Give a specific example that shows clearly how the System of National Accounts endorsed by the United Nations fails to properly capture activity that harms the environment. Now, suggest a way to quantitatively correct the flaw in the particular case that you describe in part (a).
What will be an ideal response?
Application on environmental accounting, such as the devaluation of any natural resource due to pollution, or the clearing of forests for industrial development, which are excluded from national income measures, or the health care costs linked to toxic exposure that improperly inflate GDP. Depending on the example, the correction may be to estimate the value of the lost resource and deduct it from GDP or to deduct the actual health care cost for toxic exposure from the GDP measure.
You might also like to view...
What is the optimal scale of plant?
What will be an ideal response?
________ are asymmetric information problems that act as a barrier to efficient allocation of capital
A) Asset prices B) Credit imbalances C) Financial frictions D) Financial derivatives
Which of the following is an appropriate fiscal policy prescription that addresses the inflation that occurs when the economy is above potential GDP?
a. Decreasing taxes to protect consumers from the effects of inflation b. Increasing taxes to reduce aggregate demand c. Increasing government spending to provide some of the goods that consumers can no longer afford at the higher prices d. Decreasing government spending to cause a decrease in the demand for money e. Increasing transfer payments to poor people, who are hurt the most by the inflation
A normative statement deals with:
A) the facts. B) what was, is, or will be. C) what ought to be. D) the scientific method