Economics Homework Help

Part 1. Respond to the following in a minimum of 175 words: 

 Discuss the limitations of GDP as a measurement tool.

Part 2. Reply to the following post in a minimum of 100 words:

“GDP has many limitations, some can be accounted for with real GDP, and other simply will never be accounted for like illegal activity, bartering, and the productivity of stay at home parents. The real problem is that none of these actions are taken place inside of an official market. Without being monitored how is it supposed to be accounted for. These can have large consequences when it comes to figuring out how much money a country is making or losing. For example if someone made $80,000 a year strictly through selling drugs in the underground market that money will never reach the GDP of the country, thus making it seem like the country is making less all around, making it seem like the economy is more expensive then it really is. This can affect how voters think of different leaders, as well as how much effort is put into the wrong area to help fix the economy. This also doesn’t account for illegal drug activity that crosses the boarders to different countries. While GDP isn’t a perfect system, and has some major flaws, I agree with the text book in saying that as long as we understand what GDP is not accounting for we can make educated guesses on what is best for the country based on the GDP information that we can collect. If there is a massive change in the GDP from one year to the next and we cannot see a major difference in tracked information, we would at least know it has something to do with un-tracked information and start making adjustments based on that.” – Orrin M.

Part 3. Respond to the following thread in a minimum of 100 words:

“Gross Domestic Product (GDP) refers to the total financial revenue accomplished by a nation over a certain period. While GDP is commonly a reasonable indicator of a nation’s monetary effectiveness, money related prosperity and way of life, it comes with inadequacies. In any case, it has some significant limitations. Gross domestic product only includes market transactions. GDP fails to account for transactions that do not take place in the market such as black-market transactions and domestic or voluntary work. The gross domestic product does not portray what is being created. Since GDP estimates the estimation of every completed good and service inside an economy; it likewise incorporates items that may affect social welfare. Gross domestic product disregards externalizations. Economic development often goes connected at the hip with expanded misuse of both sustainable and non-inexhaustible assets. One imperfection inside GDP calculations is that estimating entirely by cost underestimates certain items by limiting their commitments to profitability and ways of life. Medical advances, for example, are evaluated exclusively by the cost of the treatment, disregarding the advantages of shorter emergency clinic stays and longer lifespans. GDP fails to indicate whether the rate of growth of a nation is sustainable or not.” – Austen M.