Final answer:
A country's GDP can exceed its previous values through increased exports or government investment in infrastructure. A rise in population may increase GDP but decrease GDP per capita. Moreover, GDP does not accurately reflect changes in the standard of living when considering environmental or social factors.
Step-by-step explanation:
Economic Growth and GDP
Gross Domestic Product (GDP) is the total value of all goods and services produced within a country over a set period, typically a year. It includes various factors such as consumer spending, government spending, investments, and the net exports of a country.
Answering when a country's gross product might exceed its previous values can be addressed by considering different economic activities:
- When the population increases: If the population grows faster than GDP, then the overall GDP may increase due to a potential increase in the workforce and consumer base, but GDP per capita, which is GDP divided by the population, may decrease.
- When inflation decreases: A drop in inflation does not necessarily mean the country's output has increased. Instead, it often indicates stabilized prices, which can be beneficial for the economy but may not lead directly to an increase in the output of goods and services.
- When the government invests in infrastructure: Investments in infrastructure can lead to economic growth by increasing efficiency and productivity, leading to a potential increase in the country's GDP.
- When exports increase: An increase in exports leads to an increase in production to meet international demand, directly raising the country's GDP.
Factors such as environmental degradation, crime rate, the availability of goods, and changes in infant mortality rates can cause GDP to either overstate or understate the change in the standard of living, as GDP does not account for these social and environmental factors.