GDP

GDP

Last week, in the class, we learned about economics indicators: GDP. GDP stands for Gross Domestic Product, and is the primary indicator to be used to gauge the health of a country’s economy. It shows the employment and unemployment, inflation, and level of economic activity. Every country in the world uses the GDP to measure their health of the country, indication of standard of living, and the value of goods and services produced in given amounts of time, which is usually presented on percent basis. Even if the country is high on GDP, that does not mean that GDP per capita is also high. GDP per capita is also important because it shows the average output per person in a nation. The growth in the GDP per capita tends to mean the increase in productivity. 

GDP can be measured using the formula: GDP= C+I+G+(X-M). C stands for consumption which is the value of goods and services bought by people. Consumption is usually the biggest term for GDP. I stand for investment, value of machinery, plants, and buildings that are bought for production purposes. G stand for government, purchasing of goods and services by government. X stand for exports, goods and services sold to foreigners. Lastly, M stand for imports, goods and services purchased abroad.

How it relates to the world

United States of America had significant impact by a recession. A recession is the slowdown in overall economic activity. Recessions always bring unemployment. Survey by the Fed showed that unemployment nearly doubled from 5% to 9.5% from 2007 to 2010. This forced many individuals to use their savings, credit cards or get a personal loan, which will direct to increase in debt. This incident had greatly affected the consumption which is the part of GDP. During the time, keeping the job was considered lucky as long as they were willing to take a cut in pay. As the cycle of GDP decreased or cut off, the property value also declined eventually lead to average American Family's net worth declined from $126,400 in 2007 to $77,300 in 2010.
http://www.investopedia.com/financial-edge/1212/will-your-net-worth-be-affected-by-a-recession.aspx

Video

https://www.youtube.com/watch?v=h-nTxfNM5qs

Work Cited

"Will Your Net Worth Be Affected By a Recession." investopedia <http://www.investopedia.com/financial-edge/1212/will-your-net-worth-be-affected-by-a-recession.aspx> Sun. 08 Feb. 2015.
"Per Capita GDP." investopedia  <http://www.investopedia.com/terms/p/per-capita-gdp.asp> Sun. 08 Feb. 2015.
"Exports." economicswebsinstitute  <http://www.economicswebinstitute.org/glossary/exports.htm> Sun. 08 Feb. 2015.
"Imports." economicswebsinstitute  <http://www.economicswebinstitute.org/glossary/imports.htm> Sun. 08 Feb. 2015.
"Investment." economicswebsinstitute  <http://www.economicswebinstitute.org/glossary/invest.htm> Sun. 08 Feb. 2015.
"Consumption." economicswebsinstitute  <http://www.economicswebinstitute.org/glossary/cons.htm> Sun. 08 Feb. 2015.
"World GDP Ranking 2014 | Data and Charts." knoema <http://knoema.com/nwnfkne/world-gdp-ranking-2014-data-and-charts> Sun. 08 Feb. 2015.
"Economic Indicators: Gross Domestic Product (GDP)." investopedia <http://www.investopedia.com/university/releases/gdp.asp> Sun. 08 Feb. 2015.
"Why is GDP and why is it so important?." investopedia  <http://www.investopedia.com/ask/answers/199.asp> Sun. 08 Feb. 2015.
"Economics Made Easy - Lesson 6: GDP".Youtube. Youtube, n.d. Web. <https://www.youtube.com/watch?v=h-nTxfNM5qs> Sun. 08 Feb. 2015.