Case Study : Real Gdp

Decent Essays
Case Study 2 Every country around the world uses GDP as a way to monitor the overall “output” of its economy, and an understanding of this measurement is vital to success in economics. The text book defines “real GDP” as, “the total value of all final goods and services produced in the economy during a given year, calculated using the prices of a selected base year” (Textbook). The book later goes on to define “GDP per capita” as the “GDP divided by the size of the population; equivalent to the average GDP per person” (Textbook). So, logically we could draw the conclusion that the “real GDP per capita” is simply the real GDP of a nation’s economy divided by the population of said nation, or in other words, it’s “a measure of an economy’s average aggregate output per person” (Textbook pg. 201). Perhaps one of the most defining factors of a country, when compared to other countries, is the overall “standard of living”. The quality of life within countries can vary greatly, even between neighboring, geographical nations. Many people have come to believe that the standard of living within a country is directly proportional to the country’s “real GDP per capita”, when in fact this is far from true. In reality, a “high GDP per capita makes it easier to achieve a good life but countries aren’t equally successful in taking advantage of that possibility” (Textbook pg. 200). It is clear that a country’s standard of living ultimately depends on its ability to effectively use the
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