Both the gross domestic product (GDP) and genuine progress indicator (GPI) can be used as a measure of the wealth of a nation. Explain the difference between the GDP and GPI

What will be an ideal response?


GDP is the total value of goods and services produced by the citizens of a country in a certain amount of time (e.g., annually). GDP can be measured as either (a) money spent on goods and services, money flowing into investments, money spent by the government, and net exports; or (b) all of the money paid in wages, interest, rents, and business profits. Usually both approaches yield relatively similar totals. Because some actions and events may increase a country's GDP but reduce natural resources (e.g., overharvesting forests or fisheries) and/or degrade human welfare (e.g., illness and death from pollution), economists have more recently suggested using the GPI as an alternative measure of natural wealth. The GPI combines 26 economic, environmental, and social indicators into a single measure of welfare. An action such as forest destruction may decrease a country's GPI even though it may increase the country's GDP if the purpose were for timber harvesting. Likewise, destruction and hospitalization caused by a natural disaster would increase GDP but would likely decrease GPI.

Environmental & Atmospheric Sciences

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