Topic 1: GDP and Its Limitations
The national income accounts measure productivity, spending, and income; but these accounts were not designed to measure economic welfare. GDP only measures the value of marketed goods and services for a country during a given period of time. Goods and services that are not sold in markets, such as food produced and consumed at home and household articles, are not included in GDP. Discuss aspects of economic welfare ignored in GDP measurement.
Discussion Checklist:
A.) What are the limitations of the GDP in measuring total output and national welfare?
B.) What products (goods and services) are excluded from the GDP computation?
C.) What are the impacts of the shortcomings of the GDP as a measure of the national product and national welfare?
Topic 1: GDP and Its Limitations
The national income accounts measure productivity, spending, and income; but these accounts were not designed to measure economic welfare. GDP only measures the value of marketed goods and services for a country during a given period of time. Goods and services that are not sold in markets, such as food produced and consumed at home and household articles, are not included in GDP. Discuss aspects of economic welfare ignored in GDP measurement.
Discussion Checklist:
A.) What are the limitations of the GDP in measuring total output and national welfare?
B.) What products (goods and services) are excluded from the GDP computation?
C.) What are the impacts of the shortcomings of the GDP as a measure of the national product and national welfare?
