Approximately half of what people use their money on apparently was not created in the 1880s; these include air travel, computers, cars, hip replacements, antibiotics among many other life-improving machines and life-saving medications. doi: 10.5901/mjss.2013.v4n10p415, Stolz, Y., Baten, J., & Reis, J. The Advantages of Using GDP as a Measure Universal. It is obvious that country A will have higher living standards than country B, but this is not apparent from their GDP figures. When we look back, we will see that this is the same as the sum of all values added at each stage of production. GDP will therefore underestimate the actual value of output. (John Sloman, 2006) GDP can only measure the material standard of living, without taking into account the quality of life as perceived by each individual, which cannot be standardized across a population or countries. 48 Vitosha Boulevard, ground floor, 1000, Sofia, Bulgaria Bulgarian reg. Gross Domestic Product is the absolute economic productivity attained by a nation over time. A coefficient of zero indicates a perfectly equal distribution of income or wealth Gross Domestic Product (GDP) Gross domestic product (GDP) is a standard measure of a country’s economic health and an indicator of its standard of living. The inflation rate is the rate at which the price level increases. Subtracting military expenditures from the total consumption in order to identify the standard of living will do this. They don't have time for entertainment like cinema, game; party also there is not enough leisure centers where people can go easily. However, as a measure of the standard of living in a country, GDP has its limitations and shortcomings. Concept of the GDP / GNP 2.1 Definition of the GDP, GNP and growth rate 2.2 Advantages of the GDP / GNP 2.3 Preconditions for the use of GDP / GNP 3. happyplanetindex. Most of third world county has been suffering of this problem (Bangladesh, India, and Pakistan). 22.65% indexmundi. html) but its people are considered to be the happiest in the world. The major advantage of using GDP per capita as an indicator of living standards is because it is used widely, frequently and consistently. Since GDP measures the value of all finished goods and services within an economy, it also includes products that may have negative effects on social welfare. GDP measures the total value of output produced, but it cannot distinguish between the effects of different types of output on living standards. 3 Growth and Development 1 7. Gross Domestic Product. The latter is measured by gross national income per capita. Simply because a country appears to be rich does not actually mean that it is, and this means that using national income figures like GDP as a measure of living standards may be inappropriate. Real GDP is failure to measure unemployment of a country. It directly effects on the welfare of the unemployed. Real GDP tends to increase as a nation’s standard of living improves; however, GDP does not capture some very important social measures. As example, some Asian Country there GDP is high, price of goods is also high, and the rich people can easily buy the goods because there income is high. When people not involved with recreation to have proper leisure, it is not even mentionable whether the current GDP is high or low in the country. But as more and more economists begin to question GDP’s true worth, there are growing calls to find GDP alternatives to measure countries’ wealth and welfare. GDP doesn’t account inequality: some very wealthy businessmen may make the GDP of a country high yet the majority of the country may be backward and in poverty. Source: Source: IMF. 3. 3. -1.21% For most economists, there is a heightening disconnect amid GDP and standards of living. 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