Question

Describe three different uses of GDP, or give three different reasons to explain why it might be useful to calculate GDP.

Answer 1

Solution:-Three different uses of GDP

1.Measure Standard of Living
higher level of GDP = higher standards of living
higher level of GDP = larger income

2.Measure economic growth
Changes in value of real GDP over time
real GDP = GDP adjusted changes in prices
caused by inflation over time
economic growth = percent change in the real value of production

3.Measure Business cycle
weather an economy is expanding or contracting in the short run
Business cycle = short run fluctuation of economic activity
contracting = economy growing slower than usual
expanding = economy growing faster than usual