Econometrician Simon Kuznets stated in his first report to the US Congress in 1934: “…the welfare of a nation [can] scarcely be inferred from a measure of national income…”
————————————————————————
I am under that assumption that I must create this blog for the general public, so I will need to “dumb things down”. Also, I will strictly provide facts regarding the measurement (GDP), so that we can have an unbiased discussion of a terribly liberal concept.
What is GDP?
GDP- the total market value of all FINAL goods, services and assets produced in a country in a given year.
What makes up GDP?
GDP=C+I+G+NX or GDP=C+I+G+(X-M)
- C = Consumer spending
- I = Investment; more specifically, business investments
- G = Government spending; Do not that this is Fiscal Policy and funds are raised through ta
- NX (X-M) = Net exports. Meaning the sum of the nations exports (X) minus their imports (M).
*Important Notes:
- GDP is often referred to as Y, which refers to Output or Income.
- GDP NOES NOT EQUAL GNP
- Y=C+S (consumption plus savings)
There are three forms of GDP:
- Current GDP
- Nominal GDP Growth
- and Real GDP Growth
To keep things simple, I will not embellish on GDP/GDI; this is the concept of GDP income account.
I look forward to continuing this conversation with WRIP(SA)…I hope you are just as thrilled as I am.
Til next time,
Your Monetary Policy Analyst
