Exam 1 review
Exam 1:
1. List 2 data sources researchers use to estimate historical standards of living and explain what they can infer from these sources. List three indicators of economic development other than National Income measures (NI, GDP, or GNP, level, growth rate, or per capita) that are of interest to economists and explain what can be inferred from each of these indicators. ( Topic 1)
2. Explain in detail 3 weaknesses of per capita GNP (or GDP) as a measure of economic well-being. Although this measure has the flaws you just listed (and others) it is the most oft-referenced statistic when considering standard of living differences across countries. Why? Problem with GDP:
1. Does not capture all economically important activities
Black market/informal market-not captured-much more significant in lesser developed countries.Agricultural production for own consumption.Housework
2. Dollar value of a good does not always equal “social” value (e.g., no accounting for pollution costs).
Relevant for industrialization standard of living debate. Keep in mind a crime wave or war increase G, but doesn’t make society better off. On the other hand, spending on schools and other things with positive spillovers also understate welfare in GDP.
3. Does not account for differences in “cost of living” across time and space Even if GDP per capita were a good measure of average income, comparisons across space and time would be hindered by the fact that the “cost of living” – that is, the cost of a certain bundle of goods or a certain lifestyle – is not the same in different societies (prices – housing prices in particular, taxes, etc.)
Why
1. Widely available and easily comparable for many years for most countries.
2 Highly and predictably correlated with any other measure.
3. What has happened to global economic inequality since 1960? Why? Characterize the progress in social measures (education and health) in impoverished nations. Why is there less of a
1. List 2 data sources researchers use to estimate historical standards of living and explain what they can infer from these sources. List three indicators of economic development other than National Income measures (NI, GDP, or GNP, level, growth rate, or per capita) that are of interest to economists and explain what can be inferred from each of these indicators. ( Topic 1)
2. Explain in detail 3 weaknesses of per capita GNP (or GDP) as a measure of economic well-being. Although this measure has the flaws you just listed (and others) it is the most oft-referenced statistic when considering standard of living differences across countries. Why? Problem with GDP:
1. Does not capture all economically important activities
Black market/informal market-not captured-much more significant in lesser developed countries.Agricultural production for own consumption.Housework
2. Dollar value of a good does not always equal “social” value (e.g., no accounting for pollution costs).
Relevant for industrialization standard of living debate. Keep in mind a crime wave or war increase G, but doesn’t make society better off. On the other hand, spending on schools and other things with positive spillovers also understate welfare in GDP.
3. Does not account for differences in “cost of living” across time and space Even if GDP per capita were a good measure of average income, comparisons across space and time would be hindered by the fact that the “cost of living” – that is, the cost of a certain bundle of goods or a certain lifestyle – is not the same in different societies (prices – housing prices in particular, taxes, etc.)
Why
1. Widely available and easily comparable for many years for most countries.
2 Highly and predictably correlated with any other measure.
3. What has happened to global economic inequality since 1960? Why? Characterize the progress in social measures (education and health) in impoverished nations. Why is there less of a