Please give one thoughtful paragraph for each one of the following questions. Pl
ID: 1096463 • Letter: P
Question
Please give one thoughtful paragraph for each one of the following questions. Please provid example for your analysis as well as some data to backup your argument. Do not just google for information as i can just do that myself. Thanks.
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?
Explanation / Answer
What are the limitations of the GDP in measuring total output and national welfare? What products (services) are excluded from the GDP computation?
GDP is like the tip of an iceberg and is in true sense an economic indicator. It should not be viewed as an overall indication as to the true health of the economy. GDP is a good proxy of the consumption possibilities people have, and consumption is a good proxy of well-being/welfare. Therefore, we allegedly can use GDP per capita for comparing welfare between countries and GDP growth as an indicator of social progress within a society. This may
sound compelling to many and, indeed, we are used to this rhetoric from authorities and the media. But it is wrong to assume that GDP or any of its common derivatives provides a measure of social welfare, for a number of reasons.
GDP (gross domestic product) is computed as the sum of all end-use goods and services produced in an economy during a period of time, weighted by their market prices.
First of all, GDP is computed at market prices