Instant GDP for Non-Economists

By Lars Gustafsson

If you are a student, a teacher, a journalist, a politician or perhaps just interested in quickly understanding the Gross Domestic Product (GDP), this book is for you.

Through easy-to-understand examples you'll gain a good working knowledge of GDP and economic growth in a very short time.

• Language: English
• Publisher: Lars Gustafsson
• Release date: Jul 1, 2022
• ISBN: 9798201540036

Lars Gustafsson

Lars Gustafsson has for more than a decade been responsible for GDP growth calculations in the Danish National Accounts Department (Statistics Denmark). He holds a M.Sc. in Economics from the University of Copenhagen.

Book preview

GDP

GDP IS A MEASURE OF creation of income.

Imagine a chap, Robin, living alone on a desolate tropical island. Coconut palm trees grow on the island. The ocean is light blue and the sandy beaches are white. During the year Robin picks 100 coconuts, sails to the mainland, and sells the coconuts for $1 a piece. Let's say he sells all 100 coconuts in a year and returns home with $100 in his pocket. In this simple economy the GDP is $100 corresponding to the market value of the islands total production. That's how simple the core concept of GDP is: The result of all income-generating productive activity.

Already it's easy to see why GDP is a relevant economic key figure: If GDP is high, there is a good foundation for a high level of welfare. A foundation is however not a guarantee. If Robin uses his $100 income to buy healthy food and housing, high quality education and health care, then there's arguably a high level of welfare on the island. However, if he uses his $100 income to gamble in Vegas the welfare is probably not going to be very high, at