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Gross domestic product is defined as “the nation’s expenditures on all the final goods and services produced in the country during the year at market prices.” In the U.S., it is compiled by the Bureau of Economic Analysis (BEA), a federal agency within the Commerce Department. By measuring expenditures on goods and services, the BEA estimates the dollar value of the production of all goods and services produced in the domestic economy in a year’s time.
GDP is the most common metric by which economists and policy makers measure the economic value and well-being an economy creates. Similarly, per capita GDP—that is, GDP divided by the population—is commonly used to make international comparisons of the living standards of people in different countries. To measure the well-being of an economy relies on other measurements as well: employment and unemployment situations, labor force participation, labor productivity, or long run growth factors, to name a few.
Yet, many economists and others have noted that GDP is a very limited tool for fully understanding well-being and progress. In fact, some organizations have developed alternative ways of measuring these important values.
The purpose of this assignment is to critically evaluate GDP and other standard measurements, and find alternatives to supplement the missing information of measuring a society’s well-being. By doing so you will become more familiar with the essential ways in which economists measure the macroeconomy, as well as the limitations of these standard methods. The tasks in this assignment include four questions to be answered:

  1. Define and identify the standard measurements of the economy.
  2. Evaluate the merits and some limitations of these standard methods.
  3. Choose an alternative to evaluate it along with the standard measurements as different ways of measuring well-being of a country.
  4. Contrast the standard measurement and the alternative measurement in measuring a society’s well-being.
    This assignment supports the course learning outcomes:
  5. Discuss basic concepts and theories in macroeconomics.
  6. Formulate independent conclusions about economic issues and policies.
    Writing Your Reports
    ● Step 1: Read through all the questions first. Your report will be organized into five sections as stated below. Read through the first four questions since they are related. You will know what you are looking for and how to organize your research and writing.
    ● Step 2: Conduct research and gather references from the module learning content and other external sources. The data and information of Questions 1 to 4 should be clearly presented and with appropriate in-text citations of the sources. Section 5 will be a list of references of your in-text citations.
    ● Step 3: Write Your Report. An introduction is not required for your report. You can type up your answers question by question. Provides the Question# in your report writing. Question 1 is data collection and is presented in a table format. Questions 2, 3, and 4 should each be at least 200 words in discussion. The fifth section of your report will be your citations–the list of references. The report should be spaced 1.15 at least, clearly written in your own words, and grammar and spell-checked. Put a title, your name, and the class and CRN on your paper.
    ● Step 4: Compare your work to the grading rubric and revise your work if needed before submitting.
    Question 1 GDP and Standard Measurements of the Economy
    Bloom’s Taxonomy Skill level: Remembering, Understanding, and Applying.
    Research and identify standard economic variables from chapters 6 to 9; interpret and present your data collection.
    Chapters 6 to 9 covers a lot of macroeconomic variables. They are the standard tools to measure the health of an economy. These economic variables include: real GDP, GDP per capita, potential GDP, growth rate of real GDP or GDP per capita, GNP, NNP, labor force participation rate, official unemployment rate (U3), other unemployment rates (U4, U5, or U6), natural rate of unemployment, number of jobs added to the entire economy, labor productivity, annual rate of productivity growth, CPI, GDP deflator, other price indices, and inflation rate.
    Your task is to:
  7. Required: research from the BEA website, find the data of real GDP (not nominal GDP) for the year of 2021 and the growth rate of real GDP of the year 2021 for the U.S. economy. It could be an annual growth rate (from 2020 to 2021), or a growth rate of more than a year, such as a decade from 2011 to 2021.
  8. Identify and research at least four other standard economic variables of your choice (see the above paragraph of the standard economic variables).
  9. Use first-hand data; that is, the data is from the Bureau of Labor Statistics (bls.gov) and from the Bureau of Economic Analysis (bea.gov). Use GDP Quick Guide to direct your research on GDP and related data.
  10. Create a table similar to the one below and present your data. In your own words, briefly explain what each data is measuring for.
  11. Provide citations by inserting an active hyperlink of the data collected.
  12. In Question 2, write a summary of these five measurements of the U.S. economy.
    Economic variables Data
    (Value and Unit)
    Period/Month/Year Active Hyperlink
    In one or two sentences, define and describe the use of this variable in measuring the economy.
  13. Real GDP and Growth Rate
  14. Your choice
  15. Your choice
  16. Your choice
  17. Your choice Put the collected data in this column.
    Be careful to put down the correct unit of the value. For example, is it in $, thousands $; is it a % rate; is it just an index number? Put the time period of the data in this column.
    Some data need to be compared by period to period, e.g., growth rate from certain quarter to another quarter; some data is for a certain month or a certain quarter of a certain year. Put an active hyperlink for in-text citation in this column.
    Use the “Insert–Link” function to provide an active hyperlink. When I click on the hyperlink, I can read the data directly from the webpage that you quoted from.
    I am using data related in Module 8 (ch.14 Money) as an example. You have to focus on Modules 1 to 4 (chapters 6 to 9) macroeconomic variables.

