Gdp a Good Measure of Growth
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By Growth we generally mean gradual increase of an animal or a vegetable body, the development from a seed, germ, or root, to full size or maturity, increase in size, number, frequency, strength, etc. It also refers to augmentation; advancement; production; prevalence or influence, such as, the growth of trade; the growth of power; the growth of intemperance. Growth is a part of development. Growth is one dimensional while development is multidimensional. Simply in a laymans opinion growth is a change over a period of time which is always positive so, growth generally refers to a positive change over a time period. Growth can be measured by many methods as suggested by several economists, out of those many methods we have to find out some useful methods, how these methods are used, their efficiency, drawbacks, improvement over them, and finally the best and most preferred or used out of them.
GDP stands for Gross Domestic Product is defined as the sum of all goods and services produced in a country over time, without double counting products used in production of other outputs. Or it is a measure of a countries income or production. We can simply understand this as a sum of incomes all people living in a particular country earn.
In the words of DERNBURG,” Gross domestic product is defined as the market value of the output of final goods and services produced in the domestic territory of a country during an accounting year.”
This is one of the most simplest and intuitive measures to track the economy. In this single number, you get an idea of whether an economy is expanding or contracting. Thus, most government prioritize maximising this measure. The annual growth in GDP is the most used metric to figure out if an economy is going up or going down.
According to PAUL SAMUELSON, noble laureate and author of many reference books, once described GDP as,” Truly among the great inventions of 20th century, beacon that helps policymakers steer the economy toward key economic objectives.”
In order to calculate the value of gross domestic product, the quantum of goods and services produced is multiplied by their prices.
GDP = P x Q
Here GDP = gross domestic product; P = market price; Q = final goods and services produced in a given year.
FEATURES OF GDP
According to Peterson, the term gross has been pre fixed with the domestic product to indicate that the latter is inclusive of depreciation, means; consumption of fixed capital in the process of production has not been deducted.
It includes the value of final goods and services produced by normal residents as well as non-residents within the domestic territory of a country in an accounting year. Domestic territory refers to the political boundary of a country including territorial water of a country, its aeroplanes, ships operated by its residents and its embassies. A normal resident is said to be a person who ordinarily resides in a country and whose centre of interest lies in that country. He may or may not be the citizen of that country.
Price of goods and services refers to their prevailing or current market prices.
To avoid double counting, only final goods and services are taken into account.
Gross domestic products include those goods which come to the market for sale or add to the stocks of the producers. However, there is an exception. Goods for self- consumption are also included in GDP. GDP is the sum total of gross value added by all the producing units within the domestic territory of the country.
Imputed value of such goods and services as do not come to the market for sale is included in the Gross domestic product. These goods and services comprises : (a) value of such services as free residential accommodation, food, clothing