GDP: The Economics Wealth

“Gross Domestic Product (GDP) is the vital sign of an economy.” According to the videos made by Jacob Clifford, a youtuber,
GDP is the measure of economic growth. It is one of the primary indicators used to gauge the health of a country’s economy.

The GDP pertains to the peso value of all final goods and services produced within a country in one year. I have learned that
final goods and services which will not incur modifications will be considered as part of the GDP while those goods produced and used
as the as a component of another good is not a final good but an intermediate good. I also acquire the knowledge of three ways of
measuring GDP: the expenditures approach, the income approach, and the value added approach. The expenditure approach involves
spending of the consumer, business, government and the net exports (exports - imports). In simplest form, GDP under expenditure
approach is GDP= C+ I + G + (X-M). Meanwhile in income approach, GDP is measured through the national income which is equal to
the sum of wages, rent, interest and profit. Third, the value-added approach is the adding of cost for the components used in order to
produce a certain good. These approaches indicate the same amount of a GDP. However, I also became inform about things that do
not count in GDP such as intermediate goods, used goods for the past years, financial transactions and transfer payments. We can
know the welfare of a certain country through is national income. To know the standard living, calculating GDP has also limitations such
as population, income, environment, and shadow economy (informal sector). Other things that made out of government knowing,
volunteer works, illegal trading, making your own goods will not count as GDP.

On the other hand, GDP can be classified as real and nominal. Based on the video from the Principle of Economics of
Professors Tyler Cowen and Alx Tabarrok from MR University, nominal GDP is differentiated from real GDP. GDP can increase in two
ways: prices and production of more and better goods and services. First, nominal GDP pertains to the increase of prices or the
inflation of value of products and services though economy is not actually increasing production but the price itself which drives a
higher GDP. Meanwhile, real GDP measures second type of economic growth through usage of same set prices OVER time. It tells us
the if prices of goods and services had not changed, what is the real increase or decrease of GDP?

In conclusion, every well drawn economic future plan by the government should include a significant figure "Gross Domestic
Product" because it locates important aspects in economics. Besides of the information about the size of the economy and how an
economy is performing, the growth rate of real GDP is often used as an indicator of the general health of the economy. It is the higher
the GDP; the lower unemployment levels, the higher the standard of living, and the higher the investments In broad terms, an increase
in real GDP is interpreted as a sign that the economy is doing well.

Videos Watched: Gross Domestic Product and Limitations of GDP (Jacob Clifford)

Nominal GDP vs. Real GDP (MRUniversity)