Explain why comparing the G.D.P. of various nations might not tell you which nation is better off. Use information from the World Bank website to support your answers. In your explanation refer to the limitations of using G.D.P. as a measure of economic welfare and where possible, refer to the countries in your table above.
Due to the very complex methods used in estimating gross domestic product and the sheer enormity of the task, gross domestic product is very necessarily a less than perfect measure of a nation’s economic pulse. Nonetheless, measured gross domestic product certainly plays a very critical role in influencing government economic and social policies. Therefore, there is, quite appropriately, some degree of concern that a false impression of a nation’s material wellbeing may result from an imperfectly measured gross domestic product (Layton, Robinson, and Tucker 2009).
According to the World Bank website, Australia has (US$) $924,843,128,521 GDP in year 2009 and the total of 22,328,800 population in the year 2010 (World Bank 2012). Economic growth is considered to be good because it allows people to have a higher standard of living, to have more material of goods. However, an increase in real GDP or per person, real GDP does not tell us whether the average citizen is better off or not. The problem is that there measure say nothing about how income is being paid. The national economy may be growing, but the poor people may be staying poor, and the rich people may be getting richer and richer. As so, looking at the economic growth, it may benefit only some groups of people more than others. Moreover, it is entirely possible that despite national economic growth some groups can be worse off than they were before. Obviously, neither per person in real GDP or real GDP accurately measures the standard of living for all of the nation’s population. Another reason that real GDP and per capita real GDP are misleading is that neither says...
References: Boyes, W & Melvin, M 2008 “The Problem with Definitions of Growth”, 7th edition, Cengage Learning, Inc, Boston
Layton, A, Robinson, T & Tucker, IB 2009, “Economics for Today”, 3rd Asia Pacific Edition, Cengage Australia Pty Limited, Sydney
World Bank 2012, GDP (current US$), viewed 29 January 2012, http://data.worldbank.org/indicator/NY.GDP.MKTP.CD
Tree of Mamre, 2011 Why The US Is Still The Number One Economy In The World, And Will Remain So For A Very, Very Long Time, viewed 29 January 2012, http://treeofmamre.wordpress.com/2011/02/19/why-the-us-is-still-the-number-one-economy-in-the-world-and-will-remain-so-for-a-very-very-long-time/
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