Question

WRITTEN WORK do 5 of 7 Articulate an argument for and against five of the following statements.

Topic 1: GDP is the best measure of how well an economy is doing

Topic 2: Inflation harms the poorest and most venerable in our economy

Topic 3: Everybody gains from free trade.

Topic 4: Increases in GDP reflect increases in the well-being of a country.

Topic 5: Steps should be taken to reduce its size of the underground economy in Canada

Topic 6: An economy experiences cyclical fluctuations and this is good for a market based economy.

Topic 7: Large corporations are the major drivers of the world’s economy

Answer 1

Topic 1. GDP is the best measure of how well the economy is doing.

GDP is the measure of total output produced by a nation and it's domestic boundary , at the given price levels and at exsisting rate of employment. It is one of the best measures to see how well an economy is doing. The reason for this is , GDP gives a quantifiable measure of how well an economy is functioning . The measures which are quantifiable have a minute scope of manipulation with prospectives and learnings. An economy having a growing GDP is always showing growth but it is not necessary that an economy with high GDP is grwoing in nature. Although high GDP indicates the prosperity among the people in the country with respect to high average income levels. Although the deduction of high GDP might be a manipulation of figures , as in , if there is a large inequality in income , average GDP will be on the higher , but majorly of the mass would be below the average rate of income. Hence the problem of skewness occured while measuring GDP . Along with this GDP doesn't involve index like well being and happiness of people. This makes it a one dimensional parameter to measure how well an economy is doing , which is fixed on quantitative biases.

Topic 2. Inflation harms the poorest and most vulnerable in economy.

A rise in inflation is a direct effect of higher aggregated demand , which indicates a progressive economy. Inflation leads to a structure which grows as the output increased due to high returns from the production. The measured GDP also rises with inflation. If a GDP is growing proportionally, this indicates a growing economy . Having said this, the poor and vulnerable section must be provided enough incentives and wage rate rise , as the economy faces high inflation. High inflation , which is the result of high wage rates , is healthy for every section. But if the producer marks the profit and the labour ( which is mostly the vulnerable and poor) are not aware of the falling real wage with rising prices, it leads to price burden on the poor , making them even more vulnerable and rising the income gap even further. This escalates the level of unemployment , and most importantly , the levels of inequality gap in a country. Hence , even if GDP is rising with rising inflation, the govt must ensure including every section in the growth , that is , it must be equally distributed.

Topic 3. Everybody gains from free trade.

According to international economics models , free trade causes Economies to grow and expand on the basis of producing goods which each country has a natural advantage in. With free trade, the average production in the world rises. But theories like leontiff paradox , proves that a larger country is expected to grow more( having a capital advantage) , compared to nations with labour advantage and smaller production capacity. This argument is also traced in mechantalism , where the theory of Beggar thy neighbour was discussed. Which means , with free trade , the one country growing, grows on the resources of some target nation. Hence free trade if beneficial only if the participating countries have each a resource which they have a natural advantage in and trade with the country which has goods produced from the resources , which are not naturally abundant in importing country.

Topic 4. Increase in GDP reflects increase in well being of the nation.

It is true that increasing GDP is actually an indicator of increasing well being of a nation. A rising GDP is a result of rising aggregate demand . This is a direct quantitative indicator that an economy has seen a rise in capacity of individuals. Although if a rise in GDP is from skewed sources in economy, this means GPD rise is a result of rising inequality gaps among the rich and poor in the economy.

Topic 5. Large corporations are major drivers of world economy.

Large corporations have a large market share , which might exist even in the world market. The profits are super normal and the numbers of members involved in moving the corporation is also very large. The countries with these large players , extract high tax revenues , which is great for an economy . The employment levels of economy are also increased with flourishing large corporations. The large firms focus on research development activities, from the large profits extracted.hence yes , the large corporations are major drivers of the world economy, with growing initiatives and high employment opportunities.