Annual Gross Domestic Product

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Recommended: Real GDP rather than nominal GDP

Question 1

1. Annual Real GDP growth rate

An increase in the market value of goods and services produced in an economy over time is defined as economic growth. Economic growth is usually measured as the percent rate increase in real gross domestic product, or real GDP (http://en.wikipedia.org/wiki/Economic growth). To know what is happening in economic activities if prices are changing over time, growth is calculated in real terms. Meaning that inflation has to be adjusted to eradicate the effect of inflation on the price of goods produced. Economic growth is normally referred to as growth of potential output, i.e. production at full employment.

Gross Domestic Product (GDP) measures the total value of goods and services produced in an economy in any given year (Miskin,2012). Real GDP measures the output of actual goods and services produced in an economy (Miskin,2012). The measurement of actual goods and services produced means that there has been an adjustment for constant price changes i.e. inflation. Nominal GDP (measured at current prices which does not truly reflect the activities of an economy over time) is transformed by this adjustment into an index for quantity of total output. Real GDP takes into account inflation which measures the actual increase in goods and services and excludes the impact of rising prices (http://economicshelp.org/blog/glossary/real-gdp-capita).

Information on whether economic well-being is improving is reflected in real GDP (Miskin,2012).

Real GDP is characterised by fluctuations of aggregate economic activity around a long-run trend, these fluctuations are called a business cycle. Structural causes such as technological growth and factor accumulation are caused by long-run trend in producti...

... middle of paper ...

... The article is named OECD Economic Surveys: South Africa 2013

Bibliography

World Bank: www.worldbank.org/data.

IMF: http://www.imf.org/external/data.htm

ILO: http://laborsta.ilo.org/

UNSD: http://unstats.un.org/unsd/cdb/cdb_help/cdb_quick_start.asp

http://databank.worldbank.org/data/views/reports/tableview.aspx

https://www.cia.gov/library/publications/the-world-factbook/geos/sf.html

http://people.stern.nyu.edu/nroubini/bci/bciintroduction.htm

(http://www2.resbank.co.za/internet/Glossary.nsf/0/9028ea9be02366d342256b43002f51f5?OpenDocument)

(http://www.econlib.org/library/Topics/HighSchool/RealvsNominal.html). thus inflation is not accounted for.

(http://www.un.org/esa/sustdev/natlinfo/indicators/methodology_sheets/econ_development/inflation_rate.pdf)

OECD (2013), OECD Economic Surveys: South Africa 2013, OECD Publishing

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