Topic 1 DQ 1

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Economics

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Apr 3, 2024

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Topic 1 DQ 1 Dec 18-20, 2023 Refer to the article, "Why GDP Fails as a Measure of Well-Being," found in the topic Resources. The article discusses the weaknesses of GDP as a measure of well-being and discusses several alternatives. Choose one of the alternative metrics discussed in the article, describe what it is, and explain why you believe it would be a better measure of well-being. Gross Domestic Product (GDP) allows us to judge whether an economy is doing well or doing poorly and is considered one of the most important economic measurements due to it providing a broad measure of the value of goods and services produced in a country over a period of time (Mankiw, 2021). Using GDP as a primary way to measure a country’s economic well-being has many well-known problems and one of them is it does not include things that would contribute to a good life. An alternative mentioned int the article, “Why GDP Fails as a Measure of Well- Being,” is the Genuine Progress Indicator (GPI). The GPI is used to measure the health of a nation’s economy using environmental and social factors (Hayes, 2023). This measurement takes into account everything that the GDP does and incorporates the cost of the negative effects related to economic activities (Hayes, 2023). I believe that this would be a better measurement of well-being because it takes into consideration what is really going on in our economy. As mentioned in our textbooks, as more goods and services are produced, the GDP would rise but it does not show the cost it took for it to rise (Mankiw, 2021). The GPI would consider the reduced amount of leisure time lost towards the rise in the GDP. Being able to see more of the picture is better way of seeing how an economy is performing. Hayes, A. (2023). Genuine progress indicator (GPI): Definition, formula, vs. GDP . Investopedia. https://www.investopedia.com/terms/g/gpi.asp Mankiw, G. (2021).  MindTap for Mankiw's  Principles of macroeconomics (9th ed.). Cengage Learning. ISBN-13: 9780357133613
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