Gross Domestic Product is not an uncommon term for us. Especially because we have already tackled that term during our high school economics subject, as well as in our tertiary level or college. But whenever we are asked what the real meaning of GDP is, we are still having some hard times in thinking what really it is. For all we know, it is just the measurements of all the monetary value of goods and services within the country. Aside from that, none anymore.
Thanks to the article by Tim Callen, Back to basics: What is Gross Domestic Product? I was able to understand more on what GDP is. I’ve learned the importance of GDP is that it enables each and every one of us to determine the size of the economy and if it is performing well or not. In measuring the country’s GDP, one can use the production approach, or summing up the value added or the total sales less the production cost of a production, the expenditure approach or adding up the value of the final users’ purchases, and the income approach or adding up the incomes that the production has generated. In that way, GDP of a certain country is going to be accurately measured.
As a person, we should all be aware of what is happening in our country and its economy and by being aware, it also includes whether that issue is positive or not. By knowing our country’s GDP, we can compare it to the past results so that we are most likely updated and aware if the country as well as the government running it is doing a good job or not.
Though it may sound helpful, I believe that GDP is not the over-all determinant of a country’s success. If for instance the GDP is doing badly, it doesn’t mean that the country is poor or under-developed. It can have tons of reasons. But what is important is that people are able to help each other in good and bad times. That is for me, a better determinant of a good and well-run country.