Generally speaking, the standard of living of a country is often measured by the per capita GDP. It will not be wise to think GDP per capita to be the measure of personal income. If the economic theories are taken into account, then per capita GDP will be the same as per capita GDI (Gross Domestic Income). The goods, as well as the services produced in a certain country and brought to the market, have some price. Some experts regard GDP as the price of the total output. The GDP can be calculated in the following ways.
Cumulative figure of all income within an economy or the total spending made by all the participating agents within the same economy is referred to as GDP. Both the spending and income will roughly be the same. It should be kept inking that Gross Domestic Product and Gross National product is not the same thing. The market value of the goods as well as services produced within a particular time period by the residents of a particular country is regarded as the GNP. It allocates the production based on ownership.
Three approaches can be used in order to determine the GDP. They are- the income approach, the product approach and the expenditure approach. The product also called as the output approach sums the total produced within the economy in order to attain the value of GDP. The expenditure approach assumes that the products produced must be bought by someone and so the total value of the product must be matched by the total expenditure of the people in purchasing things (Wesselink, Bakkes, Best, Hinterberger, and Brink, 2007).
The last approach takes into consideration that the value of the products must be equal to the incomes of the factors of production. It determines the value of GDP by calculating the sum of the income of the producers. Inflation is defined as the continuous or sustained rise in the general level of price. It can also be defined as continuous reduction in the value of money. The movement in the general price level is referred to as inflation.
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