Question: What does GDP measure and is it an accurate macroeconomic indicator?
GDP also known as Gross Domestic Product measures an economy's progress overtime by calculating total production costs. GDP also measures the countries total output of goods and services produced in a year. The measurement of GDP is sometimes an accurate macroeconomic indicator because it does calculate total output but it does not incorporate some key factors. For example, GDP does not incorporate poverty and unemployment in the total calculations. Real GDP is takes out the effects of price increases while nominal GDP includes inflation in the final calculations.
