Country gross domestic product – an economic concept, one of the most important elements of the System of national accounts which represent the total cost of all goods and services made in the country for the annual period.
Instruction
1. Distinguish nominal, real, actual and potential GDP. Nominal GDP is expressed in the prices of the current year, real is calculated adjusted for inflation at the prices of previous year.
2. The actual GDP is calculated at part-time employment of the population, and potential – at full. Their distinction is that the first reflects real opportunities of economy, and the second – potential, i.e. overestimated.
3. There are three methods of calculation of GDP: distributive, production and method of end use. GDP by a distributive method represents the sum of factorial income (wage and the rent, receiving percent, the profit of the organizations). This method is to calculations for income of all subjects living in the territory of the country, being both residents, and nonresidents.
4. The production method is used for calculation of GDP for added value. Thus, GDP is general monetary assessment of all goods and services made in the country in a year. Only the added value, i.e. a difference between the income of the company and intermediate costs spent for production of goods or service is considered. At the same time all goods have to be considered only once, i.e. it is necessary to avoid double accounting of the products which are a part of final goods. For example, flour is intermediate goods for production of bread, therefore, only bread cost is considered.
5. The method of end use is calculation for expenses. In this case GDP is equal to the sum of consumer expenses of the population, investments into production (purchase of the equipment, purchase or tenancy and so forth), the public expenditures on goods and services, net export (a difference between export and import of the country).