Question

Economic growth is usually measured by the annual percent change in real output of goods and services per capita (real GDP per capita), reflecting the expansion of the economy over time. Suppose the U.S. government provides subsidies for high schools and universities in 2019. How does it affect economic growth, and why? Please make sure you develop the essay, using relevant economic concepts and theory. (Due: Day 4(Thursday) by 11:59pm; word count: minimum 300 words, not including the original question, title and the reference pages)).

Answer 1

GDP is calculated as the market value of all goods and services produced in any economy. Providing subsidies for high schools and universities in 2019 would make the higher education affordable to everyone and thus people would be more skilled and have better knowledge. Thus these skilled and knowledgeable workforce can even contribute in a much better way towards the growth of the economy as it results in higher level of GDP.

The opportunity cost of going for higher studies is the salary foregone which they might receive if they start working immediately after middle school studies. This would be very low and these unskilled workers would not contribute much to the economy compared to the skilled workforce. Thus providing subsidies for high schools and universities would result in higher level of GDP and economic growth and the opportunity cost is also low. Thus its a wise decision to offer subsidy for high schools and universities.