Question

APPLICATION 1 – GROSS DOMESTIC PRODUCT: Prior to completing the application, students will need to review Chapter 5 and 6 to best prepare for the applications.

OPTION 1: USING VALUE ADDED TO MEASURE THE TRUE SIZE OF WALMART

Answer 1

Inflation,unemployment ,economic growth are the factors that need to be focussed while studying a economy.GDP is the monetary value of all final goods and services produced in the economy during a year.Walmart's sales during 2014 was $473 billion which was 2.7 %of the GDP of US.Walmart ,which is a leading discount retailer in the world,has been making progress in the world and its progress is measured through its sales.In order to make a substantial increase in sales, Walmart had to purchase goods from other companies. The amount of money spent on sales was $358 billion and $115 billion was value added.When Walmart's sales is compared to a country,its GDP will be same as Taiwan and the ranking of Taiwan in the world in GDP is 29th.Value added is the extra value created over and above the existing value.It is the most appropriate measure to compare Walmart to a country. If we use value added to compare Walmart to a country, it will be like Angola which ranks 60th in the world.