Examen Economía Primer Periodo

Erika Gabriela Rozo Moreno

Colegio Arca Internacional Bilingüe

Economía

Diego Esguerra

Bogotá, Colombia

16 de Noviembre de 2023
2. What is the GDP?

Gross Domestic Product (GDP) is a measure of the monetary value of all final goods and
services produced in a country during a specific period of time. It is used to assess the size
and performance of a country's economy. The calculation of GDP is usually the
responsibility of the national statistical agency, which collects data from a variety of
sources. Real GDP is important because it provides information on economic performance
and is used as an indicator of the overall health of the economy. However, GDP is not an
indicator of a country's standard of living or overall well-being. It is important to
understand that GDP does not directly reflect the quality of life of citizens or other aspects
of social welfare.
2.1 What is nominal GDP?
Nominal Gross Domestic Product (GDP) is the value, at market prices, of the output of
final goods and services produced in a country during a given period of time, usually one
year. It reflects price increases or decreases, if there is inflation or deflation respectively.
For example, if in an economy inflation is 5% over the previous year and its nominal GDP
is 4%, real GDP would be -1.0%, indicating a fall in real terms, despite a nominal increase
due to price increases (inflation). Nominal GDP is important because it provides
information on the size of the economy and its performance, and is used as an indicator of
the overall health of the economy.
2.2 What is real GDP?
Real Gross Domestic Product (GDP) is an economic indicator that measures the monetary
value of the output of final goods and services produced in a country during a specific
period of time, at constant prices. Unlike nominal GDP, which reflects price increases or
decreases due to inflation, real GDP takes into account the effect of inflation on prices. Real
GDP is important because it provides information on the size and performance of the
economy, and is used as an indicator of the overall health of the economy. In addition, it
allows comparison of a country's output over different time periods, isolating changes in
prices. It is important to note that real GDP does not directly reflect the quality of life of
citizens or other aspects of social welfare.
Real GDP is calculated by dividing nominal GDP by a price index known as the GDP
deflator. The formula is next one:

Figure 1. Formula used to calculate real GDP.

 Year Real GDP (in Nominal GDP (in GDP per
millions of euros) millions of euros) capita
growth (%)

2013 1.560.685 1.560.685 0,0

2014 1.586.291 1.586.291 0,0

2015 1.624.747 1.624.747 0,0

2016 1.676.740 1.676.740 0,0

2017 1.735.806 1.735.806 0,0

2018 1.787.545 1.787.545 0,0

2019 1.838.934 1.838.934 0,0

2020 1.748.819 1.748.819 0,0

2021 1.794.345 1.794.345 0,0

2022 1.946.479 1.946.479 3,7

2023 508.013 508.013 0,0

Figure 2. Table with the analysis of real and nominal GDP in Italy over the last 10 years
-Real and nominal GDP data were obtained from, while GDP per capita growth can be
found at. Real and nominal GDP values are presented in millions of euros, and GDP per
capita growth is expressed as an annual percentage. Data were collected from 2013 to 2023.
Figure 3. Table of annual GDP evolution of Italy.

Figure 4. Table of GPD evolution per capita in Italy.

Figure 5. Italy's GDP per capita growth graph.

Figure 6. Italy's annual GDP graph.

3. Concept of intermediate goods and value added in the context of the GDP of Italy.
The concept of intermediate goods and value added in the context of Italy's GDP refers to
the production and manufacturing processes of goods and services. These concepts are
described in detail below:
3.1 Intermediate goods: Intermediate goods are products that are used as raw materials or
resources for the production of other goods and services. In the context of the Italian
economy, exports of intermediate goods reached a value of $132,727 million in 2021.
These goods are transformed into final products or finished goods, which are then marketed
to consumers. These inputs are not directly destined for final consumption, but are used for
the manufacture of other products.

3.2 Value added: Value added is the net output of a sector after adding up all products and
subtracting intermediate inputs. In other words, it is the value added to intermediate goods
to produce final products. Value added is a key component of GDP, as it represents the part
of the economy that is devoted to the production of goods and services.

In the case of Italy, the production and manufacturing processes of goods and services are
central to economic growth and employment in the country. Italy's GDP per capita in 2022
was €33,020 €34,188, indicating a relatively high standard of living compared to other
countries. The Italian economy has focused on improving competitiveness and innovation
in several sectors, such as manufacturing, technology and innovation, and logistics and
transportation. These sectors have contributed to GDP growth and employment in the
country.
3.3 Value added is calculated by subtracting the value of intermediate goods consumed in
production from the value of total production. Mathematically, it is expressed as follows: