Economics G.D.P Vs. G.P.I.

A detailed Summary of Economics G.D.P Vs. G.P.I.

When economists study the markets of the United States, they must use certain criteria to judge their performance. They use those principles to determine if the economy is stable, slumping, or if it's growing. One tool economist use is the Gross Domestic Product. This is a measurement of money spent on goods and services purchased by households, businesses, and governments. Some look at a relatively new aspect of measuring economic prosperity, called the Genuine Progress Indicator. The G.P.I. "takes from the G.D.P. the financial transactions that are relevant to well being. It then adjusts them for aspects of the economy that the G.D.P. ignores"(Cobb). This paper will discuss what indicator economists should use and why, and alternatives available to the ones in use right now.

One measure economists use to measure economic growth is the Gross Domestic Product. Now, there are many problems with this being an economic indicator. Originally "designed as a planning tool to guide the massive production effort for World War II, the G.D.P. wa

I believe that the most effective way of measuring economic growth would be to use the Genuine Progress Indicator. Because the G.P.I. measures total expenditures like the G.D.P, and takes into consideration many other factors such as, household well being, and "differentiates between what most people perceive as positive and negative economic transactions, and between the costs of producing economic benefits and the benefits themselves"(Cobb) it gives people a much better look at the current economic situation. In addition, G.P.I. considers affects on the environment, whereas, G.D.P, simply includes pollution cleanup as an increase in economic activity. As stated earlier, the G.D.P. was never intended to be a measure of economic progress, but was "designed as a planning tool to guide the massive production effort for World War II"(Cobb), so why should we still use it today?

s never intended to be a yardstick of economic progress: yet it has assumed totemic stature as the ultimate measure of economic success"(Cobb). The main problem facing the G.D.P. is that it "fails to

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Approximate Word count = 729
Approximate Pages = 3 (250 words per page double spaced)

Category: Politics

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