That means, for example, that a baker who produces a loaf of bread for a customer would contribute to GDP, but would not contribute to GDP if he baked the same loaf for his family (although the ingredients he purchased would be counted). For example, unpaid work (such as that performed in the home or by volunteers) and black-market activities are not included because they are difficult to measure and value accurately. Not all productive activity is included in GDP. So if a German-owned company has a factory in the United States, the output of this factory would be included in U.S. An alternative concept, gross national product, or GNP, counts all the output of the residents of a country. GDP is composed of goods and services produced for sale in the market and also includes some nonmarket production, such as defense or education services provided by the government. It counts all of the output generated within the borders of a country. GDP measures the monetary value of final goods and services-that is, those that are bought by the final user-produced in a country in a given period of time (say a quarter or a year). When GDP is growing, especially if inflation is not a problem, workers and businesses are generally better off than when it is not. It has become widely used as a reference point for the health of national and global economies. It is often cited in newspapers, on the television news, and in reports by governments, central banks, and the business community. One of the most common is GDP, which stands for gross domestic product. To someone unfamiliar with these fields, however, without an explanation these initialisms are a stumbling block to a better understanding of the subject at hand.Įconomics is no different. To doctors, accountants, and baseball players, the letters MRI (magnetic resonance imaging), GAAP (generally accepted accounting principles), and ERA (earned run average), respectively, need no explanation. Many professions commonly use abbreviations. When it is growing, especially if inflation is not a problem, workers and businesses are generally better off than when it is not
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