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label Economics
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  1. Is the GDP measure underestimating or overestimating national production and total income in the economy? Why?
  2. What are the limitations of the GDP in measuring total output and national welfare? What products (services) are excluded from the GDP computation?
Aug 19th, 2015

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GDP measures the market value of all final goods and services produced within a country in a given period of time.  GDP measures continuous flow of money from households to firms and then back to households in the whole economy.

The trend of the GDP growth rates is the key indicator of macroeconomic fluctuations , which include expansion, boom, contraction, and recession. Thus the real GDP is used to explain how well the overall economy of a country is performing whereas GDP per capita is used as a natural measure of the economic well-being of the average individual in a given country.

Limitation can be flactuation of price goods

Please let me know if you need any clarification. I'm always happy to answer your questions.
Aug 19th, 2015

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