What is GDP growth rate and how to calculate it Since the media often talk about the growth rate of an economy, it is important to clarify and to correctly define what the growth rate of GDP is. This indicator has a lot more meanings and it can be used to measure different components of a country’s economy. Nevertheless, it generally gives an idea of the economic growth or the economic decline....
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Nominal GDP, Real GDP and the GDP Deflator: Formulas, Worked Examples and Index-Number Bias
An economy that produces nothing new but doubles every price reports 100% nominal GDP growth. A complete guide to nominal GDP, real GDP and the GDP deflator — with worked calculations, why the deflator excludes imports, base-year bias, chain weighting, and Nordhaus on the price of light.
Difference between GDP and GNP
Although both GDP and GNP measure the size of an economy, either for business or economics forecasting purposes, they are not one and the same thing. Therefore, one should not be confused by their similar terminology. Simply put, while GDP looks at the strength of a country’s local economy, encompassing not only residents, but also immigrants and tourists, GNP focuses on the economic performance...
Three Approaches of Calculating GDP: Production, Expenditure and Income (Complete Guide)
Three completely different accounting routes — production, expenditure, and income — must arrive at exactly the same number. A complete guide to calculating GDP, with the value-added identity, the C+I+G+(X−M) formula, Ireland’s 26% growth year, Nigeria’s rebasing, and Kuznets’s original warning.
GDP Introduction and Usage
Although GDP is commonly used to measure the size of an economy nowadays, Simon Kuznets, the economist who created this tool has warned against its use as a measure of welfare. Commissioned by the US Congress in 1934 to create a system that would monitor the productivity of the United States of America, Kuznets proposed the GDP or Gross Domestic Product. However, this metric aimed only at...
Unemployment Rate: Definition, Measurement, Okun’s Law and Why the Statistic Misleads
A person who stops looking for work isn’t unemployed — they vanish from the statistic, and the rate falls. A complete guide to measuring unemployment: the ILO criteria, U-3 vs U-6, the four types, Okun’s Law, the Beveridge curve, and why Blanchard and Summers showed the natural rate isn’t natural.
Demand-Pull vs Cost-Push Inflation and Stagflation: Diagrams, Evidence and Exam Technique
Demand-pull and cost-push inflation produce the same rise in prices and opposite movements in output — and that asymmetry determines the entire policy response. A complete guide with AD/AS analysis, the expectations-augmented Phillips curve, the 1973 oil shock, and what Bernanke and Blanchard found about the 2021–2023 surge.
Economic Impact of Inflation
There are many deadly effects of inflation. Two of the most important are: Redistribution of Wealth and Income among the People Distortion in the Production of Goods, employment and relative Prices (During Periods of Inflation all prices and wages do not change at the same rate; so changes in relative prices occur) Impact on Wealth and Income This effect is focused on the assets and liabilities...
Balanced and Unbalanced Inflation
Balanced Inflation Consider its title “Balanced”, a type of inflation when all the prices increases proportionately. So its more like an increase in the prices of all of the Products rather just a few. This kind of inflation manage your money matters accordingly as you know that the cost of all products are increasing. Unbalanced Inflation On the other hand Unbalanced Inflation has its effects...
Anticipated and Unanticipated Inflation
Anticipated Inflation We can simply understand this phenomenon by its title “ANTICIPATED” , which means Predicted or “KNOWN”. Such a “PREDICTED INFLATION” does not cause enough harm to the people since you can handle it by proper planning. For Example you know that the Price of household products may increase for some known factor that has caused the prices of Inputs to rise. As a result, you...
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