Question

1. How much is the overall GDP contribution of the uber ? Which part of the GDP does the event affect (C, I, G or NX)? Explain the expected effects on GDP (whether increase or decrease).
2. Will the event increase or decrease unemployment? Discuss the impact on the economy. {regarding uber

Answer 1

The overall contribution to GDP can be summarized as following:

1) contribution of $17 billion per year

2) income of drivers contibuted $5.7 billion annually

3) increased no of tourists and trips around 26.7% because of convenience to visit additional locations.

GDP includes the following under "Expdt method":

"C" private final consumption expdt

"I" gross domestic capital formation

"G" govt final consumption expdt

" X-M" Net exports

Because of uber,GDP of country increases.Being a start up it creates capital in the economy.It is a productive firm which adds on to investment expdt or gross domestic capital formation.Benefit of uber is also enjoyed by insurance companies.They are also able to generate more revenue.

It has also increased personal final consumption expdt in the economy because hiring of uber services will increase consumption of household on services.

It has also increased export by making trips convenient for tourist.Their shopping and stays has increased revenue in country .If any foreigner will purchase anything produced in our nation,it will be considered as export.

So,uber affected C, I and net exports component of GDP.

Expected effects on GDP:

While including UberEATS and Uber offices alongwith drivers earnings,GDP of country will increase.It generates income directly for drivers and indirectly for office workers.

Uber has contributed around more than $15 billion to GDP of U.S.

Effect on employment:

Because of uber services ,employment has both positive and negative impact.

Uber has given employment to many people as drivers and office workers.It has also increased tourism by making trips easy and affordable.

But it has snatched employment from traditional taxi drivers because people prefer to hire uber because of mobility,less fare and more convenience.

Thus,overall impact on economy is moving towards more employment and revenue.