Answers_to_Asst_1

Answers_to_Asst_1 - Answers: Homework #1 - ECON 423 - Fall...

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Answers: Homework #1 - ECON 423 - Fall 2008 Due: Thursday, September 4 All of these questions require essay answers, and there is some leeway in what the student replies. The notes below present some of the things that might have been incorporated into ta good answer . 1. Discuss all the ways economists have adjusted gross domestic product to make it more relevant for examining economic development and comparing levels of economic development across countries. Can you suggest any further adjustments that would make GDP or GDP per capita a more accurate measure of human well being? Economists have adjusted GDP in a variety of ways. First, leisure should be added to the welfare function. Secondly, there have been numerous attempts to add the value of household activity, informal activity, and illegal activity. Adjustments have been made for changes in quality and for increases in choice, or variety. Some have argued that nature’s services should be included (see Question 4 below). The textbook argues that it is more valid to judge welfare by lifetime income rather than annual income. Finally, there is the Human Development Index,
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Answers_to_Asst_1 - Answers: Homework #1 - ECON 423 - Fall...

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