Ch. 10 Reflection: Measuring a Nation's Income

1.      What is the difference between an intermediate good and a final good?  Why do we care?
An intermediate good is either raw material or a part that is purchased to create a larger, more complex, more expensive item. Intermediate goods are not considered when factoring for GDP because the cost of all intermediate goods is wrapped up in the costs and sales of final goods which is recorded in GDP.

      2.       Is GDP a good measure of well-being?  Why or why not?  What is missing?  Has what is missing changed over the years? (For example, if improvements in products are not counted, is that more important now than it was a few decades ago?) GDP is a good measure of economic prosperity but in my opinion a mediocre measure of well-being. For instance, as Robert Kennedy once said, “(Gross domestic product) does not allow for the health of our children, the quality of their education, or the joy of their play”. I believe that the Well-being Index does a much better job of measuring well-being of a country’s citizens in comparison to other countries. This accounts for time spent for leisure and length of life or life expectancy as well as GDP. This measure is still incomplete and does not account for things like the quality of one’s environment, or income inequality. Perhaps there will become an even more comprehensive measure for a nation’s overall well-being in years to come? And yes, what is missing has changes over the years, for instance how technology has improved and become more efficient. Many aspects of technology used today that saves us time are free services like search engines and apps. How do we best account for those improvements and open source, free or volunteer technologies?


      3.     What do you think of other measures such as Gross National Happiness pr Gross Progress Indicator? I think that other measures of well-being need to be experimented with and explored in today’s day and age. GNP and GPI are such measures that are being tested currently as well as the Well-being Index mentioned above. All of these measures including GDP measure different aspect of economy, happiness and health but still other measures need to be taken into account such as helpfulness and volunteer time for the public and for one’s family.

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