Does a countries GDP end up ultimately being distributed to individuals by salaries, shares, purchases and other assets?
In: Economics
GDP is the value of goods produced in that country’s economy. That’s it. It’s not a good measure of anything unless it’s combined with other values in order to draw conclusions. Caring about GDP alone and making judgments off that is about as useless as only using mass when calculating force of impact across a surface area.
The GDP is not a pile of money accumulated somewhere by the government, it is a measurement of a countries economy.
It represents all the value produced by the country by either exporting, services or selling of final products.
Kind of, but it depends what you mean by distributed. GDP is a measure of goods and services produced within a given time period. It isn’t “distributed” in the sense that it gets handed out to people. They produce the value themselves. It is “distributed” in the sense that it exists spread out amongst them.
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GDP stands for Gross Domestic Product. It’s suppose to be a measure of all the economic transaction in a country economy. This is a useful measure because it relates to a concept call the velocity of money. Money is either spent or hoarded. Each time money is exchanged for a good or service, some portion of that money is given to the people employed to produce that good or provide that service, or their management, and they then go on to use that money purchase more goods & services, repeating the cycling until someone decides not to spend it, hoarding it in some from. The more times the money exchanges hands before it is hoarded, the higher it’s velocity is. Economists and governments care about this because when the velocity of money goes down, it’s means that people are decided to hoard money more than they are spending it, and this is one of the things that will trigger a recession. Since GDP is a measure of the total amount of transactions within a country, examining how it changes can tell people when a recession is coming.
It’s not the case that the GDP is distributed to individuals, but rather that GDP is suppose to a measure of their actions.
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