Economics: Private and public choice

Instructions: There are 2 responses. Must include biblical integration , and must be 100 words or more for each response.

Response1.) Beverly

According to Gwartney, Stroup, Sobel & Macpherson (2018), real GDP is defined as Gross Domestic Product (GDP) as the adjusted for changes in the price level. Real GDP refers to the measure of GDP adjusted according to the general price level within a year. It represents the economic worth of goods and services produced, after inflation and/or deflation. Real GDP controls inflation and it adds up all the goods and services-producing in the economy using the same set of prices over time. Nominal GDP is expressed at current prices. It represents the GDP at the current process in the current market. It is referred to as the money GDP. It includes all the changes in the process of finished goods and services that took place in one year due to inflation and deflation.

If I was asked to evaluate the economy over the last five years, I would use Real GDP because real GDP controls the inflation and it tracks the total value of good and services by calculating the quantities by using constant prices. Real GDP is a good indicator of economic growth and can be analyzed easier. Nominal GDP is basically the opposite, it tracks the total value of goods and services by calculating the quantity by all the prices. Although there are many variables used to forecast the Real GDP, I would take into consideration consumer spending due to the increase in the unemployment rate, this will represent a high percentage of the calculation of Real RDP. In the upcoming, measures, we can certainly expect a decrease in the Real GDP due to the COVID-19 pandemic. It is projected that we will see as much as a 30% decline. However, over the past five years, Real GDP continued to increase.

Reference

Gwartney, J. D., Stroup, R. L., Sobel, R. S., & Macpherson, D. A. (2018). Economics: Private and public choice (16th ed.). Boston, MA: Cengage Learning. ISBN-13: 9781305506725

Response 2.) Brent

Unemployment in the market economy is not necessarily a sign of a poorly operating economy. According to Gwartney et al., “some unemployment is consistent with economic efficiency” (2018, page 164). The idea of the government hiring unemployed workers to dig holes and fill them in again is a flawed way of thinking about job creation. When someone is hired, there must be some measure of output that contributes to economic growth. While digging a hole and filling it in again may satisfy the concept of putting someone to work, this type of activity has no meaningful economic output. Digging holes produces no good that can be assigned a price unless the dirt being dug out was sold. This type of meaningless labor could contribute to a contraction of the economy as the employees engaged in this work would have to be paid while not producing anything that could create economic growth.

Unemployment sometimes allows skilled workers to seek employment that compliments their skillset, resulting in a more effective, efficient, and productive work product. If the government hired unemployed persons that did not possess the skillset to dig holes, the results could range from more unemployed, low productivity, high inefficiency, and negative effectiveness. We all would like to see more people enter the workforce and reduce unemployment. However, I believe we can all agree that we would like to see unemployed workers enter or re-enter the workforce in a productive and meaningful way that positively contributes to the output and GDP growth. The Holy Bible tells us that “whoever works his land will have plenty of bread, but he who follows worthless pursuits will have plenty of poverty” (Proverbs 28:19, English Standard Version). Having unemployed workers engage in such mundane activities as digging a hole and filling them back in is the height of a worthless pursuit and counter to the teachings of the Lord.

Resources

Gwartney, J. D., Stroup, R. L., Sobel, R. S., & Macpherson, D. A. (2018). Economics: Private and public choice (16th ed.). Boston, MA: Cengage Learning.

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