This is what I came up with from my chapter reading, but this subject is confusing me.
There is not a direct relationship between Gross Domestic Product and the economic well being. There may be a correlation in some instances, however high Gross Domestic Product does not necessarily equate to higher standards of living. In some governments, and Elitist system exists, in which a great deal of the wealth is concentrated in the hands of a small group of individuals and the general population is relatively poor.
When measuring wellbeing from a Gross Domestic Product perspective, important indicators are overlooked such as mortality rates, income per capita, employment rates, literacy rates, government spending on programs for the public.
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Gross Domestic Products could be increased by taxing the population. That would not be a plausible idea because people would not be able to afford the standard of living they were previously accustomed to. I do not think this would be a good government strategy. The opportunity costs of increasing taxes could be decreasing. And this would affect the government spending aspect of GDP.
What is the relationship between the level of Gross Domestic Product and economic well-being.
What factors of well-being are missing from the Gross Domestic Product?
Is there a point where the Gross Domestic Product could increase to such a high level that economic well-being could be compromised?
If so,what are some of the opportunity costs associated with maximizing the Gross Domestic Product.
2 answers
Anna. Your first paragraph starts off well. I would add that GDP does not include leisure. So, GDP would go up if people would work more hours. But all work and no play is not necessarily a good thing. I would also add that GDP does not count negative (or positive) externalities. So, for example, GDP would go up, in the short run, if factories were allowed to pollute as much as they wanted.
As to your second paragraph, why would GDP rise if governments increased taxes? This argument needs to be expanded and explained. (or dropped)
As to your second paragraph, why would GDP rise if governments increased taxes? This argument needs to be expanded and explained. (or dropped)
2 answers