presentation

1. TEAM SMITH
Group Members Matric Number
Kanggadevi A/P Murthi MC200912013
Mohammad Faiz Asyraf Bin Razali MC200911631
Pamela Pisha A/P Theesan MC200911958
Sharanya Marimuthu MC200911931
Yoganeswarri A/P Subramaniam MC200911869
Dead Rats Can Raise GDP, Economists
Have Lowered It
GSFM7223 - MC-O22 Economic Manager
LECTURE NAME : DR. SAFIAH
SUBMISSION DATE :
05/12/2020
PREPARED BY –
A TEAM GROUP

2. DEFINITION
OF
GDP
What is GDP?
• GDP stands for GROSS DOMESTIC PRODUCT
Definition of GDP
•Gross domestic product (GDP) is the overall monetary or
or market value of all finished goods and services
generated over a particular time period within the
boundaries of a country. It serves as a detailed scorecard
of the economic health of a given country as a general
measure of overall domestic output.

3. METHOD OF CALCULATING GDP
THE EXPENDITURE
METHOD (
AGGREGATE DEMAND)
THE INCOME METHOD
(SUM OF FACTOER
INCOME)
THE OUTPUT METHOD
(SUM OF OUTPUT
VALUE)
EXPENDITURE METHOD
GDP = C + I + G + (X – M)
where:
C=Consumer spending on goods
andservices
I=Investor spending on business
capital goods
G=Government spending on public
goods and services
X= exports
M=imports​

4. TYPE OF GDP
 Real GDP.
True GDP is a GDP measure which is inflation-adjusted.
The prices of goods and services shall be calculated at a constant price level, which shall normally
be fixed by reference to a predetermined base year or by reference to the price levels of the
preceding year. The most reliable representation of a country's economy and economic growth rate
is known to be real GDP.
 Nominal GDP.
Nominal GDP is calculated with inflation.
Goods and services values are measured at existing market levels.

5. 1. Natural Resource
- The discovery of more natural resources like oil, or mineral deposits
may boost economic growth as this shifts or increases the country’s
Production Possibility Curve.
2. Population or Labor
- A growing population means there is an increase in the availability
of workers or employees, which means a higher workforce. One
downside of having a large population is that it could lead to high
unemployment.
3. Technology
- The technology could increase productivity with the same levels of
labor, thus accelerating growth and development. This increment
means factories can be more productive at lower costs. Technology is
most likely to lead to sustained long-run growth.
4 . Capital
- Increased investment in physical capital, such as factories, machinery,
and roads, will lower the cost of economic activity. Better factories and
machinery are more productive than physical labor. This
higher productivity can increase output. For example, having a robust
highway system can reduce inefficiencies in moving raw materials or
goods across the country, which can increase its GDP.
Factors of Increase in GDP Growth:

6. Factors of Decline in GDP Growth:
Poor Health and Low Level of Education
◦ High mortality rate
◦ High illiterate percentage
Lack of Necessary Infrastructures
◦ Education center to outreach rural area
◦ Better internet facility and coverage
◦ Efficient healthcare institutions
Political instability
◦ Outthrown of government
Flight of Capital
◦ Closing of international franchises/business
◦ Investors to find better opportunity overseas
Resource Depletion

7. LIMITATIONS OF GDP
GDP does not account for :
voluntary and domestic transactions – household chores
black market transactions – drugs and weapon
overall societal welfare – if there is on poor and very rich man, the GDP still increase
depreciation of assets – depreciated capital not accounted
Negative externalities – cost of pollution

8. An older man sees a dead rat
on the road and gives his
young colleague an offer: "If
you eat it, he says, I'm going
to pay you $10,000."
A simple cost-benefit
analysis is performed by
the younger professor, who
thinks that he is better off
with $10,000 than without
and eats the rat.
He dares his older colleague to eat it
when he sees another dead rat on the
street, and he offers to give him
$10,000 back when they go to the
young professor who suffers from a
bad aftertaste and needs to do the
same thing with his senior colleague.
After some hours, noticing the nasty
aftertaste, the younger professor
finally speaks to his mind: "Well it looks
like we ate dead rats for free, but don't
forget the $20,000 dollar increase in
GDP” the older professor says.
SYNOPSIS

9. METAPHOR OF THE DEAD RAT
◦ Eating dead rat is a performance metaphor for the benefit of the viewer and by this if the
taxes were paid from these two transactions, it is an increase in the GDP. -”Did the gross
domestic product (GDP) really increase? From a national income accounting perspective, the
two ‘meals’, requested and paid for by the other, constitute paid services unlike, say, much
care work by family members which goes unremunerated.”
◦ Some would say that this example fits the definition of GDP precisely – new goods and
services produced and sold on the market. In this case a rat-eating performance for the
benefit of the viewer. If taxes were paid from these two transactions, it is an increase in
official GDP, if not – an increase in output of the shadow economy (unofficial GDP). Others
would say that it is foolish to include these types of transactions into the calculation of GDP.

10. In conclusion, GDP related measures have long been criticized, and we should strive
to do better to measure and improve human progress. After all, as Robert F.
Kennedy famously quipped over half a century ago, GDP “measures everything,
except that which makes life worthwhile”
CONCLUSION