In each of the following cases, determine how much GDP and each of its component

Question

In each of the following cases, determine how much GDP and each of its components is affected (if at all).

A. Debbie spends $200 to buy her husband dinner at the finest restaurant in Boston.

B. Sarah spends $1800 on a new laptop to use in her publishing business. The laptop was built in China.

C. Jane spends $1200 on a computer to use in her editing business. She got last year’s model on sale for a great price from a local manufacturer.

D. General Motors builds $500 million worth of cars, but consumers only buy $470 million worth of them.

Next considering that GDP is only a rough indicator of a society’s standard of living, provide some suggestions for a better way to measure the well-being of a society. Provide some examples, and use the case you chose as one example.

Explanation / Answer

A. Consumption and GDP increase by $200.

B. Investment rise by $1800, net exports fall by $1800 so GDP will be unchanged.

C. Current GDP and investment do no change because the compute was made last year.

D. Consumption rises by $470 million, inventory Investment rises by $30 million and GDP rises by $500 million

GDP is only a rough indicator because it does not directly account for leisure, environmental quality, levels of health and education, activities conducted outside the market, changes in inequality of income, increases in variety, increases in technology. Human development index can be used, HDI was created to emphasize that people and their capabilities should be the ultimate criteria for assessing the development of a country,

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