Asked by bryson
Define Gross Domestic Product and explain one reason why it is an incomplete measure of national wealth in the United States.
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Gross Domestic Product (GDP) is the total market value of all final goods and services produced within a country’s borders during a specific period (usually a year or a quarter).
One reason GDP is an incomplete measure of national wealth: GDP is a flow measure of annual production and does not account for changes in the stock of assets that make up national wealth. It ignores depreciation and the depletion of natural and man-made capital — for example, extracting and selling oil raises GDP today but reduces the country’s remaining natural-resource wealth; if capital is being worn out or depleted faster than it is replaced, GDP can be high while national wealth falls.
One reason GDP is an incomplete measure of national wealth: GDP is a flow measure of annual production and does not account for changes in the stock of assets that make up national wealth. It ignores depreciation and the depletion of natural and man-made capital — for example, extracting and selling oil raises GDP today but reduces the country’s remaining natural-resource wealth; if capital is being worn out or depleted faster than it is replaced, GDP can be high while national wealth falls.
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