Which is defined as the total of all value made in an economy. which is measured by calculating the a quantity of goods and or services by their corresponding prices. There are also two approached to calculating this such as the Income approach and the expenditure approach. In the income approach the quantity calculated comes from income derived from production with examples being wages, rental income, interest income and profit. Expenditure income comes from the sum of money spent buying the final goods.Usually a high GDP also corresponds with a good or strong eceonomy. When looking at this economist also look at inflation and unemployment because believe it or not these three things are connected. Inflation is the increase in prices of goods or services. They look at the GDP and if it is increasing this usually means that unemployment rates lower and an increase in inflation occurs, but if the GDP decreases this corresponds to unemployment rates increasing ( which means more people are left without jobs) and inflation is decreasing. The first example of the GDP increasing is a good example of a stronger or a more stable economy and as more people have jobs and there is more income coming in around the board with the second example showing a weaker unstable economy with less jobs and less income.
#2) To: Jacob Shapley
Economists focus on the GDP, inflation, and unemployment when assessing the health of the entire economy. They focus on the real GDP to identify the rate that the economy is growing without the effects of inflation, which can be distorting. The unemployment rate measures the percentage of all workers who are not able to find paid employment. These workers are willing and able to work. High unemployment rates usually indicate that a nation is not using a substantial portion of its most important resources. Inflation is an increase in the level of prices. In an economy experiencing inflation, a family will spend more money per year on goods and services than it did the previous year. This can be troublesome if incomes do not also increase. Families will not be able to buy as much as in previous years. This means that companies are selling as much either.
GDP, real gross domestic product, is the measure of the final goods and services produced in a countrys borders during a certain time period. The time period is usually a year. Real GDP is calculated by dividing nominal GDP over a GDP deflator. The GPD only includes final goods. It excludes intermediate goods, nonproduction transactions, and secondhand sales. The GDP accounts for price changes and can be compared from year to year.
