Differences Between Gross Domestic Product And PPP

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Differences between the terms Gross Domestic product (GDP) and Purchasing Power Parity (PPP) by Ruta Janciulyte Foundation Course – Introduction to Business Tutor: Dr Bekir Emre Kurtulmuş Istanbul Aydin university Departament of Business Administration 11th November 2015 INTRODUCTION Nowadays economic situation changes every day. It is really important to understand what can increase and reduce country economic. GDP is one of the most main index, which shows level of economic development of country. And PPP is the method, which shows cost of living in country. I would like to talk about differences between Gross domestic product (GDP) and Purchasing Power Parity (PPP) terms. My purpose is to reveal and discuss differences between GDP and…show more content…
Explain what is Gross Domestic product; 2. Explain what is Purchasing Power Parity; 3. Reveal differences between Gross Domestic product and Purchasing Power Parity. Gross Domestic Product (GDP) Definition of Gross Domestic Product (GDP) is the monetary value of all the finished goods and services produced within a country's borders in a specific time period (Kotler 2004:36). Though GDP is usually calculated every year, it can be calculated every four weeks as well (GDP includes all public and private consumption, investments, government outlays and exports minus imports that happen within a defined territory (GDP formula is in picture 1). Put simply, GDP is a broad rating of a nation’s overall economic activity. GDP is gross income, which created in country area (income received domestically). For example, person works in his country, so his income will be include to GDP. But if person works in other country, he will increase that country GDP, not his country. GDP is the final product or service amount, which had to be made per one year. Final product is goods or services, which you can…show more content…
If country has really big GDP it doesn‘t mean that they have good society in country. For example, country has a lot of forests, they cross them and sell wood to other countries. Country increases their GDP. But under high GDP you can see other problems, like: air pollution, oxygen deficiency, health problems. Because country crossed forests people can start to sick more. If they will sick more, country unemployment rate can increase. It will be not good for country economic. China has the second largest GDP in all world (10,356,508 $) but it also doesn’t show real economic
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