Eli5 If a nation’s GDP is essentially simply how much businesses are charging for products and services, then why is it such a closely followed metric?

Question

Is it simply a matter of, “This is how much money consumers can spend”? Because if so, that seems arbitrary to me, given the fact that it’s the business giving the money to the consumers to begin with.

In: 5

Answer 1

GDP is a measure of how much money changes hands, which (to your point) does not seem particularly meaningful on its own. I’ve always enjoyed this joke: https://www.reddit.com/r/Jokes/comments/qp49wz/two_economists_are_walking_in_a_forest_when_they/