What would you include in the GDP calculation (in addition to what's already counted by Statistics...

What would you include in the GDP calculation (in addition to what's already counted by Statistics Canada) to make it better reflect the living standards? Why?

Explain in detail. It should be related to Macroeconomics.

Expert Solution

Following parameters/variables are already included in GDP Calculation:

- Consumption expenditure by hourseholds

- Investment expenditure

- Government spending on goods and services

- Net Exports

However, these measures do not reflect the true value of country's standard of living. GDP aggregate excludes several variables which are included in other aggregate like Human Development Index.

I, as an economist would try to include following measures to make the GDP figure more relevant to country's health and condition:

- Pollution or Environmental Damage: Huge costs are involved due to such factors and must be included in GDP calculation.

- Education: This is also excluded from GDP. As a nation, the education or literacy levels tell how progressive that country is.

- Financial Assets such as stocks and bonds

- Transactions that happen in an underground economy

- Home services: services given by a house wife should be included in GDP calculation

Exclusion of all above factors makes GDP not a reliable indicator of nation's living standards

**if you liked the answer, then please upvote. Would be motivating for me. Thanks.

Rahul Sunny answered 7 months ago

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