Gross Domestic Product (GDP) of a Nation Essay - 889 Words

GDP Gross domestic product (GDP) of a nation is comprised of four primary components. These components; consumption, investment, government spending and net exports are the measure of the monetary value of all the finished goods and services produced within a countrys borders in over a given period of time. This can be broken down in any time frame but is normally used quarterly and annually. The GDP can be calculated as; GDP (Y) = consumption (C) + investment (I) + government spending (G) + net exports (NX) or Y=C+I+G+NX. The key word here is finished goods and not all goods. Consumption Household consumption, one of the four components of calculating the GDP of a nation has a broad range of items included in it. With the exception of†¦show more content†¦It is not until the items are sold that they become converted to consumption spending and will then be considered negative inventory investment for Amazon. Mankiw (2012) stated that the GDP measures expenditures on goods and services where the word investment means the purchase of goods used to produce other goods (p.498). It is very important that companies invest in the future for its business. The economy could be doing better if some companies were not so profit oriented and more growth conscious. Amazon has been investing a great deal into the future of its business. For the shareholders of Amazon this action should have an affect the value of the shares. Since Amazon is investing so much back into its growth it has not made any real money and the shares do not earn much of any dividends. For most stocks this would be seen as a negative for its shareholders. For Amazon though, its stock continues to increase in value even without showing a profit. This may be very good for the future of its shareholders once Amazon gains the market share it is looking for and can then return great profits. Amazon has been building market share by continually building more fulfillment buildings in more cities. For now it has foregone maximizing profits which could be staggeringly high and used this money to help gr owShow MoreRelatedGross Domestic Product ( Gdp ) Of A Nation949 Words   |  4 PagesGross Domestic Product Gross domestic product (GDP) of a nation is comprised of four primary components. These components; consumption, investment, government spending and net exports are the measure of the monetary value of all the finished goods and services produced within a country s borders in over a given period of time. This can be broken down in any time frame but is normally used quarterly and annually. 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