Summary
Summary Measurement and Limitations of GDP
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Refined notes regarding the various methods of calculating GDP and its limitations as a measure of economic growth and living standards.
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GDPThe value of all and services produced in
goods an
economy within a
year
Method :
Output method added value of all goods and services produced
within a year
Income method added value of all factor incomes earnt within
a year
Expenditure method added value of all expenditure on goods and
services within .. a year
outcome =
Income =
Expenditure
> measure of growth
Risk of double counting
e.
g .
counting the value of a
primary good and then also
counting
the value of the secondary good it is made into .
this is why the FINAL value must be used
Doesn't count informal
activity
e.
g -
gardening , babysitting s acts that you may perform yourse
but still hold '
value
Errors in data collection
the chance for error is very Large given the amount of data that
needs to be collected and reviewed
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