Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 19: Problem 1

Why does the size of a country's GDP matter? How does it affect the quality of life of the country's people?

Short Answer

Expert verified
The size of a country's GDP serves as an indicator of the economic health of a country, as it encompasses the total value of goods and services produced. A larger GDP generally indicates more available goods and services, potentially leading to higher living standards. However, it's important to note that a large GDP does not guarantee high quality of life, as it doesn't take into account factors like income distribution, environmental effect, or subjective well-being measures.

Step by step solution

01

Definition of GDP

GDP, or Gross Domestic Product, is the total economic output of a country, which includes the complete value of all goods and services produced in a certain period. It's commonly used to assess the health of an economy.
02

The Importance of GDP Size

The size of a country's GDP matters because it is one of the primary indicators used to assess the economic performance of a country. A larger GDP indicates a bigger economy and a higher level of productivity. If a nation's GDP is growing, the economy is in good health. Conversely, if the GDP is falling, the economy could be in trouble.
03

GDP and Quality of Life

A country's GDP can influence the quality of life of its people. A larger GDP means that more goods and services are available for the population, potentially leading to higher living standards. However, a high GDP does not always equate to a high quality of life, as the GDP does not consider income inequality, environmental impact, or social factors. Therefore, while GDP is a useful indicator of economic health, it's not a comprehensive measure of a population's well-being.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

In the circular flow of income, why must the value of total production in an economy equal the value of total income?

An article in the Wall Street Journal noted that many economists believe that GDP data for India are unreliable because "most enterprises are tiny and unregistered, and most workers are employed off the books. The government's infrequent surveys represent only a best guess of the value being added in back-alley workshops, outdoor markets and other cash-based corners of the economy." a. What does the article mean by working "off the books"? Why might it be difficult for the government to measure the production of small, cash-based firms? b. Why would the problems listed make it difficult for the Indian government to accurately measure GDP? c. What problems can be caused for a government or for businesses in a country if the government cannot accurately measure GDP?

Describe the four major components of expenditures in GDP and write the equation that represents the relationship between GDP and the four expenditure components.

Why is GDP an imperfect measure of economic wellbeing? What types of production does GDP not measure? If GDP included these types of production, would it still be an imperfect measure of economic well-being?

Suppose Switzerland has many of its citizens temporarily working in other countries, and many of its firms have facilities in other countries. Furthermore, suppose relatively few citizens of foreign countries are working in Switzerland, and relatively few foreign firms have facilities in Switzerland. In these circumstances, which would you expect to be larger for Switzerland, GDP or GNP? Briefly explain.
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free