Gdp Is the Best Measure of a Country's Standard of

Topics: Gross domestic product, Economics, Purchasing power parity Pages: 3 (968 words) Published: March 29, 2011
GDP is the best measure of a country’s “standard of living” Discuss Gross Domestic Product (GDP) is the value of everything produced in the economy for the year. It usually is used to provide economic growth rates and other important data, it is valued in terms of the cost of all inputs. Gross means total; domestic means it applies to everything produced within the economy, product means output. Standard of living refers to the wellbeing of the population, this requires a very wide range of data to measure effectively and I am going to find out how and if we can measure the standard of living and whether GDP is the best at it. GDP is useful because it is a key measure of economic activity, it is measurable, quantifiable and there is data which is very useful to show which countries are very active and doing well. It also seems so far that it is the “least bad” measure and it does a very good job corresponding with standard of living, even though it was not what the designers invented it for. There are benefits of using GDP because in the past when GDP has gone up so has the standard of living, for example in Qatar over the last 20 years the GDP levels have rocketed and this has made huge impacts on standard of living because now there is no tax and the average wage is about $45,000 and the GDP per capita is the highest in the world. This is an extreme example but it has been seen in the past that GDP impacts standard of living in a country. On the other hand there are many costs of using GDP it ignores key variables like how depressing China is, it also counts negative and useless activity, it does not show the spread of wealth across the population and the income distribution. GDP also does not show a country’s debt, for example in Argentina around 15 years ago they took out a huge amount of debt and because of this new money, it looked like it was doing amazingly well with huge increases in GDP but at the moment they have been caught up with the debt and are...
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