Key Concepts Macro - GDP (1/5)

• Economists trach the GDP to understand how an economy is performing: growing, stable or shrinking.

• A rising GDP usually means more jobs, higher incomes and stronger national prosperity.

• GDP includes three main components: consumption, investment and government spending.

• The values of all components are added plus the net exports (export - imports) to calculate the GDP.

• However, GDP does not measure everything - it ignores inequality, enviromental impact and unpaid work.

• Alternatives could be: HDI (Human Development Index), BMI (BigMac-Index) or GPI (Genuine Progress Indicator)

• GDP gives a first idea of how an econmoy is doing, but it doesn't show how the gains or losses ar distributed in the economy.

• Indicates economic growth of a country through the consumption side.

• Only one piece of the bigger picture through ignoring important values (equality, health, environment).