Hajia Amina Sammo (PhD) Abstract Gross domestic product (GDP), this is a term which is familiar to pretty much anybody who has ever read any newspaper. This number is considered by many to be the most important indicator of the state of the economy. However, how little clarity we have on the subject is remarkable. The average public is not completely ignorant about what GDP is. They do have some idea about the GDP number and its importance. The issue is that they harbor a lot of wrong notions about this subject. If many economists are to be believed, these wrong notions are extremely dangerous and may have in fact played a huge part in the recent economic crisis that halted the growth of the global economy. All these arguments, the pros and cons make any sense only after we have a clear idea about what GDP is. In the previous article, we understood why the GDP number was created and what purpose is it supposed to serve. However, this does not state the importance of the GDP number. The average person begins to believe that GDP is one of the many numbers that economists use. However, this is not the case. The Gross domestic product (GDP) is central to the subject of macro-economics. This article is dedicated to understanding the applications of the GDP number. Once we know how widespread the use is, we can understand how the system will be gravely affected, if the number is incorrectly defined! Keywords: Common Sense, GDP Sense, and Depleting Natural Resources |