What are the different GDP problems?

Gross domestic product (GDP) is the most commonly used indicator of Earth's economic growth, but there are a number of problems associated with how the GDP is calculated to keep in mind. One of the primary GDP problems is that it measures goods and services sold in the markets, but does not take into account anything that is produced, but is not sold. This value also does not take into account the underground economy of tax and criminals in the country. Most importantly, GDP aims to determine the growth and standard of living of the country, but only from a significant point of view and does not take into account the real social well -being.

The country deals with its degree of economic growth because it predicts the ability of its people to produce and consume goods and services in the future. The consumption or demand for goods and services is managed by job creation, which in turn leads the standard of living of the country. The economic growth rate with measuring GDP or the total value of the goods and services produced. This number is calculated by the government based on the sale of goods and services on the market that can be determinedT by looking at government transactions such as sales and income taxes.

One of the problems with GDP is that it only takes into account the goods and services that the economy produces and sells on the legitimate market. This is only part of the overall economic activity that takes place in the country. In areas where the exchange is still used, GDP is particularly unsuitable as an economic indicator. The value of economic production, which is not changed in the traditional sense, is also countless, such as the work done by the mother's stay at home.

GDP problems also appear when you believe that there is part of the economy of a country that does not flow through legitimate government channels. This "underground" economy can be significant. If it was a real impartial indicator, all production would be appreciated regardless of the legality of the transaction. GDP ignores a person who works outside the books, illegal immigrants who work without paying taxes, taxof the income of legal entities and a criminal master as well.

Maybe, one of the most important GDP problems is its frame paradigm. This value is used to indicate the standard of living of the country, or how well its citizens compare with other citizens in other countries. However, the indicator uses market sales exclusively to achieve its conclusion, which is usually driven by the motive of profit. As an indicator of GDP, it only measures how well the country is materialistic and how it is possible to buy the population. Indeed, it measures the increase in social well -being, which is a multilateral approach to the analysis of living standards.