Nominal gross domestic product is the cost of production for that current year. Our world
faced a life event that many are still recovering from. During covid a lot of people were
impacted and especially a lot of businesses. However, towards the end of 2021 CNBC
reported that GDP grew at a 6.9% from the start of pandemic. Although a lot of companies
were still dealing with a lot of call outs due to covid they still managed to move production to
their expedited rates. Consumers were able to purchase the product at a much faster rate as
the work force slowly started returning to work. I know a lot of people were concerned about
how they were going to get their daily needs, and sadly some people did struggle, but as the
new article reports, we're slowly starting to get back to normal from pre pandemic. I don't
feel like we'll ever completely go back to pre pandemic, but we're starting to see the shelves
stocked again with every day items. In the Oxford Languages dictionary, the definition of
gross domestic product (GDP) is the total value of goods produced and services provided in a
country for one year. I think it is a sort of benchmark or point of reference where a certain
economy stands or shows how it grows or shrinks. This sums up consumption, investments,
government purchases, and net exports to measure the whole economy in specific periods of
time to compare if the economy is healthy or not.
There is an article by the associated press on how the U.S economy has shrunken from April
to June for a second straight quarter. It says the decline of gross domestic product in
consecutive quarters could be an indicator of a recession. The article explains how the report
on GDP comes in a critical time as consumers and businesses have been struggling under the
pressure of inflation and high interest rates. The government has been trying to “fight”
inflation by raising interest rates, but it is affecting small businesses and consumers alike.
Government avoids recession talk and steer towards fighting inflation. Nominal gross
domestic product is a culmination of final goods used in consumer consumption, economic
investment in business, government purchases, and net exports. These categories summarize
the final goods produced in a country, excluding any intermediate goods, as to not count
these goods twice. Nominal gross domestic product sums up consumption, investments,
government purchases, and net exports for a specified time. This is valued at current-year
prices. The nominal GDP measures the current dollar value of production. This includes
consumptions, investments, government purchases, net exports. Due to inflation this may not
reflect true economic growth or fall. It is important to determine the real GDP by using a
base-year to calculate with a constant price. This will allow us to determine whether there has
been economic growth and at what percentage of growth has transpired. This will also allow
for us to determine whether there has been a price inflation or deflation over the specified
time.
f f f f f f f f f f According to the Bureau of Economic Analysis, “Real gross domestic product (GDP)
increased at an annual rate of 6.9 percent in the fourth quarter of 2021 (table 1), according to
the "advance" estimate released by the Bureau of Economic Analysis. In the third quarter,
real GDP increased 2.3 percent (2022). The economic growth is due to an increase in private
inventory investments led by retail and wholesale trade industries, an increase in exports of
service led by travel and healthcare, a decrease in federal spending on intermediate goods and
a decrease in consumption expenditures, and an increase in imports primarily reflected an
increase in goods. Current-dollar personal income increased due to compensation increases
accompanied with rental income being offset due to government or social benefits (U.S.
Department of Commerce, 2022). Nominal GDP is the Gross Domestic Product in current
time with current prices. Unlike Real GDP that uses the previous years as a base to calculate
total market value or GDP, nominal gross domestic product calculates the total market value
of the goods and services produced in a county's economy over a certain amount of time.
When calculating GDP, it uses current prices in its equation. Nominal GDP does not include
things like air and land pollution or inflation.
GDP= C+I+G+NX
According to bea.gov the United States nominal GDP is fluctuating over the last few
quarters. They have had an upturn in exports which resulted in a lower decrease in the second
quarter and a smaller decrease in federal spending. GDP is an overview of how well an
economy is performing.
GDP does not include all production and consumption.
GDP does not include intermediate goods, underground economy activities - legal and illegal
- and social/environmental well-being in its calculation.
GDP is the value of all new final goods and services produced within a country’s borders by
its own citizens or foreign citizens in a given time period.
The formula for GDP is:
Y=Consumption(C)+Investment(I)+Government Expenditures(G)+Net Exports(X-M).
