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Strengths and weaknesses of G.D.P Essay

Strengths and weaknesses of G.D.P Essay.

Strengths and weaknesses of G.D.P Essay

 Discussion: Strengths and weaknesses of G.D.P

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Discussion: Strengths and weaknesses of G.D.P

The gross domestic product refers to the cumulative market value of all goods and services produced within a country in a given period. There are some significant strengths and weakness regarding its use as a measure of a countries economic performance and activities. On strengths, it is simple and easy to understand. This because it provides a generalized approach of the economic elements that add up to the final resource to draw a conclusive performance index. Secondly, it is an indicator of the country’s well-being whereby the GDP shows the balances between the production of goods and services and the market demand for goods and services, crediting or discrediting the country’s economic balances through the provision of information on purchasing power, income generation and employment (Grover, 2019).

 The weaknesses however ,are extensive. The GDP does not include voluntary labour where unpaid services are unaccounted for. This element has a lowering effect on GDP. Disasters and accidents are not included in the measure. The occurrences of such have a boost effect on economic activities and the GDP. It does not account for the quality of goods in the market but rather on market value. This is contributed by wastefulness and inefficiency which costs the consumer and has a boost effect on the GDP (Cliff note,2020). Finally, It is prone to inaccuracy whereby It does not account for all contributors of the GDP hence the probability of a country’s economy being dependent on unrecorded sources (Grover, 2019).

                                                            References     

Grover, S. (2019). What Are the Advantages & Disadvantages of the GDP in Macroeconomics?B influence. https://bizfluent.com/info-8467424-advantages-disadvantages-gdp-macroeconomics.html.

Cliff note. (2020). what are the advantages and disadvantages of Gross Domestic Product? https://www.cliffsnotes.com/cliffsnotes/subjects/economics/what-are-the-advantages-and-disadvantages-of-gross-domestic-product.

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