Desscribe An Accounting Problem On Gross Domestic Product - 275 Words

Desscribe An Accounting Problem On Gross Domestic Product (Math Problem Sample) Content: The Gross Domestic Product (GDP) refers to the total value of goods and services produced over a given period of time. The Nominal Gross Domestic Product does not reflect the differences in the cost of living and inflation, hence the use of real Gross Domestic Product. The GDP is often used as a yardstick to measure the performance of the economy.As the technology improves, production costs decline and prices falls. In order to control the decline of purchasing power of a dollar, chained dollars is used to adjust the real dollar amounts to counter check the inflation. The chained dollars therefore offers the best approach as a measure of Gross Domestic Product. The price level in the economy being the nominal wage rate depends on the money supply. As money supply grows in the economy, the rate of inflation rises. Money in the economy reflects the total value of all transactions in the economy i.e. M= PY where M is money, P is price and Y being all the transactions in the economy.The first quarter of the year 2006 have a slight increase of its GDP chained dollars compared to the last quarter of the 2005. From the year 1990 to the first quarter of 2006, there has been an increase of GDP chained dollars over the years. However, it started declining from the second quarter of 2006 till the last quarter. This is where the investors are concerned. The reduction of the chain dollars from the second quarter to the last quarter means that the corporate profitability of the stocks invested by the middle age customers will decline overt...