1. Explain the factors that the measurement of GDP ignores. 2. Explain the difference between a...

1. Explain the factors that the measurement of GDP ignores.

2. Explain the difference between a positive and a negative externality along with an example

Expert Solution

1.GDP which is the production of final goods and services within the boundary of a country in a financial year

Many Economists think that it is not a complete tool for measuring the economic health as it lacks so many important factors like-

Gini coefficient

Carbon footprint index

Happiness index etc

2.

An externality can be defined as when there is transition between the first two parties and the effect seen on the third party

If the effect onthe third part is negative then the externality is called negative externality and if the effect seen on the third party is positive then the externality is called positive externality

The example of negative externality can be air pollution

For example suppose a person is driving car but he is intentionally or unintentionally is harming the nearby people walking by him

Example of positive externality can be let's say in an colony a person is having beautiful garden then the beautiful smell of the garden will be feel by the neighbors living with that person

Rahul Sunny answered 7 months ago

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