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Gross Domestic Product.edited

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Saint Leo University
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Running head: GROSS DOMESTIC PRODUCT 1
Gross Domestic Product
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GROSS DOMESTIC PRODUCT
2
Gross Domestic Product
The Gross Domestic Product (GDP) is the measure of a country's total output.
Economically, GDP measures the overall wellbeing of a nation, including the total value of
production within its borders (Amadeo, 2020). The size of a country's economic growth is
measured based on several components, including government spending, business investments,
personal expenditures and the value of exports less imports (Amadeo, 2020). GDP is measured
quarterly, and a negative growth rate implies a recession or depression, which leads to the
economy contracting. Whereas GDP acts as a proxy for measuring the social welfare of a
country, it is subject to several limitations that disqualify it as the most potent indicator of a
country’s growth.
GDP fails to incorporate a standard measure for welfare. While calculating a country's
total production, GDP only accounts for the value of the finished goods, but it excludes a specific
indicator for social welfare. For instance, GDP does not measure the output from voluntary
activities or domestic work which positively impact the standards of living (Zeder, 2018). In
contrast, it measures the value of black-market transactions, sales from illicit drugs or arms and
other illegal activities that form part of the finished goods but have negative social effects
(Zeder, 2018). It is therefore arguable that an increase in the total GDP of a country is not an
overall indicator of a rise in social welfare. To effectively measure social welfare, GDP should
include an index that describes the effect of production methods on social standards.
The economic and social wellbeing of a country or a person bare an independent
relationship. Although policymakers imply that an increase in financial output suggests an
increase in the citizen's happiness, the correlation is unjustified. For instance, being the

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Running head: GROSS DOMESTIC PRODUCT Gross Domestic Product Student’s Name Institution Date 1 GROSS DOMESTIC PRODUCT 2 Gross Domestic Product The Gross Domestic Product (GDP) is the measure of a country's total output. Economically, GDP measures the overall wellbeing of a nation, including the total value of production within its borders (Amadeo, 2020). The size of a country's economic growth is measured based on several components, including government spending, business investments, personal expenditures and the value of exports less imports (Amadeo, 2020). GDP is measured quarterly, and a negative growth rate implies a recession or depression, which leads to the economy contracting. Whereas GDP acts as a proxy for measuring the social welfare of a country, it is subject to several limitations that disqualify it as the most potent indicator of a country’s growth. GDP fails to incorporate a standard measure for welfare. While calculating a country's total production, GDP only accounts for the value of the finished goods, but it excludes a specific indicator for social welfare. For instance, GDP does not measure the output from voluntary activities or domestic work which positively impact the standards of living (Zeder, 2018). In contrast, it measures the value of black-market transactions, sales from illicit drugs or arms and other illegal activities that form part of the finished goods but have negative social effects (Zeder, 2018). It is therefore arguable that an ...
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