What Factors Affect Real GDP Growth?
The economic growth rate (RGDP) is the comparison of the final GNP and the GNP of the base period. The final GNP is calculated at the current price at the end. The growth rate is the nominal economic growth rate, which is calculated at a constant price (that is, the base price). The final GNP, the resulting growth rate is the actual economic growth rate.
Economic growth rate
- The size of the economic growth rate means the speed of economic growth, and the length of time it takes for the people's living standards to improve. Therefore, the government and scholars are very concerned about this indicator. If the values of the variables are
- The calculation of economic growth rate is divided into two types:
Zero and negative economic growth
- Zero growth is sometimes expressed as GDP unchanged from previous years. Negative growth indicates that this year's GDP is lower than in previous years and is often described as a "depression" or economic recession. Zero growth is sometimes considered to be negative growth, because considering inflation and rising prices, the purchasing power of the same amount of currency will be lower than in previous years.
Economic growth rate Economic growth development
- Economic growth does not necessarily represent development. Critics often question the practical significance of economic growth because the measure of economic growth is GDP, and GDP growth does not necessarily represent the development of productivity. For example, country A requires 2 tons of coal for each ton of steel, and country B also needs 1 ton of coal to produce 1 ton of steel. From a GDP perspective, assuming that this is the entire economic event in both countries, then A China's GDP = 1 ton of steel + 2 tons of coal, while country B's GDP = 1 ton of steel + 1 ton of coal. So the GDP of country A is larger than that of country B, but it is clear that the production efficiency of country A lags behind country B. Another well-known example, if two cars on the U.S. highway come across from each other and pass by, there will be no impact on this year's GDP statistics. On the contrary, if two cars are involved in a car accident, a police car will be required to fire Vehicles, ambulances, and increased work to clear the road, compensation for insurance benefits, and the need for new vehicles in the future, which may increase millions of dollars in GDP. However, the nature of this incident is an accident, not a development of productivity.