ECON 3550 Chapter Notes -Consumerism, Diminishing Returns, Per Capita Income
29 Jun 2014
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G&d readings: another measurement problem for gdp (cont. to written notes, need to compare apples with oranges in calculating value of nation"s output. You need to use market prices to add up total value of goods and services. Problems with missing price, inaccurate, price information: does not account for bads" society produces. Cost of pollution must be deducted from profit made on an output. Crime, congestion, other social bads ought to be deducted from gdp: does not account for depreciation of goods or depletion of natural resources. Exchange-rate conversion problems: another measurement issue, how to compare levels of gdp per capita across countries, problem is there because each nation measures national income using its own currency, must convert gdp per capita to a common currency. To better compare national income levels across countries: nation a"s true level of per capita income is higher than b"s when.
