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Questions about GDP

 
 
Reply Mon 27 Jul, 2015 11:58 am
I am taking an online personal finance class that is required for me to graduate high school and thought of some questions about the GDP that aren't explained in the curriculum.

1. Does the GDP take in inflation? The course says the GDP is the total monetary value of all final goods sold. In other words, say in year one there are $5,000 goods sold. In year two, the value of the dollar doubles but the same goods are sold. This means that from an outside perspective there are $10,000 goods sold. This means that GDP growth can't be compared between countries except in terms of % increase/decrease unless the GDP takes inflation into consideration.

2. The course says that only final goods are counted so that the same good isn't counted twice. This includes goods that are resold. But isn't that an impossible distinction to always make that can also lead to an inaccurate GDP? For example, if plastic bags are sold to grocery stores they have to be counted to the GDP because most of them are final goods. But some will be recycled and turned into re-usable bags. Or are these 'new goods' instead of resold goods/the sane good? What about things like construction materials? How are they counted?

3. How can all materials/services be accurately counted and valued? What is the estimated % error on an annual GDP report of a 1st world country? For example, when kids do a lemonade stand or a yard sale none of those goods will be counted. Also, do countries with internal issues that make getting a sort of accurate GDP still try to estimate a GDP? Would those countries even bother, or is GDP not a measurement that is important to countries facing such difficulties?
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