Money stock M1: it is the most liquid type of money circulated in the economy outside the banks, including coins and bills, travelers checks and other checkable deposits, and saving deposits and money market deposits. (Note: saving deposits and money market deposits were counted as M2 before May 2020). $20,345 billion

It would be incorrect without the billion or without the dollar sign. The M1 amount is as of Nov 2021 H.6 Release Seasonally Adjusted M1 Aggregate, published on Dec,2021, the Federal Reserve System website.

An “active” hyperlink is that once clicked on it, it will bring to the webpage of the data.
Question 2 Evaluation of the Standard Measurements of the Economy
Bloom’s Taxonomy Skill level: Analyzing and Evaluating.
● Write a summary of these five measurements of the U.S. economy and tell how they are related and relevant in measuring the health of the nation.
● Tell some of the merits of these standard measurements. The discussion can go beyond the five data you researched for Question 1. Refer to the standard measurements listed in Question 1 (also found in modules 1 to 4) to consider what you might use in your discussion.
Question 3 Choose an Alternative Measurement
Bloom’s Taxonomy Skill level: Analyzing and Evaluating.
Considering in terms of the entire country, as opposed to individuals or groups, what are some economic aspects that you want to measure but these standard measurements fall short in telling? How do your own values affect your views on this?
● For example, if you researched the labor participation rate or the labor productivity data, are there other important aspects that these measurements are not telling? Same evaluation for other data you found in Questions 1 and 2.
● The following are some suggestions of alternative measurement. Choose one alternative measurement and describe how it will supplement the missing information that you value most and why it is a better measurement of the well-being of a nation.
● Better Life Index (OECD): Created to measure a country’s well-being by means of rating the importance of eleven aspects of a country.
● Human Development Report (United Nations): Created “to emphasize that people and their capabilities should be the ultimate criteria for assessing the development of a country, not economic growth alone.” The HDI indexes life expectancy, years of schooling, and per capita income. Explore the Human Development Reports for more information.
● World Bank Data: Global development data with topic indicators.
● Happy Planet Index (New Economics Foundation): Created to measure “how well nations are doing at achieving long, happy, sustainable lives,” by taking life satisfaction times life expectancy times inequality and dividing by the nation’s ecological footprint.
● Heritage Foundation: 2020 Index of Economic Freedom The economic freedom index covers twelve areas of freedom. “The 12 economic freedoms and accompanying historical data also provide a comprehensive set of principles and facts for those who wish to understand the fundamentals of economic growth and prosperity.” About The Index, Heritage
Question 4 Measuring Well-being and Make Comparison
Bloom’s Taxonomy Skill level: Analyzing and Evaluating.
Choose another country and contrast with the U.S.. For this question, the standard measurement we are focusing on is the GDP per capita.

  1. Find GDP per capita and the global rankings of both countries.
  2. Use your chosen alternative measurement from Question 3 and find your chosen data and the global rankings of both countries.
  3. Contrast the performance of both countries.
    ● GDP per capita data and global topic indicators can be found from World Bank Data.
    ● A number of metrics for GDP per capita are available at WIKI Countries by GDP (PPP) per capita.
    ● If you choose the Human Development Index as your alternative index, you can find data at Human Development Data.
    ● If you choose the Happy Planet Index, you can find data at Happy Planet Index (note, you can see global rankings by clicking the third icon in the top left).
    ● If you use the U.S. Better Life Index (OECD), you can create the index by choosing the relevant importances of the different aspects of the country.
    ● If you use the Economic Freedom Index, you can find the country rankings from the link provided.
    Reporting the data. Your report should include the following:
    ● A table to populate the data.
    ● The most recent values of your chosen alternative measurement and GDP per capita data for both countries.
    ● The global rankings for your chosen index and GDP per capita.
    ● Insert active hyperlinks as in-text citations for your data.
    Compare the numbers and rankings
  4. What conclusions do you draw regarding the human well-being of both countries?
  5. Which measurement (GDP per capita or the alternative measurement) do you believe is more effective in measuring the well-being of a country?
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