GDP - Gross Domestic Product Essay Example | Topics and Well Written Essays - 1500 words

gross domestic product - Gross Domestic Product - Essay ExampleNominal gross domestic product is the GDP according to current category prices turn real GDP accounts for the effect of inflation on prices and is thusly also known as inflation adjusted GDP. By the use of a base year and elimination of effects due to price changes, real GDP allows useful comparabilitys to be made regarding the fruit of goods and services in an economy. For instance if the economy were growing at the rate of 4% per year while the rate of inflation was 1% then only 3% of the growth would be due to an add in the economic output while 1% would be only due to price changes. GDP per capita describes the sightly issue forth of goods and services consumed per person in a country. The significance of GDP as an tool for channeling of aid and investments into countries is highlighted by Canoy and Lerais in the research titled Beyond GDP that was composed for the European kick in which they say GDP is the be st-recognized measure of economic performance in the world, often used as a generic indicator of well-being. GDP is used in a large variety of semipolitical and financial arenas. It serves as a criterion to decide who has access to funds at international organizations much(prenominal) as the EU, UN, IMF and World Bank, GDP plays an important part in the Stability and Growth Pact, and it is a chairman indicator for forecasts of financial markets and banks, to mention just a few examples. It is also used for international comparison and rankings and plays a crucial role in political debates. (Canoy and Lerais, 2007) The GDP of any given country fails to adequately explain its overall economic well being since its calculation either excludes or overstates a number of crucial aspects that describe the standard of living of a population. The notion of well being has been described as a multidimensional concept with both an singular interpretation in the Aristotelian spirit and a coll ective one to capture the progress of a nation (Canoy and Lerais, 2007). Although GDP per capita i.e. goods and services consumed by the average person measures the spending by an individual yet it does not accurately depict an individuals well being. worldly-minded expenditure is not all that characterizes individual well being. Rather it is a much more citywide idea including psychological well being as well as happiness derived from non material sources. An individuals health, diet, achievements, mobility and participation in society are all essential sources of contentment that are not included in calculation of GDP.