Economics 101 For The Political Junkie: Part 4a

NNI. GDP steps all the goods and services produced within the borders of the country plus new home structure. It’s the value of the end products bought by households and businesses. It generally does not include a “work-in-progress” (WIP) which is completed items waiting to be assembled into a final product or items still on the assembly line. GDP is one of the gross steps used to determine how well a nation’s overall economy is working. One rule of thumb used by many is that two consecutive quarters of negative development in GDP might constitute a tough economy.

While the details of GDP are quite complex, the fundamental idea is not. For example, if you possess consumer spending, business investment, and imports/exports constant, but reduce government spending, what goes on to GDP? It theoretically down goes, does it not. Conversely, an increase Federal government spending and GDP should go up. The same, of course, would be true if you vary each of the other variables individually similarly. I led with government spending since it has characteristic the others don’t, deficit and taxes spending, to become more specific.

Notice that neither is straight included here when we discuss increasing or reducing G. But, of course, there is certainly some indirect connection that MAY play in what happens to the other factors. Specifically, if taxes are raised to be able to increase Federal government spending, that MIGHT control some consumer spending or business investment or, it might not.

TO SUPPLY FULL DISCLOSURE I must confess there are more acronyms out there than GDP than attempt to measure the financial health of a nation. If you were taking notes, you can deposit your pencils for the moment as I only want to concentrate on GDP in this Hub. To mention a few.

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  • High productivity growth in the country
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  • 7%(1 – .4)(.5) + 15%(.5) = 9.6%

Fortunately, many of them are identities. NII, AD, and GDP all have the same method (1), while GDI and AS have different styles, but end up with generally similar results. NNP and NDP are GDP and GNP less depreciation of capital assets, respectively. GPI, Genuine Progress Indicator, deserves special talk about. The largest criticism out of all the metrics just listed is that only measure one aspect of the economy, the production part, if the product is a good or something.

There is a lot more to economic health, it is argued, just that then. It’s best to put in a speech by one of Senator Robert F. Kennedy’s last speeches when he summed in the limitations of GDP. It counts special locks for our doors and jails for individuals who break them.

GDP develops with the creation of napalm and nuclear warheads. Consequently. The GPI has been developed to quantify 26 methods which incorporate specific things like the expense of pollution, the value of education, the worthiness of volunteer and household labor, and the like to produce an alternative solution to the GDP.

Nevertheless, I have to continue to concentrate on the GDP because that is what is commonly used in politics debates today and is what the general public can be used to seeing despite having all its defects. What’s needed, of course, if for the public to be fully aware of is exactly what those imperfections are. Taxes and Government Spending Are Central to the Political Debate!

WHEN YOU THINK ABOUT IT, THE GROSS DOMESTIC PRODUCT is the stand-in for most of the non-social yelling and screaming that continues on between the politics Left and Right. GDP is affected much by online exports too, to mention a few. Also to make intelligent choices about which applicants to vote for, you will need to “understand the place” as “Professor” Harold Hill said in 1962 musical The Music Man.

Otherwise, you will get schnookered. Therefore, it’s the job of individuals like me to try to make an esoteric subject like economics understandable so that when a politician makes a state, you can measure it by yourself personal BS meter predicated on actual knowledge. So, as you can plainly see, coming to grips with the concept of GDP is fundamental to about everything else economic in the political debate. OK, to restate it, what GDP is supposed to measure in regards to a nation is the aggregate “Demand” for goods AND services within the borders of the country, in our case, America, and its own territories.