![]() If it’s lower – the economy is getting smaller. ![]() If the GDP figure is higher than it was in the previous month – the economy is growing. In the UK, we get a new GDP figure every month All three different methods of calculating GDP should, in theory, give the same number. These are known as the expenditure, income and output measures of GDP, respectively. the value of goods and services produced.the money earned through wages and profits.all the money spent on goods and services, minus the value of imports (money spent on goods and services produced outside the UK), plus exports (money spent on UK goods and services in other countries).Just imagine trying to add together the value of everything made in the UK – that’s no easy feat, which is why there is more than one way of measuring GDP. There’s more than one way of measuring GDP It is otherwise known as the ‘current price’ measure of GDP. Nominal GDP still measures the value of all the goods and services produced in the UK, but at the time they are produced. Real GDP is otherwise known as the ‘constant price’ measure of GDP. Real GDP takes the value of goods and services produced in the UK, but it takes into account changing prices to remove the effect of rising prices over time, otherwise known as inflation. This is because GDP can be expressed in nominal or real terms. ![]() The amount you pay, or the market value of that good or service, is what’s important as these are added together to get GDP. So if some tyres roll off a production line and are sold to a car manufacturer, the value of the tyres isn’t included in GDP, it is reflected in the value of the car. It’s only final goods and services that are sold to you and me that matter for GDP though. Services include the haircut from your hairdresser, or repairs done by your plumber. Goods are things such as your new washing machine, or the milk that you buy. GDP measures the total value of all of the goods made, and services provided, during a specific period of time. What is GDP? GDP is the size of the economy at a point in time The animation below gives a quick introduction to GDP
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