ECO 212 Week 3 DQ 2 - 7527

Solution Posted by
3number
Solution Detail
Price: $2.00
  • From: ,
  • Posted on: Wed 11 Apr, 2012
  • Request id: None
  • Purchased: 0 time(s)
  • Average Rating: No rating
Request Description



What is the difference between real GDP and nominal GDP? Does GDP accurately reflect our nation’s productivity? Why or why not?

GDP, which is Gross Domestic Product, can be Nominal or Real.  GDP measures the productivity of our country over a certain amount of time.   Nominal GDP is the value of final goods and services evaluated at current-year prices. Real GDP is defined as the changes in price level by measuring the changes, which occurred in output/production. Real GDP is the value of final goods and services evaluated at base-year prices. Real GDP holds prices constant which makes it a better measuring tool of the changes in the production of good and services from one year to the next. In the base year, nominal and real GDP are going to be the same because both are being calculated for that year.

GDP is not a clear and concise method of measuring production. GDP does not include household production nor does it measure the underground economy. The underground economy in some developing countries can make up more than half of the measured GDP. It shows there is more to measure when it comes to our economies than just what the government can account for. GDP does not accurately reflect our nation’s productivity because not all productivity is reported to the government. People’s income is not rising while the price of products are either increasing or staying the same. The recession plays a major part of why GDP isn’t as accurate because consumers are looking for cheaper ways to acquire items, whether it’s through the Internet or looking for a bargain. A lot of consumers’ are not spending money right now because they are only spending on necessities instead of luxury items.  It is also hard to measure GDP because most companies are in a deficit.



Solution Description



What is the difference between real GDP and nominal GDP? Does GDP accurately reflect our nation’s productivity? Why or why not?

GDP, which is Gross Domestic Product, can be Nominal or Real.  GDP measures the productivity of our country over a certain amount of time.   Nominal