Question

Sarah lives in Montana and works remotely with a company in Portland. She lives in Montana because of the fresh air, clean water and wide open spaces to go hiking on her time after work. Is Sarah's environmental quality reflected in factoring the Gross Domestic Product and why or why not? Sarah's environmental quality is left out of GDP because GDP focuses on productivity rather than Sarah's well being or standard of living. O Sarah's clean natural environment is left out of the GDP because it distracts Sarah from being productive with her work. O The quality of Sarah's environment is included in GDP because it improves her standard of living.

Answer 1

(1) Option (1)

GDP excludes environmental quality because it is difficult to measure and quantify, and also, it is considered less important than monetarily measurable variables like productivity.

(2) Option (2)

GDP per capita = GDP / Population, so

% Change in GDP per capita = % Change in GDP - % Change in Population

If GDP increases faster than population,

% Change in GDP > % Change in Population

(% Change in GDP - % Change in Population) > 0

% Change in GDP per capita > 0.