Angela Scharf, Chapter 9, Q. 6

The passage that struck me as interesting was the explanation of Gross Domestic Product. Essentially it is weighing the productivity and total output of a country. The percents that headlines always advertise (etc. the economy dropped 2.1 percent) is referencing the GDP growth. The consumption of the total country is constrained by what they can produce in turn. Inflation has to be factored into the GDP, which by definition is the increase in prices and the fall of the value on money; this is called the real GDP. An example of this is if a country's GDP increases by 12 percent, and the inflation also rises by 12 percent then the economy hasn't actually produced more of anything. The GDP per capita also has to be factored in because of general difference in population. This GDP was interesting because it explains the typical "today the economy dropped ____ percent" that's always advertised on the news.