What GDP Counts
Same Number, Three Economies
One amount of spending, one GDP figure, and a next ten years that depend on what the money bought.
8 min110 XP available3 challenges
A state spends money this year. Part of it becomes lasting capital that keeps working: roads, hospitals, housing. The rest is used up or destroyed within the year, like ammunition that is fired. GDP equals the spending either way. What the economy can produce afterwards does not. Set the split to 0% and then to 100%, and compare the next ten years.
GDP this year
€100B
The spending, whatever it bought
- Still standing next year
- €50B
- Extra production per year afterwards
- €4B
- Over ten years
- €40B
spending × share
capital × return
simply added up, to keep it simple
What the state pays for, whatever it buys
0% is all used up or destroyed; 100% is all roads and hospitals
What each euro of roads or hospitals adds to production each year
Compare spending that is all destroyed with spending that is all built, and end with more than €50bn over ten years
- Try 0% — not yet
- Try 100% — not yet
- Compare spending that is all destroyed with spending that is all built, and end with more than €50bn over ten years — not yet
Answer to continue.