Question

“GDP does not measure the output of the economy any more”. Do you agree, and if so, what improvements would you suggest?
50 points

Answer 1

Gross Domestic Product (GDP) is a measure of the ‘aggregate demand’ of an economy; that is to say the total market value of all final goods and services. This can be measured either through the total output, total expenditure or total income (all three values should equate). The idea of GDP was first introduced by Simon Kuznets as a way of empirically measuring the recovery of any economy (but specifically the USA’s), after the 1929 Wall Street Crash. The Bretton Woods conference in 1944 resulted in an agreement supported by J.M. Keynes to use GDP as a measure of economic recovery. However, there have long been misgivings over how useful an indicator GDP is; although it perhaps serves as a good indicator of economic activity, there are a number of reasons why it does not accurately measure economic output, especially if we allow the slightly looser definition of economic output to mean the total utility generated in an economy.

Answer 2

Hey mate here is your answer ✌✌

ONE of Albert Einstein’s greatest insights was that no matter how, where, when or by whom it is measured, the speed of light in a vacuum is constant. Measurements of light’s price, though, are a different matter: they can tell completely different stories depending on when and how they are made.
In the mid 1990s William Nordhaus, an economist at Yale University, looked at two ways of measuring the price of light over the past two centuries. You could do it the way someone calculating GDP would do: by adding up the change over time in the prices of the things people bought to make light. On this basis, he reckoned, the price of light rose by a factor of between three and five between 1800 and 1992. But each innovation in lighting, from candles to tungsten light bulbs, was far more efficient than the last. If you measured the price of light in the way a cost-conscious physicist might, in cents per lumen-hour, it plummeted more than a hundredfold.

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