Question

Economists have predicted that the outbreak of COVID-19 will lead to large decreases in the gross domestic product (GDP) of many countries. Discuss the pros and cons of using GDP to measure the impact of COVID-19 on economic activity.

Answer 1

ANS

GDP or gross domestic product is the value of goods and services produced in an economy in a year or in a period of time in any economy .The GDP is an absolute term which tells about the absolute performance of an economy .After the covid-19 breakdown the GDP of many countries are bound to fall drastically because the economies have been shutdown and the factories are been locked for a huge period of time. The unemployment rate has gone up drastically and the production are stopped.The GDP of each economy which is affected by the Covid 19 is bound to fall now and also in the current future .

The GDP can still be considered as the good measure to calculate or to judge the effectiveness of an economy because it still has many pros .Some of the pros of using GDP are that GDP tells how much the economy has lost because of the pandemic as the industries were shut .The GDP has an advantage that it gives us an absolute term to measure ,it will also have a benefit that it will suggest the economist or the government about how much amount of intervention is required in the economy .,it will help the government to frame new policies and will tell about the amount of injuction required in the economy .

The GDP is the adequate measure to measure the performance during the Covid -19 but it has its share of Cons too.The cons that would affect the study is that GDP is now affected by the epidemic but when it is used to compare the results of past and to compare with the results of pandemic free nations then it would not illustrate the adequate and accurate results .Many of the countries have seen that GDP is been tempered by the government to state the false results and in order to obtain public trust and support and to obtain the foreign investment .The GDP would also only take nominal factors into the consideration it woulld neglect the death rate due to the pandemic and the amount of suffering that people have to bear due to this epidemic.