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GDP: measures overall market value of final goods/services within a country in a given period of time.
GDP= volume of goods/services * price
Pros:
- long hx of use - a lot of historical data to compare
- many countries use it - comparison
- easy to calculate
- consistently measured across all countries (uniform)
Cons:
- does not include domestic household products, or black market.
- does not consider the "real value" of money as it uses price * volume (yet prices change based on inflation, purchasing power of the dollar changes).
- if compared with other years it does not accurately measure the changes in productivity (thus use REAL GDP)
- does not consider how the wealth of a nation is distributed
- does not take into consideration the cost of productivity externalities (green house gas emissions on neighbouring countries)
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∙ 14y ago
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