GDP Assignment Example | Topics and Well Written Essays - 250 words - 1

gross domestic product - Assignment ExampleSubsequently, assuming an increase in the real gross domestic product per person, the rise in the real national GDP would indicate that the standards of living for the citizens has risen too. This is in pass onation of the ownership of material things such as shelter, viands and clothing which are fundamental to wellbeing. The increased standard of living could also be as a result of the enhanced security, inlet to safe water, justice, access to medical care and a safe environment. However, more of these outputs are more easily obtained by using fewer resources to produce more goods (Mankiw, 2007).The use of GDP as a measure of economic well-being has several limitations. First, it results in changes in quality of products by including new goods that replace older products. Second, it does non consider the leisure time or how hard people work to produce output thus, likely to understate change in real income. Third, GDP does not recogniz e the underground economy (non-market production) involving cash transactions and barter trades conducted outside the recorded marketplaces (Mankiw, 2007). Fourth, GDP ignores the harmful side effects of goods (economic bads) like pollution in its statistics by counting them the same as goods, as well as GDP places no value on the environmental costs of the