At a monthly staff planning meeting, the outlook for the national economy was a

Question

At a monthly staff planning meeting, the outlook for the national economy was a topic of discussion. During the discussion, one participant noted that gross domestic product (GDP) was expected to increase only slightly for the coming year. Another commented that a slight increase in the expected GDP did not necessarily mean an increase in business activity or output. Still another participant asked about the role of GDP per capita as it relates to planning. The partner-in-charge of the meeting asked that, prior to the next planning meeting, you prepare and distribute a brief memorandum defining and describing (1) GDP, (2) real GDP, and (3) GDP per capita, and how each may be used for analytical purposes. Type your communication below the line in the response area below.

Explanation / Answer

1) GDP stands for Gross Domestic Product. It is the value of all goods and services that are being produced in an econom during a particular period of time. the value does not include depreciation deduction hence it is gross and also does nov include earnings or outpu produced ouside the nation thus it is domesvic in nature.

Expected GDP helps us o determine what will be available o he people of economy in a particular year to whuch it can be find out how would be demand and how would be income also.

2) GDP value of all products being produced in a paricular year in which we measure the value with current year price bu in Real GDP we measure value by considering a base year's price and current year's quantities.

Real GDP helps us to know he increase in general price level of a year compared o base year which tells how much purchasing power has decreased of people of the economy.

3) When value of all products being produced in a paricular year is being distributed among each individual of he economy b dividing GDP with its population, it becomes per capita GDP.

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