Do wages and bonuses increase GDP

gross domestic product

What is part of the GDP?

The GDP comprises the sum of all goods and services that have been produced in a country. It is irrelevant whether the goods / services were produced or provided by residents or foreigners.

Undeclared work, subsistence farming (self-sufficiency) and unpaid activities such as volunteering or housework are not recorded. Therefore, GDP can only be estimated approximately.

A distinction is made between nominal and real gross domestic product. While nominal GDP is shown free of price influences - i.e. price-adjusted - real GDP also takes into account inflation. Real GDP is used to assess the development of economic output.

Calculation of the gross domestic product

The calculation of the GDP can take place on the production side as well as on the use side. In the production approach (production approach), value added is calculated as the difference between the value of the goods and services produced (production value) and intermediate consumption. As a result, taxes on products are added and subsidies on products are subtracted.

In the usage calculation (expenditure approach), the costs for the end use of goods and services are determined - private and government consumption expenditure, investments and export surpluses.

The calculation of GDP is carried out and published by the Federal Statistical Office.

Growth equals prosperity and quality of life?

An increase in prosperity and the quality of life of the population is usually derived from the positive development of the gross domestic product. The simple formula used by politicians is: if GDP grows, so does the quality of life.

But it's not that easy. Strictly speaking, GDP does not allow any conclusions to be drawn about this because it does not take into account the way in which a country's economy is growing and whether the growth actually benefits the people. Aspects such as environmental pollution, air quality or social peace do not come into play. Instead, crime and catastrophic events and the associated costs falsify the information on economic and prosperity growth. An example: The oil spill in the Gulf of Mexico and its consequences increased US GDP, although there is evidence that this event did not improve the quality of life of citizens.

The question of wealth distribution is also ignored. GDP cannot distinguish which euro goes into which pocket - poor or rich. It is therefore conceivable that the gross domestic product will rise, but the population will suffer from hunger.

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