Write the impacts of shortcomings of gdp as the measure of

Reference no: EM13451810

Gross Domestic Product (GDP) measures the market value of all final goods and services produced within a country in a given period of time. In other words, GDP measures continuous flow of money from households to firms and then back to households in the whole economy. (Refer to Chapter 24)

The trend of the GDP growth rates is the key indicator of macroeconomic fluctuations (business cycle), which include expansion, boom, contraction, and recession. Thus the real GDP is used to explain how well the overall economy of a country is performing whereas GDP per capita is used as a natural measure of the economic well-being of the average individual in a given country.

However, there are limitations (shortcomings) in using the GDP as a measure of national income as well as a measure of national welfare.

1. What are the limitations of the GDP in measuring total output and national welfare? What products (services) are excluded from the GDP computation?

2. Is the GDP measure underestimating or overestimating national production and total income in the economy? Why?

3. What are the impacts of the shortcomings of the GDP as a measure of the national product and national welfare?

Reference no: EM13451810

Questions Cloud

Saffing company purchased the net assets ie assets minus : staffing company purchased the net assets i.e. assets minus liabilities of time management inc. for 390000. time

How can sustainable long-run economic growth be realized : there are a number of economic and non-economic factors that affect long-run economic growth of countries. among these

Describe how resource-based competitive advantage drives : competitive advantage implies the creation of a system that has a unique advantage over competitors. with the advent of

Compute the amount of depreciation expense recorded on old : smith steakhouse is a restaurant catering to a variety of customers. they purchased a new high-power oven at a cost of

Write the impacts of shortcomings of gdp as the measure of : gross domestic product gdp measures the market value of all final goods and services produced within a country in a

What is the opinion on relationship between unemployment : both inflation rate and unemployment rate are closely watched aspects of macroeconomic performances of the economy and

Classic irons inc purchased manufacturing equipment with : classic irons inc. purchased manufacturing equipment with an expected useful life of five years or 5000 hours of usage.

Explain four types of audit opinions green and associates : write a 750- to 1050-word paper accomplishing the followingmiddot describe four types of audit opinions green

Describe how resource-based competitive advantage drives : competitive advantage implies the creation of a system that has a unique advantage over competitors. with the advent of

User Account

All Pages