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Assigment - Essay Example

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Transactions included in the GDP are; a) Payment by Smith for garage building which raises GDP by $50000.b) $ 60000 used by Smith to build himself a garage which will increase the GDP by $60000. d) Joneses $ 500000 used in purchasing the house which will raise GDP by the same…
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Download file to see previous pages... The general assumption is that wealth is equally distributed among the citizens yet it is a few individuals who are rich. Secondly, the quality of goods and services that comprises the output and externalities like pollution are not taken into consideration. In addition, increase in output may be attributed to long working hours with less leisure time. There is a lot of money in the black economy like prostitution, which is not included in the GDP computation. Non-market transactions such as volunteer and household chores are also not included. Sustainability of growth is not considered in the calculation of GDP because the country may have exploited its resources hence increasing its GDP.
b) % change in nominal GDP is calculated by change in the GDP *100; from 1981 to 1991 and 1991 to 2001 , the nominal GDP has changed by 91.18% and 70.50% respectively while the real GDP has changed by 43.75% from 1981 to 1991 and by 21.96% from 1991 to 2001. (b)
The last few years after the crisis have witnessed a gradual decline in productivity growth and the situation may persist for much longer (Orszag). Projections indicate that the trend is likely to persist for a much longer period. One of the reasons behind the slowdown in productivity growth is the fact that a significant percentage of the population is not engaged in active productive engagements. An aging population has also been cited as one of the reasons behind the slump in productivity. The author points out that workers usually display less enthusiasm and productivity after a crisis. The impact of the crisis manifests at the level of confidence on the part of the workers as many of them become affected by insecurities that hamper their capacity to produce.
The studies indicate that the levels of productivity have been going down even before the crisis reached its peak in ...Download file to see next pagesRead More
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