In: Economics
A) What is Gross Domestic Product and what are its components? B) Based on the text and any additional sources you select, what are the limitations of GDP as a measure? C) What are some alternatives/additions to GDP as a measure of economic well-being?
A) What is Gross Domestic Product and what are its components?
The Gross domestic product (GDP) refers to the total number of output being produced in the boundary of an economy in a tax year. It is mainly used to calculate a nation’s wealth which describes an economy’s financial status. The main components of gross domestic products are personal consumption, investment, expenditure and net exports (export-import).
B) Based on the text and any additional sources you select, what are the limitations of GDP as a measure?
GDP has some limitations as it can’t be an accurate and complete measure of economic wealth as it does not include other components in the calculations. It is truly based on the productivity in an economy. GDP does not encounter several points while calculating nation’s wealth such as
Other than these GDP does not include suicide rates, family breakdowns, poverty, health, infrastructure, income gap and cost of commuting to work and many more in its calculation for national income.
C) What are some alternatives/additions to GDP as a measure of economic well-being?
There are other measures available which can replace or can be better off than GDP. The other alternatives can be: