Drawbacks to GDP

Drawbacks to GDP - Drawbacks to GDP: The use of GDP as a...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Drawbacks to GDP: The use of GDP as a measure of economic welfare and well-being has been criticized because of: (*Important when asked to explain situations on tests and exams when looking at an economy’s stats, to say remember: it would be better if we took into account the population size, etc) o Population Size Comparing the GDP for different years can be misleading if the population of the country has changed significantly Ex. If GDP has grown by 5% it may seem to have a substantial growth, but if the population has grown by 7% then the output is actually less per person A better indicator is per capita GDP o Non-Market Production GDP does not count output that has no dollar value Ex. Contribution that people make create output by renovating their homes or voluntary services to charitable organizations o Underground Economy “Under-the-table” transactions that occur to avoid paying taxes Statisticians have estimated that these activities would add 3-20%
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 2

Drawbacks to GDP - Drawbacks to GDP: The use of GDP as a...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online