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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

“I just heard on the news that GDP is higher this year than it was last year. This means that we’re better off this year than last year.” Comment.

To determine

Explain why the GDP is higher this year than last year.

Explanation

In this case, the statement does not refer to the real GDP because it refers to the nominal GDP. In general, increase in nominal GDP was due to higher price. If the real GDP increases, then the countries’ well-being will decrease, bad associated with the increased production of goods and services. Therefore, if the population grows faster than GDP, then the country’s per capita GDP will decrease in an economy.

Concept

GDP (Gross Domestic Product): GDP refers to the market value of all final goods and services produced in an economy during an accounting year.

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