Economics for Business Updated

CONTENTS

Contents………………………………………………………..………………2

Introduction……………………………………………………………………2

1.        How is GDP measured in your home country?        

   What is Gross Domestic Product?......................................................................

   Various methods in measuring GDP:        

   Real life example:        4

2.        Main restrictions on imports:        5

   General Introduction of restrictions under The Customs Act, 1962         5

   Common types of import restrictions:        6

   Who benefits from the restrictions and who loses?        7

3.        Case for and against the protectionist attitude:        8

   Arguments for protectionism        8

      Conclusion:        9

      References:…………………………………………………………………...10

INTRODUCTION:

This paper analyses the different methods of measuring GDP of our home country with a real life example in the first section. In the second section the various restrictions and prohibitions on the trade with foreign countries are discussed and in the third section the role of protectionists and the arguments for protectionists are discussed.

1. Explain how GDP is measured in your country.  Provide real life examples.

GDP is the total monetary value of all final goods and services produced in a domestic territory of a country in a particular year. GDP can be measured at various prices depending upon that there are various kinds of GDP which are as follows- (Prof. P.M. Salwan, CA Pranjal B. Deshpande, 2014)

• GDP at constant price- It is also called as real GDP. It means when the final goods and services are measured at pre-estimated fixed price.
• GDP at current price- It means when the GDP is measured at current prevailing price.
• GDP at factor cost- The net value added by various production units and the utilization of fixed capital are summed up in order to find GDP at factor cost. The following  formula is as follows:

GDP at FC= Subsidies+ GDP at market price-indirect taxes

• GDP at market price- GDP is also measured at market price which can be measured as follows:

GDP at MP= GDP at factor cost+ taxes- subsidies on production

There are various approaches available to measure GDP in India viz. Production Approach, Income Approach and Expenditure Approach. Among these, Production Approach is the most convenient one. The Indian GDPis calculated by expenditure method. Due to the diversity of an Indian economy, the Indian GDP need to be calculated very carefully. There are different sectors in India which is categorized into three segments viz. Primary sector which is also called as agricultural sector, Secondary sector which is also as manufacturing sector and tertiary sector which is also called as service sector which will contribute to the Indian GDP. Now we will study the various approaches in detail which are as follows.