To understand the economic health of Argentina—or any other country—we begin by looking at production in the economy. Let us imagine that Argentina produces a single good—pizza. Each pizza is sold for 10 pesos (which is about US$3.33). To be concrete, suppose that every worker in the economy works in a pizza factory in which (1) each hour worked produces 1 pizza, (2) each worker works 40 hours per week, and (3) each worker works 50 weeks per year. Suppose there are about 15 million workers in the economy. We measure total economic activity by determining the total value of the pizzas producedin this economy. We obtain this by multiplying the previous numbers together. There are
40 pizzas per worker per week,
so there are
2,000 pizzas per worker per year (= 40 × 50),
which means that there are
30,000,000,000 pizzas per year (= 40 × 50 × 15,000,000).
The value of those pizzas is
300,000,000,000 pesos per year (= 40 × 50 × 15,000,000 × 10).
The total value of all the production in the economy is called nominal gross domestic product (nominal GDP). The word nominal indicates that something is being measured in terms of money—in this case, Argentine pesos. For this economy, nominal GDP is 300 billion pesos per year.
The economy we have just described is extremely stylized and somewhat dull from a culinary perspective. We begin with such a simple economy because it allows us to understand the basic workings of the economy without getting bogged down in a lot of details. We did, however, choose numbers that are the right order of magnitude for the Argentine economy in 2002: the total number of workers in Argentina in 2002 was about 15 million, and nominal GDP was about 300 billion pesos. In 2010, estimated GDP for Argentina was 1.4 trillion pesos, and the workforce was over 16 million.
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