Understanding Gross Domestic Product (GDP) is fundamental to understanding macroeconomic enablers for sustainable growth. GDP is a universal term, yet people do not entirely understand its significance. Awareness of macroeconomics drives a nuanced meaning of the bigger picture.
How will you understand the effect of different policies if you do not understand the economics behind the economy?
Healthcare: To understand the effect of effective policy initiatives in healthcare, you need to understand the components of GDP for a start. The effectiveness of minimum wage on productivity or economic wellbeing?
When measuring the wellbeing of a nation, as an economist, it’s better to compare health spending as a percent of GDP among similar countries as a significant barometer. The other could be equitable education and society. A comparison between similar economies can share a better perspective on the effectiveness of policies and pathways in bettering the wellness within society. The middle Road emphasizes learning macroeconomics through its specialized offering of online courses on Macroeconomics. GDP measures the total wealth created in a nation measured over time, but still, it might not be the best measure of the wellbeing of a country. New Zealand is one of the few countries that gives weightage to wellness.
World Happiness Report uses statistical tools to measure the happiest countries globally, rated Finland on top among the 149 countries surveyed. Finland is followed by Denmark (7.620), Switzerland (7.571), Iceland (7.554), the Netherlands (7.464), Norway (7.392), and Sweden (7.363). This measure highlights that countries’ happiness depends on GDP per capita (to a certain extent) as all the top-ranked countries are advanced, but it is not the only criterion. Here comes the topic of causality. To truly understand the effect of GDP per capita on happiness, we need to keep other factors that impact happiness index constant, limiting omitted variable bias. By nominal GDP, the United States ranks at the top, followed by China. A progression in macroeconomics is insightful in understanding the importance of technological innovation and productivity over the long term. Both the US and China are leaders in technology, a significant factor in their global dominance. Quality education, sound infrastructure, data management, digital transformation, and a well-rounded workforce are vital drivers of today’s major economies. A proper understanding of macroeconomics is essential to comprehend policy initiatives through a top-down approach.
The lesson on GDP will look into understanding components of GDP, different measures of calculating GDP, the difference between real and nominal GDP, GNP, GDP deflator, inflation, backed with practical examples. The module on GDP is split into three parts, with this educational video introducing the term GDP.
“”GDP is the value of goods and services produced by the nation’s economy less value of goods and services used up in the production”” Bureau of Economic Analysis
Let GDP = Y
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