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# growth~GDP~

10 min

GDP

from the trend of GDP

How to measure

the GDP

Index similar

to GDP

## What is GDP ?

Simply put

Is the profit was higher

How much the quantity sold

Turn these into indices

By measuring the growth rate, you can measure the economic growth rate of the country.

### "Gross Domestic Product Index"

There are two types of GDP: Nominal GDP and Real GDP.

You can also derive other economic indicators such as Consumer Price Index (CPI) from these two types of GDP.

Here is a brief article about the Gross Domestic Product Index (GDP),

which is important in measuring the economic growth of a country.

It is most important to forecast the economic prospects in business and life as well as investment.

## Sales are "Nominal GDP"

When, for example, "country" is that it is "the shop"

Simply put,

The sum of the monthly profits of the shop will be the "Nominal GDP" as it is.

If you say a little finely

The sum of the prices evaluated in the market will be the "Nominal GDP" as it is.

### the economy will improve

If the growth rate of nominal GDP is higher than the growth rate of real GDP,

prices are considered to be high (inflation).

In other words, the demand for products is high, so the supply can not catch up.

This rise in nominal GDP is important for recovering the depressed economy.

## Profit is "Real GDP"

simply put,

It is the profit calculated by subtracting the cost from the sales of the store.

### When selling cake

The cost of ingredients will be added to the price of the cake.

If the price of wheat flour is cheaper also cheaper price of the cake.

Conversely, the higher the price of flour, the higher the cake.

Just because there were a large number of cakes sold and lots of sales,

it does not always mean that the profits were high.

### In other words

By subtracting the cost from the sales and calculating the profit,

it is possible to figure real value.

As a way of thinking

Try to understand as Profit = Real GDP.

### the economy will deteriorate

If the real GDP growth rate is higher than the nominal GDP growth rate,

prices are considered to be cheaper (deflation).

In other words, the demand for goods is low and oversupply.

It does not sell even if it is made,

and it is a bad situation of the economy where consumption falls.

To summarize this far...

Nominal GDP is the total of things produced.

Real GDP is the sum of nominal GDP minus prices.

## GDP assesses the economy

So how much is these GDP actually growing?

In order to make a long-term judgment, you need to convert it to the index.

The exponent derived by this formula is ....

"Deflation" if close to 0

If it is close to 2, "inflation"

The closer to 1, the balance between supply and demand is maintained.

## Digest

GDP is an important indicator in measuring the country's economic growth rate.

This is very useful for business and life as well as investment.

The GDP deflator quantifies good and bad of the economy by dividing nominal GDP by real GDP.

## Is the bubble coming again now?

Japan's bubble season ended in 1998.

If you look at the statistics of GDP with the graph ...

It can be said that the economy in 2019 is higher than at the bubble period.

The bubble can only be noticed when it burst,

"Oh, Is that so been a bubble until now."

However, GDP, CPI, etc.

If you can interpret economic indices such as the price index,

you will also realize that "the bubble has started now".

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【References】

J.P Cabinet Office Economic and Social Research Institute-National accounts

J.P Ministry of Internal Affairs and Communications Statistics Bureau-Statistical data

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