Speaker 1: Welcome to brain Stuff production of iHeart Radio. Hey brain Stuff,
Speaker 1: Lauren voke obam here with a classic episode from our
Speaker 1: earthWhile host Christian Sagar. This one breaks down some very basic,
Speaker 1: yet very complex economic terms for you, g d P
Speaker 1: and g n P. Hey brain Stuff, it's Christian Sagar. Okay.
Speaker 1: Let's say you've just gotten a job offer to work
Speaker 1: in the majestic country of bum Sylvania. Awesome, right, You've
Speaker 1: always wanted to live amongst the scenic bum Sylvanian swamp lands,
Speaker 1: and here the local ghost toads sing their famous mating screech.
Speaker 1: But before you pony up the five forty nine cents
Speaker 1: for Rosetta Stone Bumpsylvanian edition, you want to do a
Speaker 1: little research on the economic health of this country. So
Speaker 1: you ask your friend, the economics professor, Hey, how is
Speaker 1: the economy of bum Sylvania doing these days? Well, one
Speaker 1: number that will almost definitely figure into her apply is
Speaker 1: the country's g d P. This stands for gross domestic product.
Speaker 1: G d P is a common measure that's used to
Speaker 1: roughly represent the size of a country's economy. The way
Speaker 1: you calculate GDP is both simple as a general principle
Speaker 1: and complicated in the details. The simple version is that
Speaker 1: GDP is the value of all the goods and services
Speaker 1: produced within a country in a given period of time,
Speaker 1: such as a financial quarter or a year. So if
Speaker 1: we look at bump Sylvania, we can calculate its yearly
Speaker 1: GDP by adding up the dollar value of all the
Speaker 1: stuff it creates, all the pork, sandwiches, shoe shines, fashion magazines, bullets, massages, motorcycles,
Speaker 1: jiu jitsu classes, ghost toad swamp tours, and of course,
Speaker 1: traditional bump Sylvanian style wooden hats. Every item, product or
Speaker 1: service brought to market by workers or other economic resources
Speaker 1: located inside the country in that year is part of
Speaker 1: the g d P. Of course, coming up with this
Speaker 1: figure is not as easy as it sounds. GDP is
Speaker 1: actually a highly complex and abstract statistical instrument that takes
Speaker 1: some real work to calculate. Just one example of the
Speaker 1: many complications. Let's say somebody cuts down some swamp trees
Speaker 1: and turns those trees into lumber, and then sells that
Speaker 1: lumber to a haberdasher who turns it into a traditional
Speaker 1: bump Sylvanian style wooden hat. Do you count the sales
Speaker 1: of both the lumber and the hat. Well, no, because
Speaker 1: g d P is a measure of the final value
Speaker 1: of goods and services. So if you counted the sale
Speaker 1: of the wood to the hat maker and the sale
Speaker 1: of the hat, you'd be counting the same value twice.
Speaker 1: The value of the wood gets wrapped into the final
Speaker 1: value of that gorgeous, gorgeous head cear. GDP is probably
Speaker 1: the most most important measure of the size and performance
Speaker 1: of an economy, but it's not the only one. There's
Speaker 1: also g n P, which is related but slightly different.
Speaker 1: G n P stands for gross national product. G d
Speaker 1: P is the value of all economic production inside a
Speaker 1: country's borders, no matter who is doing that production. G
Speaker 1: n P, on the other hand, is the value of
Speaker 1: all the products and services produced by a country's residence,
Speaker 1: even if production takes place outside the country. So if
Speaker 1: a bump Sylvanian business has a factory making wooden hats
Speaker 1: in another country, the output of that factory would be
Speaker 1: included in Bumpsylvania's g n P, but not it's g
Speaker 1: d P. Both figures are economically useful, but according to
Speaker 1: the U. S Bureau of Economic Analysis, g d P
Speaker 1: is the primary measure used by the United States and
Speaker 1: most other countries. While GDP is a widely used indicator
Speaker 1: of economic strength, many critics point out that it's not
Speaker 1: necessarily the best indicator of the real health of a nation.
Speaker 1: For example, a country with a large, growing GDP might
Speaker 1: look strong on paper, but what if that number is
Speaker 1: masking vast income, inequality and productive economy based on huge
Speaker 1: amounts of, say, low wage labor. Of course, by comparing
Speaker 1: g d P with other pieces of data, you can
Speaker 1: do more with the figure. A simple example would be
Speaker 1: comparing g d P with population to come up with
Speaker 1: per capita g d P, which means economic value per person. So,
Speaker 1: for example, according to the World Bank, in China's GDP
Speaker 1: was a massive nine point to trillion dollars. Compare that
Speaker 1: to Luxembourg's relatively small g d P of sixty billion dollars.
Speaker 1: Yet in the same year, China's GDP per capita was
Speaker 1: only about six thousand, eight hundred dollars, while Luxembourg's was
Speaker 1: more than sixteen times that at about one hundred and
Speaker 1: ten thousand dollars. So, while China's economy is certainly much larger,
Speaker 1: it looks like each individual citizen on average is better
Speaker 1: off in Luxembourg. Financially speaking, that is. Today's episode was
Speaker 1: written by Joe McCormick and produced by Tyler Klang. To
Speaker 1: hear more from Joe, chat at his podcasts Stuff to
Speaker 1: Blow Your Mind and Invention and for more on this
Speaker 1: and lots of other topics because at how stuff works
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