Consumption (durable and non-durable goods and services for individual household
consumption)
Investment (Consumption of new physical capital and new housing such as factories,
machines, tools, transportation systems, new houses, etc.) Investment is purchased using
financial capital instruments.
Government expenditures (all Federal, State, and Local government purchases from paper
clips to aircraft carriers).
Net Exports (Trade Balance=Exports-Imports)
GDP is meant to measure economic well-being, but may indicate a growing, healthy
economy when the environment is damaged due to the production and consumption process.
What is an example of a legal informal economic activity that is not counted in GDP?
What is an example of an illegal informal economic activity that is not counted in GDP?
In my view, I would consider nominal GDP as the gross domestic product that relates to the
evaluation of the current market prices. As it is known, the Gross domestic product is purely
the value of all the goods and services a country produces. However, it is worth noting that
the real GDP is different from the nominal GDP as the nominal in that the nominal GDP
includes a shift in prices as determined by the level of inflation. The current prices play a
significant role in understanding the nominal GDP for any given country. It is therefore
important to understand that nominal GDP does not do away with inflation. It considers the
pace at which the prices are rising at the current times in the country. The article by the
CNBC news outlet explains first the understanding of GDP. At the end of the article, it gives
an understanding of how the GDP affects the growth as well as the investors. It explains that
with a bad economy, there are probably lower profits for companies. The stock prices will
likely hit a snag and some lower points with such GDP (Mark, 2013). Investors will always
research and compare the GDP growth to know where to invest and the likely growth of their
investment. ominal GDP it's more like a measurement of country gross an domestic the
product based on the current price is more like a output adjusted the inflation sometime by
multiplying the current years in quality of an output by the currency market price is very
important the nominal GDP is production goods and service which will attend to current
prices,Locate an online news article that discusses impacts to GDP in some way. Summarize
the article and explain its relation, The decline makes it two quarters in a row of negative
growth, following a 1.6% drop in the first quarter, and the news will lead to pronouncements
that the U.S. has now slipped into a recession. However, while two quarters of contraction in
economic output is often used as a measure of a recession, the official determination will not
be made for some time and will take into account a host of other economic data. nominal
GDP is describe as if a country has services and products priced according to the way people
spend and make money without the regards of inflation in the current time period. The article
that I chose is a great article for anyone to read especially a beginner to this topic. This article
defines the meaning of nominal GDP. It is mentioned about the way to calculate Gross
Domestic Product. There are two ways of getting the calculation. You can either get it by
what the people spend or what the people earn. This section is teaching me about why in
business I am doing some of what I have to do. I never really grasped an understanding of
why I have to report certain information to the IRS quarterly pertaining to the service that we
render. This article is worth sharing with my family and friends so that they are aware of the
importance of doing business properly. My payroll company assists us whenever it reports to
the IRS our earnings every period. Below I will share the link to the article. Nominal gross
domestic product, or GDP, is an economic measurement of money spent on goods and
services during a specific time period. In order to find the GDP you add up the price of all
goods and services produced During a month, quarter, year, or anytime that an individual is
looking for in order to create usable data.In an article by Morgan Stanley, they discussed
“persistent inflation, supply chain constraints, the continuing pandemic and war in Ukraine”
(2022 Midyear Outlook: Slowing or Stopping? | Morgan Stanley, 2022), and how it relates to
global GDP and how we are not “in a worldwide recession” (Morgan Stanley, 2022). They go
on to say that the Morgan Stanley chief global economist and his team believes that the
global economy will avoid a true recession this year basing much of that on a post COVID-
19 rebound by businesses. They name the biggest risks for the global economy are
embargoes of imports of oil from Russia and COVID-19 lockdowns in China.
References
f f f f f f f f f f U.S. Department of Commerce. (2022). Bureau of Economic Analysis.
https://www.bea.gov/news/2022/gross-domestic-product-fourth-quarter-and-year-2021-
advance-estimate
