ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The most common way to measure the economy is real gross domestic product, or real GDP. GDP is the total value of everything-goods and services-produced in our economy.

Detailed explanation-2: -Measuring GDP. 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). It counts all of the output generated within the borders of a country.

Detailed explanation-3: -These methods are: The Output Method (all value added by each producer), The Income Method (all income generated) and. The Expenditure Method (all spending).

Detailed explanation-4: -GDP enables policymakers and central banks to judge whether the economy is contracting or expanding and promptly take necessary action. It also allows policymakers, economists, and businesses to analyze the impact of variables such as monetary and fiscal policy, economic shocks, and tax and spending plans.

Detailed explanation-5: -The most appropriate measure of a country’s economic growth is its per capita real income. Per capita income is average income, a measure of the wealth of the population of a nation. It is used to measure a country’s standard of living thus a better indicator of economic growth.