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Economic Growth and Gdp

In: Business and Management

Submitted By raylea
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Economic Growth & GDP

“Gross domestic product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of neither public debate not the integrity of our public officials. It measures neither our courage nor our wisdom, not the devotion to our country. It measures everything, in short, except that which makes life worthwhile and it can tell us everything except why we are proud to be Americans.” Quote by Robert F. Kennedy
GDP is not a measurement of overall prosperity of a nation and it fails to measure some aspects of a national economy. As you can gain from the quote by Robert F. Kennedy, we do not use this to measure those things which “make life worthwhile” but rather use it to judge one country from another. It helps to evaluate how societies function in different economic environments and how to use this measurement to improve conditions in a society or to keep things flowing for a healthy economy. Gross Domestic Product (GDP) is defined as the total market value of final goods and services produced by factors of production. GDP also measures markets of what is being produced or whether problems are occurring. There is a relationship presented with a circular flow model that gives us a picture of the flow of production being produced in an economy. The circular flow model demonstrations product (final goods and services) and factor markets (land, labor, capital and entrepreneurship). These markets equal each half of the circular flow model representing output and input between businesses and households. The total dollar value and total output equal total income with the left over income being the residual (profit). There are two methods which are used to measure...

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