# What Causes Gdp To Change?

## Explanation of GDP & GNI?

GDP & GNI seem similar, can someone, in simple words, explain the difference? And what is Real GNI & Real GDP? THANKS!

GDP includes indirect taxes, GNI does not.

For example, sales tax is an indirect tax because it is not levied on income; it is paid as part of the purchase price when consumers buy something. It generates revenue for the government but does not produce income for any individuals. By deducting this amount from GDP, you get GNI.

Comparing the stated, or nominal, GDP or GDI for different time frames can be misleading because the numbers can change for two reasons: the level of economic activity can change, and the price level can change. To get an idea of how much the change is due to a change in economic activity, the nominal figures are adjusted by a GDP price deflator, which is a measure of price changes. This number after adjustment is called Real GDP, which is a better measure of economic activity than nominal GDP.

## calculating real GDP change?

Suppose the MPC = .80 and that it is the same at all REal GDP levels. Suppose autonomous consumption decreases by %500. How much does Real GDP change? Suppose the MPS = .1 and that it is the same at all Real GDP levels. Suppose autonomous invesment increases by \$100. How much does Real GDP change.

part a. . . if mpc is .8 then mps = .2 then multiplier is 1/mps (assuming two sector economy) i.e. the value of multiplier is 1/0.2 hence multiplier =5 so a \$ 500 decrease in Consumption will reduce the real GDP by 500 * 5 = 2500

as the change in gdp = change in expenditure * multiplier

part b. . . again if MPS = 0.1 then multiplier is 1/mps i.e. 1/0.1 so multiplier = 10 now an increase in investment by \$100 will raise gdp by

100* 10 = \$ 1000

as again the change in gdp = change in expenditure * multiplier

the expenditure in two sector is C+I

## What exactly is GDP? How is it calculated and what does it convey?

I was recently asked this question in an interview... Although I had an idea that greater GDP meant greater prosperity, I could not frame the answer well enough.

I will try and explain this in my own words. Basically GDP is how much a country produces in a certain period of time. Lets take a simple factory that produces widgets. Let's say the produced 100 widgets in 2006. This means their GDP is 100 widgets. When calculating the GDP for a country it is not very simple but basically the same concept you calculate how much factories have produced which are tangible but you must also count the services that were produced like say a haircut. The some of all the production for a country is the GDP. Going back to that example if the factory produces 110 widgets in 2007 then the GDP increased by 10%. So essentially GDP doesn't by itself measure growth but the change in GDP between 2 periods is used to measure growth or drop in growth.

## What is meant by term gdp and why is it important for goverments to be able to measure gdp?

What is meant by term gdp and why is it important for goverments to be able to measure gdp?

GDP is a basic measure of a country's overall economic performance. It is the market value of all final goods and services made within the borders of a country in a year. Usually, GDP (gross domestic product) is often positively correlated with a nation's standard of living.

GDP = C + I + G + (eX - iM)

## What is the Difference between GDP and GDP per capita?

Describe the difference between GDP and GDP per capita, please! I need a good answer, thanks!

GDP is a certain amount of money. GDP per capita is the amount of money each person would get if the GDP were divided evenly among everyone in the country.