One advantage of using the Gross Domestic Product (GDP) as a measure of productivity and economic health is that it standardizes all products and services by using market value as the single measure of the product or service's worth. Another advantage is the GDP is able to measure both the nation's income and the nation's expenditures at once. This is possible because within a nation, the income and expenditures are the same. For every buyer, there is a seller. Additionally, the GDP, through a series of formulas and rules, is able to provide a comprehensive measure of all goods and services within the country to help economists measure and predict the nation's wealth with accuracy.
The disadvantage to using the GDP as a measure of productivity and economic health is that it is difficult to measure the cost of living, which greatly affects quality of life for a country's citizens. Changes in interest rates and inflation also make it difficult for economists to measure the overall level of prices in the economy. There are a number of variables that affect the nation's wealth. Though the GDP is a very helpful measure, it is not without inaccuracies and generalizations.
One advantage of using the Gross Domestic Product (GDP) as a measure of productivity and economic