Introduction

The intention of this brief section is to educate the readers with certain core concepts concerning the economy. One can consider this as a treatise to help the commoners understand conventional terms such as the GDP or a capitalist and socialist economy; the differences in between them and how they affect the lives of the common population. All these data are vital, and everyone must have some working knowledge of these terminologies – especially considering the fact that we are all looking at a mass scale global economic decline in the coming years. The ones in authority always like to keep the masses ignorant about the real world happenings while they take important decisions in the background. Actually, one cannot blame them because many have become self-centered and do not wish in terms of the entire population (they just look into what is best for them and their loved ones).

What Is GDP (Gross Domestic Product)?

The GDP is alternatively termed as the gross domestic product. It is a leading indicator of the economy. In other words, if the GDP of a nation rises, it means that they are in a good economic shape in comparison to the other countries. Quite often tumulus activities occur in the world stock markets when GDP data is released. Secondly, let us look into the functioning of a capitalistic and socialist economic environment. In a capitalistic society, the rich gets to make monetary decisions that affect the rest of the unfortunate souls. However, under a socialist society, the government has some power over such decisions that can affect the GDP and other important economic indicators. There are advantages and disadvantages to both these forms of economy. The former may promote the affluent to come up with decisions that increase the net value of their coffers. The latter although looking helpful can prove to be problematic because of the slow pace with which the men in power take decisions.

The Relationship In Between GDP and the Real Economy of a Nation

There is a fine and distinct relationship in between the GDP and a mixed economy. Many hold on to the age old notions that GDP is the ultimate indicator that displays the prosperity of the nation. This is simply untrue. There are marked differences in between the number of goods that are being churned out from the factories and the real quality of life led by the population of the nation. For the sake of clarity consider this point – what good is the GDP value, if half of the population doesn’t have access to clean potable water?

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