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GDP Per Capita & Recessions

1. Economic growth, as measured by increases in real GDP per capita, is a goal for most countries. This is often interpreted as an increase in economic welfare for citizens. How would you evaluate this assertion? If there are reasons to dispute it, why is it a nearly universally recognized goal? Are there better methods for measuring economic welfare? How would you measure it?

2. Recessions seem to show up every so often and create economic hardship. One might think that macroeconomic policymakers could tame the business cycle and implement policies that would end recessions. Are recessions a necessary fact of macroeconomic life? If not, what would it take to eliminate them? If they are unavoidable, what types of business can benefit from them? How would a recession affect your firm?

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The purpose of this assignment is to help you develop well-reasoned arguments. There is no single right answer. So, I will discuss these issues from different perspectives and you will need to decide which arguments make the most sense to you. One could say that GDP per capital is a valid measurement, but there are also legitimate arguments for its not being so. In the same way, some people still hold that it is quite possible to eliminate recessions; we just haven't been doing it right. Others believe that recessions cannot be eliminated entirely.

In general we can associate GDP per capita with an increased standard of living for a population. Developed countries all have high GDP's per capita, and most people agree that life in third world countries is much harder. However GDP per capita does not tell the whole story. When there are natural disasters, GDP may increase in order to rebuild the devastated areas. Clearly, people are not better off in this case. It may also increase due to crime and divorce. Good things, like the absence of traffic congestion and more leisure time, do not add to GDP. Thus GDP does not reflect many things that most people value highly and consider essential to a good life. Differences in GDP per ...

Solution Summary

The solution is am 832-word evaluation of GDP per capita as a criterion for economic welfare, including a list of the pros and cons of recessions

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