|
|
This is only a preview of the paper
Click here to register and get the full text.
Existing members click here to login
|
|
|
Economists use many different methods to measure how fast the economy is growing. The most common way to measure the economy is real gross domestic product, or real GDP. GDP is the total value of everything goods and services produced in our economy. The word "real" means that the total has been adjusted to remove the effects of inflation. GDP helps us measure the health of the US economy. Data reflects income as well as expenditure flows. Sectoral coverage includes durable and non-durable goods, structures, and services. Also, price data by sector are available for detailed sub-components. Because of the detail available in the GDP reports, this provides us comprehensive information on supply and demand conditions, including information for various types of developing imbalances over the business cycle. GDP excludes most items that are produced and consumed at home and that never enter the marketplace. The shortcomings in using the GDP, as a measure of National economicsˇ¦ well being are that some production is not included. Things like household production and illegal production are not counted. Household production consists mainly of the work done by homemakers, tasks like taking care of children, cleaning, shopping, and cooking. If you were to hire a housekeeper to perform these tasks it would be counted in the GDP. However because no money changed hands these tasks can not be counted. Food grown in your backyard or even home repairs or any other do it yourself goods and services that people make or do for themselves, their families, or their friends are not counted. Illegal goods and services are not counted as well. Drugs, prostitution, and illegal gambling are ignored, even though people spend hundreds of billions on these goods and services each year. One example of this is that California is our leading agricultural state, and the number one crop produced is marijuana. It is estimated that Americans spend more than $100 billion dollars a year on heroin and cocaine alone. The under ground economy is also not counted. In every large city, on country roads, and even in malls, there are people selling everything from watches to watermelon, and corn to collectibles. Chances are, the proceeds of these sales are not reported to the government. Not only are no taxes paid, but also the sales are not reflected in GDP.
Approximate Word count = 1489
Approximate Pages = 6
(250 words per page double spaced)
|
|
|
|
|
|