ECON 203 Lecture Notes - Lecture 2: Gross Domestic Product, Black Market, Fixed Capital
13 Jul 2015
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Econ 203: principles of macroeconomics - lecture 2: gross domestic product pt. Undoubtedly, gdp is an excellent tool for analyzing and measuring the total output in an economy. However, many people also try to use gdp as a measurement of the well-being of citizens. Important: gdp has shortcomings both in measuring the total production, and in measuring citizen well-being. Shortcomings of gdp as a measure of total production. When measuring the total production of the economy, the bureau of economic analysis (bea) omits two important types of production: Household production: production such as childcare, cleaning, and cooking, which is not usually paid for with money. However, such contributions are real if they were performed by a non-household member, they would be paid for and counted in the gdp. The underground economy: the buying and selling of goods that is concealed from the government to avoid taxes or regulations, or because the goods and services are illegal.
