Read the article: http://www.oecdobserver.org/news/archivestory.php/aid/1518/Is_GDP_a_satisfactory_measure_of_growth_.html
Is GDP a satisfactory measure of growth, from the OECD Observer and answer the following questions. a) What are the limitations of GDP as a measure of economic growth? The limitations of Gross Domestic Product (GDP) to measure relatively accurate growth levels throughout a economy are a result of GDP only measuring production that eventually lead to a monetary transaction in traditional markets. While other important forms of production throughout the economy are excluded such as cleaning, cooking, etc in households, volunteering barter exchanges or the informal sector. Therefore GDP doesn’t measure all economic activity, which can imply the economy is performing better or worse then the real situation maybe. b) Why, despite its limitations, is GDP still the most common measure of economic growth? While GDP has limitations it still provides a solid platform for understanding how much economic activity is occurring throughout the economy during a set time period. GDP also has an important part of our society now, where the c) Why is GDP seen as a poor measure of wellbeing? A nation using high GDP or GNI figures as a measure of their citizens well being is a poor way to measure their wellbeing. GDP is an economic statistic of how much economic activity there currently is or was within the set period of time. This is not a measurement of how happy or well people live their lives. For example a person could earn $100 000 pa working 16-18 hour days, 7 days a week in a labour camp and while he would be forcing the nations economic figures towards growth this doesn’t mean he has a high quality of life (QOL). To measure true QOL you cannot use a sole statistic as there is many different aspects that results in well being of a person. The Organisation for Economic Cooperation and Development (OECD) measures well being with 12 different social-economic indicators to find relatively accurate levels of wellbeing, and only through measurement of these can we hope to find an accurate measurement of QOL within a nation.