   year, it includes results from national and
foreign residents.
Goods and services: vehicles, clothes, food, housing, electrical appliances,dentist appointments,  lawyers bill,  house alarms,   cleaner, tickets to the cinema, hair cut, etc.

Please note:They  do not  include  the  intermission  goods  as  they  are incorpo- rated  later.  If  they  count  the intermission  goods  the  effect will be a double 
count.
For example, if some bike pedals are made and later they are going to be used on a bike, the GDP will include the value of the pedals, therefore, the pedals don't need to be counted independently (I hope I'm explaining myself).
Produced during a year: the GDP includes, for example, the sale of an electrical appliance made during the exercise, but it does not include the sale in this year of a second-hand electrical appliance, which may be a few years old (as this was counted when it was made).

Nationals or foreign residents: for example, the GDP includes the products obtained by an English company that operates in Spain, but not those products produced by a Spanish company that operates in England.
It    needs   to   be   stressed that  the  GDP measures  the wealth generated by a
country  during  a   year,   but  it  does  not   meausre a  country's   total   wealth
(its natural resources, its costs, its hospitals, its universities, factories, etc).
GDP acts as a marker which starts off at zero at the beginning of each exercise, it then counts the wealth generated during a year and it runs until the 31st December.
 
The way they measure the GDP wealth is not complete:
They don't measure what has been produced by the submerged economies.
GDP is an indicator that is used to compare different country's level of wellbeing.
In principle, those countries that have a higher GDP are those that have a higher level of wellbeing.
Nevertheless, in  order to measure  a country's  wellbeing  you need to relate the
GDP with its population.
For example, it's not the same if  a country with a population of 1000  inhabitants generates a GDP of 1000 million Euros compared to a GDP of another country with half the population.
If we distribute the GDP between the population it will mean from half to 1 thousand euros per inhabitant (this is not bad).
Therefore,   to compare  two country's  wellbeing you need to use the ratio "GDP
per capita" (GDP/number of inhabitants).

 

  
     
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