Headlines
  • Economies of Scale vs. Economies of Scope

Accounting for Intangible Assets

08 Mar 2012 / 0 Comments

Steve Collings looks at the fundamental principles in accounting for goodwill and intangible assets and also looks at some fundamental differences between current UK GAAP, IFRS and the proposed IFRS for SMEs.As accountants we are all aware that an intangible asset does not have any physical form

Read More...

Internal Rate Of Return: An Inside Look

Gordon Growth Model

Calculating Covariance For Stocks

Financial Accounting
Economics

Economies of Scale vs. Economies of Scope

Generally speaking, economies of scale is about the benefits gained by the production of large volume of a p...

Currency Appreciation and Depreciation

Current and Financial Account Surpluses and Deficits Current account deficits (or surpluses) and financi...

Communication Skills

A Sample Cover Letter For A Job Application

Most jobs ask for a cover letter along with your resume. A cover letter can make or break your case with th...

Communication

  VERBAL COMMUNICATIONThe term “Verbal” implies ‘use of words’ which makes language. Verbal communicati...

Information Technology

    Lesson 4: Creating Charts

    In Microsoft Excel, you can represent numbers in a chart. On the Insert tab, you can choose from a variety o...

Laws

INDEMNITY and GURANTEE

Normal 0 false false false MicrosoftInternetExplorer4 ...

Contract of Agency

KINDS OF COMPANIES

Contract: express and implied terms

Contract: the elements of a contract

Management and Marketing

Interest rate risk management

The management of risk is a key area within a number of ACCA papers, and exam questions related to this area ...

Regional and Sustainable Development Department

RSCG is the Capacity Development and Governance Division of the, Regional and Sustainable Development Departm...

Comparison of financial and management accounting

There are two broad types of accounting information: • Financial Accounts: geared toward external users of...

Financial Management

The Capital Asset Pricing Model

...

Mathimetics

Linear Equation with Video Examples

An equation is a mathematical statement that has an expression on the left side of the equals sign (=) wi...

Straight-Line Equations

Solving Literal Equations

Systems of Simultaneous Equations

SolvingSystemsAlgebriacally

Cost Accounting

Product vs Period Costs

Product Costs: Include all costs that are required to make a product Product costs are: Direct Material...

Manufacturing Overhead

Zero-Base Budgeting

cash budget

Master Budget

Statistics
Audit and Assurance
Economics
Published On:Thursday, 29 December 2011
Posted by Muhammad Atif Saeed

Limitations of GDP and Alternative Measures

There are many limitations to using GDP as a way to measure current income and production. Major ones include:
Changes in quality and the inclusion of new goods - higher quality and/or new products often replace older products. Many products, such as cars and medical devices, are of higher quality and offer better features than what was available previously. Many consumer electronics, such as cell phones and DVD players, did not exist until recently.
·Leisure/human costs - GDP does not take into account leisure time, nor is consideration given to how hard people work to produce output. Also, jobs are now safer and less physically strenuous than they were in the past. Because GDP does not take these factors into account, changes in real income could be understated.

·Underground economy - Barter and cash transactions that take place outside of recorded marketplaces are referred to as the underground economy and are not included in GDP statistics. These activities are sometimes legal ones that are undertaken so as to avoid taxes and sometimes they are outright illegal acts, such as trafficking in illegal drugs.

·Harmful Side Effects - Economic "bads", such as pollution, are not included in GDP statistics. While no subtractions to GDP are made for their harmful effects, market transactions made in an effort to correct the bad effects are added to GDP.

·Non-Market Production - Goods and services produced but not exchanged for money, known as "nonmarket production", are not measured, even though they have value. For instance, if you grow your own food, the value of that food will not be included in GDP. If you decide to watch TV instead of growing your own food and now have to purchase it, then the value of your food will be included in GDP.

Alternative Measures of Domestic IncomeOther than GDP and GNP, there are alternative measures of domestic income, such as national income, personal income and disposable personal income.
National IncomeNational income is computed by subtracting indirect business taxes, the net income of foreigners, and depreciation from GDP. It represents the income earned by a country's citizens. National income can also be computed by summing interest, rents, employee compensation (wages and benefits), proprietors' income and corporate profits.
·Personal income represents income available for personal use. It is computed by making various adjustments to national income. Social insurance taxes and corporate profits are subtracted from national income, while net interest, corporate dividends and transfer payments are added.
·Disposable personal income (or disposable income) is income available to people after taxes; i.e., it is personal income less individual taxes.

About the Author

Posted by Muhammad Atif Saeed on 13:44. Filed under , . You can follow any responses to this entry through the RSS 2.0. Feel free to leave a response

By Muhammad Atif Saeed on 13:44. Filed under , . Follow any responses to the RSS 2.0. Leave a response

0 comments for "Limitations of GDP and Alternative Measures"

   

Leave a reply

Visit Counters

free counters
Free counters

About Me

My photo
I am doing ACMA from Institute of Cost and Management Accountants Pakistan (Islamabad). Computer and Accounting are my favorite subjects contact Information: +923347787272 atifsaeedicmap@gmail.com atifsaeed_icmap@hotmail.com
  1. Accounting for Intangible Assets
  2. Fair Value Measurement of Financial Liabilities
  3. The Concept of Going Concern
  4. The Capital Asset Pricing Model
  5. Bond Valuation
  6. Asset Management Market Efficiency Asset Management Market Efficiency
x

Welcome to eStudy.Pk....Get Our Latest Posts Via Email - It's Free

Enter your email address:

Delivered by FeedBurner