GDP or Gross Domestic product is gross production of any
economy represented in monetary terms. I t is collective earning of an economy
and the first denominator of econometric analysis models.
Take a simple example suppose X is a big business man and he
has variety of business and he does job also.
The list of his earning sources are mentioned below.
- Hotel
- Agricultural Land
- Job
- Medical Shop
- Petrol Pump
Attributes
|
Annual
Earnings
|
%
share
|
Rank as per
Gross earnings
|
Hotel
|
600000
|
0.12
|
3
|
Agriculture
|
1500000
|
0.3
|
1
|
Job
|
400000
|
0.08
|
4
|
Medical
Shop
|
1000000
|
0.2
|
2
|
Petrol
Pump
|
1500000
|
0.3
|
1
|
Gross
Income
|
5000000
|
1
|
Percentage Share Formulae =
- Hotel/Gross Earnings
- Agriculture/ Gross
Earnings
- Medical Shop/ Gross
Earnings
- Petrol Pump/ Gross
Earnings
Note – Agriculture and Petrol Pump earnings accounts for
highest share of Gross income
Job
earnings are lowest
Likewise GDP is gross earnings of
different segment of an economy and above mentioned example is the most basic
economic model.
The above model doesn’t reflect the true picture as only
income is considered and other variables like expenses, taxes etc. as to be
taken under consideration about which I will tell you in my future posts.
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