Limitations of GDP- Macro Topic 2.2

Jacob Clifford discusses the reclassification of economics as a STEM major and explores whether economics is a science. He highlights the limitations of GDP in measuring standard of living, focusing on population, inequality, environment, and the shadow economy. Clifford suggests alternative measurements like the Happiness Index but notes their subjectivity. Despite its flaws, GDP per capita remains widely used. The video concludes with a memory tool and a pop quiz to reinforce learning.

What recent change has been made regarding the classification of Economics in universities?

• Economics has been removed from university curriculums.

• Economics is now a mandatory subject for all students.

• Economics is now considered a STEM major.

• Economics is now part of the Arts department.

Which of the following is NOT a limitation of GDP as mentioned in the video?

• Population

• Technology

• Inequality

• Environment

Why is GDP per capita not a perfect measure of standard of living?

• It measures environmental quality.

• It includes the shadow economy.

• It assumes equal income distribution among households.

• It does not account for population size.

How does the shadow economy affect GDP calculations?

• It is not included in GDP calculations.

• It decreases GDP by a fixed percentage.

• It is fully accounted for in GDP.

• It increases GDP significantly.

What is one suggested alternative to GDP for measuring standard of living?

• National Wealth Indicator

• Economic Growth Rate

• Happiness Index

• Gross Domestic Happiness

What is a challenge associated with using alternative measures to GDP?

• They are easy to calculate.

• They are more accurate than GDP.

• They are universally accepted.

• They often involve subjective elements.

What memory tool is suggested to remember the limitations of GDP?

• A pie chart

• A GDP graph

• A pie tin

• A cake slice