Why Worry about gdp?

Limits of GDP Measure

• Leisure time
• Nonmarket economic activities
• Environmental quality and resource depletion
• Quality of life
• Poverty and economic inequality
• International GDP comparisons based on exchange rates, which can introduce bias

Consider this…

“[GDP] does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials.”

Robert Kennedy

Concerns about GDP

• The Rise and Fall of the GDP
• New York Times Magazine (5/16/2010)

Economic Growth

• Steady (long-term) increase in the quantity and quality of goods and services an economy can produce

What is it?

• It affects living standards

Why do we care?

• Percentage change in real GDP

How do we measure it?