Gross domestic product, or GDP, has become the most important measure of how well the economy performs.

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Gross domestic product, or GDP, has become the most important measure of how well the economy performs. It is used by policymakers, economists, international agencies, and the media as the primary measure of a nation’s economic health and well-being, but it was not designed for this role. It is the sum of the value of final products and services produced in one year by domestic resources, with no distinctions between transactions that add to well-being and those that diminish it. In the computation of GDP, it is assumed that every monetary transaction involving the production and sale of final goods and service adds to the nation’s well-being.

GDP ignores everything that happens outside the realm of the production and market exchange of final goods and services, regardless of its importance to well-being. 

Would GDP increase when the environment is damaged by toxic spills and then the damage caused by these spills is cleaned up? 

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