Covid-19 Effect |IMF report says: Global growth is in worst situation than earlier financial crisis. x An exceptional situation emerged in global economy due to Covid-19 pandemic world wide. Most of the countries have to shut their corporate operations and lockdown their cities due to Covid-19 outbreak. This resulted in world wide down fall of economy and financial crisis. As per the latest Global Financial Stability Report (GFSR) of IMF, Global growth is now expected to decline by 3 percent in 2020, which is the worst performance than the earlier global financial crisis. What is more dangerous is that IMF stated that the future recovery from this downfall is highly uncertain. The time period and shape of this crisis recovery is undefined right now. Covid-19 Effect on Equity Markets As per IMF equity markets faced their fastest drop in the history and asset price decreased up to about half of the scale seen in the 2008 financial crisis. Price ear
GDP Full Form |What is GDP and how it is calculated? |Importance of GDP
What is full form of GDP?
GDP full form is Gross Domestic Product.
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| GDP FULL FORM |
What is GDP?
GDP: Gross Domestic Product is total market value of final
goods and services produced within a country for specific time period (1
financial year).
It is monetary value of all the finished goods and services
produced in a country in specific time. It is generally calculated annually and
quarterly.
Basically GDP is prime indicator of national Income and
health of the countries economy. It represents growth or decline of the
countries economy.
How GDP is calculated?
GDP can be calculated by three different methods:
1) Production approach
2) Income approach
3) Expenditure approach
1) Production approach:
It is more direct approach than other two; it sums up all the
outputs.
GDP = Gross Value of output – Value of intermediate
consumption
Here,
Value of output = Total sales of good & Services + value
of changes in Inventory.
Value of intermediate = Total cost of material, suppliers
and services used to produce the
Final goods & services.
2) Income approach
This method sums up the total incomes. Hence, it is also
known as GDPI OR GDI method.
GDPI = gross domestic product income and GDI= gross domestic
income
GDP = Compensation
of employees
+ gross operating surplus
+ Gross
mixed income
+ Taxes –
subsidies on Production & Imports.
3) Expenditure approach
The final method of calculating GDP is sum of final goods
& Services except the net export.
GDP = Consumption +
Investments + Government Spending + Net Exports
Where,
Consumption = Total private expenditures by households
(People).
Investments = Capital Investment in equipment &
machineries, excluding exchange of current assets.
Government Spending = The Total value of government
expenditures on final goods & Services.
Net Exports = Total
Export- Total Import
Hence the formula for GDP is GDP = C + I + G + (E-I)
Why GDP is important?
GDP indicates the growth of the country, if the GDP is high
than it means country is growing and if it is low that means countries growth
is declining.
It represents the over all economic health of the
country. Higher GDP means more
Investments, job opportunities, consumption and better living standards of the
people.
It helps business enterprises and market to take financial
decisions. For example if the GDP is high than business enterprises will think
of more investments. Same way People will invest more in stock market.
It also helps government to determine policies and road map
for development.
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