How do I know how well and efficiently perform its tasks the country's economy?Is it possible to calculate its activities for a certain period of time?Of course, possible.For this purpose, the macroeconomic setting is gross domestic product (GDP decline).
GDP - is the sum of the market values of goods and services intended for end use, and made for a certain period of time in the territory of the country.There is a nominal and real GDP.Let us consider these important definitions.
Nominal GDP - an indicator that measures the total cost of production at prices considered in the calculation period.It changes every year.Two reasons for this.First, change the market value of goods and services.Second, the total physical volume of output is also rising, or, conversely, decreases.For example, in this period the prices for all categories of goods and services doubled.Consequently, nominal GDP also doubled, but that does not mean that the economy in this period of time to function better and more efficiently.In order to separate the changes in GDP that occurred due to increase and decrease of prices to changes in GDP, are in direct proportion to the volume of output, real GDP is introduced.To find this value, it is necessary to do some calculations.
Real GDP - a measure, weighed the physical volume of goods and services produced in different time periods by assessing all products made in both periods at constant prices.That is considered the GDP calculation allows you to ignore inflation.
Real GDP helps to understand how improved or worsened the economic situation during the year.For example, it is necessary to compare the volume of GDP for 2011 and 2012.To do this, the volume of all goods and services produced per year multiplied by their prices in 2011.This approach allows you to see the actual growth of output.
calculation of real GDP is possible to obtain by other means.To do this, divide the nominal GDP value of the GDP deflator and the GDP price index.It would require additional calculations.The GDP deflator - is an analogue of the CPI (consumer price index).It lets you know the changes in the cost of production, part of the GDP.Deflator calculation requires a certain range of election services and goods.The kit includes, in addition to the cost of the consumer basket, benefits purchased by the Government, the products traded on the world market, investment goods.The GDP deflator, unlike the CPI, based on the current structure of production.It is worth noting that the deflators of different years can not be compared, since they reflect different sets of benefits.
That is, in a different way, you can say that the real GDP - is GDP, "purified" from the effects of changes in the price level.Here is an example.The rate of inflation was 15%, while nominal GDP grew by 20%.Hence, real GDP grew by 5%.It is worth noting that the use of this example, the formula can only be used at low rates of change, that is, with a little inflation.
Let us consider the main points that need to be borne in mind when calculating the GDP.Should be considered products for end use.That is, do not figure in the calculation of intermediate goods.For example, when included in the calculation of the GDP value of the car is not necessary to separately consider the price of its wheels.
When calculating GDP accounted for goods and services produced during the reporting time period.GDP is at market prices.The GDP includes only goods and services that are produced in that country.
