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Unformatted text preview: GDP=Q1*P1+Q2*P2+Q3*P3…. 2. Value-added approach- find the value added at each step of the production process & add all those values up. Examples on page!-Does GDP measure what it claims to measure? Not quite- 2 Key omissions 1. Illegal activities 2. Non-market activities- homemaking, cutting grass, etc.-Does GDP measure well-being? Kind of…-Nominal GDP changes due to inflation/deflation • Nominal GDP can be corrected for inflation to get a measure of real GDP-Doesn’t count illegal/non-market activities.-Big changes in stocks of resources don’t show up immediately.-Doesn’t account for the distribution of resources....
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- Fall '10
- Gdp, gross domestic product, Value added, GDP measure well-being