Limitations of GDP- Macro Topic 2.2

Hey, thanks for watching. In this episode I explain the limitations of GDP and why it's not the best way to measure standard of living. I talk about GDP per capita, income inequality, the environment, and the shadow economy. Just to clarify, the shadow economy doesn't include voluneer work, household production, or the black market. Those are seperate concepts, but they all show how some transactions are not included in GDP. Thanks again.
Ultimate Review Packet-
www.acdcecon.com/review-packet
Econmovies: Endgame-
• EconMovies #17- Endgame
Recent article where Bill Gates talks about how econ is not a science-
qz.com/1709972/bill-gates-eco...
Wait, so why are universities reclassifying economics a STEM major? Well, it’s because of economics.
International students that have STEM majors are allowed to stay in the US longer so, to increase enrollment and encourage high performing international students to study in the US, universities focused on the math and statistics side of economics making it a STEM major.
So if you studying economics you can explain why the study of economics is no longer just the study of economics. Cool huh?
Answer Key
1. A
2. E
3. C

[@victoriay9500]

I never really comment on any material, but I have to say... I don’t know what I’d do without these awesome videos! So helpful for my class! Thank you so much!

[@lincolnwalter3605]

i dont mean to be so off topic but does someone know a trick to get back into an instagram account?? I somehow forgot the account password. I would appreciate any tricks you can offer me

[@Breggo1]

Super late on this, but for the 2nd question: What Is Per Capita Income? Per capita income for a nation is calculated by dividing the country's national income by its population. What is national income? Gross national income (GNI) is defined as gross domestic product, plus (blah blah blah). From my understanding, the point is that the per capita income mainly means GDP in layman's terms. So if we just replace per capita income with GDP, it makes sense that E is the answer. It will be in the short run, because the people will switch to buying a set amount of the same products from the market instead of the shadow-market and then it levels off or they stop because its too expensive or other reasons.

[@lawrencegaceta4839]

Another masterpiece! Firstly, econ as STEM is amazing. Secondly, I won't look at pies the same way ever again. Thirdly, the data (subjective or not) counts depending on perspective. Keep the videos coming!

[@chloejarvis721]

I just wanna take a minute to say thank you so much for doing these videos. I know you probably get hundreds of comments a day saying this, but you make economics so much simpler to understand, and with that simplicity, you make it _fun._ Like, the EconMovies videos? That's such a great idea! It puts economics into things that are interesting for students (such as ~myself~) and makes the importance and real-world applications of economics so much more apparent. So, thanks a lot Cheers my guy

[@VampDemigod]

Gonna be honest Jacob, I found you through Crash Course. Thank you for all you teach us!

[@hammerhead19able]

Love your videos. Thank you.

[@treeorange4739]

Top quality, as usual

[@luiegiii]

Fun channel, thanks for your great videos!

[@alkalogist]

Hi, sir! You're an AMAZING Econs teacher and I enjoy every single one of your videos. Out of sheer curiosity, what do you think of Andrew Yang's Human-Centered Capitalism idea?

[@untdabdill9620]

Ooh this guy helped me pass my economy class last semester thanks mate I dnt know how I'm gonna thank u

[@josephmzuli1555]

Don't forget to buy his review packet kkk

[@yahyamotara7590]

@@josephmzuli1555 and his cookiepack

[@AlextheLue]

Thank you, Dr. Cliffford! You're helping save my Microeconomics grade!

[@farronabysswatcher1881]

Economic feels like practical psychology and philosophy + math

[@JacobAClifford]

Totally

[@quintessenceSL]

Much to the chagrin of scientist everywhere, science is still a branch of philosophy, and econ would mostly fit in there. Whether economist would accept it is another thing entirely. I don't think econ really fits in the framework of STEM, but it should be a part of the core curriculum for highschool.

[@leopard6554]

Mr. Clifford, you are so awesome 👌 👏

[@brettdobson3122]

Mr. Clifford, would you please explain #2?

[@AnnetteLam]

For anyone confused, answers are in the description box.🤫

[@jojopyun]

clifford you're the goat

[@vanshjain7910]

thanks mark cuban

[@dmeisterr]

Jacob Clifford: Wait, don't go anywhere! Me: Watch me.

[@sathyakumar6031]

Thank you for your class

[@taongazulu7472]

Great video but have you done a video on GDP at Factor cost and Market price?

[@alorahendershot7264]

This video is very helpful for my classmates

[@rabiuafeez5185]

Thanks so much boss.

[@nickbadalamenti3854]

dude i BUSTED out laughing at that monster inc. NO NO NO NO NO hahahhahhaha. was not expecting it

[@yousra.9467]

Please sir recommend some good economics books

[@mmda8928]

Thank you!!! this has saved my life hah

[@abug314]

Can you explain the 2nd question?

[@newbygamer]

I'd have to disagree with the idea of econ as a hard STEM subject. While using math and stats are a big part of econ, human behavior is the fundamental principle. There was a very good article i read once whose title was "There is nothing more dangerous than an economist with physics envy" and i think that that is very true. When you try to generalize individual humans to mathematical equations, you run the risk of losing out on really interesting points of interest, as well as can get into unethical territory very fast if you are incharge of making policies, and prioritize scales of measurement over your own people

[@penderyn8794]

Maybe we just don't have the mathematical models to take into account quantum theory which is reflected in evolutionary biology

[@JacobAClifford]

The answers to the practice multiple-choice questions are below. Just click on "Read more". 1. A 2. E 3. C How to get the Ultimate Review Packet Step 1: Go to: acdcecon.thinkific.com Step 2: Create a free account Step 3: Enroll in the free version of the MACROeconomics packet (either AP or College) Note Teachers- Do not print any of the packet and give it to your students. This is NOT for in-class use. If you are interested in getting worksheets for your class, please go to my website: www.acdcecon.com/bulk-discount

[@maxharmonnn]

Jacob Clifford wouldn’t an increase in pollution be more likely to increase gdp in the short run than a decrease in household production? These answers are kinda general? I really love your videos thanks for the great content and help!

[@rahulshah7611]

can you pin this?

[@ace.b1614]

I got D B E, I really thought I got at least 2 right

[@nandanramesh9490]

@@maxharmonnn Not really. An increase in pollution does not have to be from industrial processes, it could be people starting riots and burning down stuff as well. A decrease in household production however, reduces the income from 'The Shadow Economy' and is probably spent as household consumption, where it counts towards the real GDP.

[@indytoons7555]

@@maxharmonnn While theoretically pollution would cause more costs to overall society, it wouldn't affect income as directly a decrease in household production since if less people are producing things in their homes then they are likely buying them from businesses instead and higher spending from consumers means higher income for the business and their workers and hence by the income approach to calculating GDP, there is a higher GDP(national income in due time)

[@AlexRamirez-pj9vr]

the bill nye of economics... JACOB JACOB JACOB, Jacob Clifford the Economics Guy

[@orionsoutro1794]

except he isn't an actor XD but love that XD

[@kelsey5569]

Answers are at the bottom of the description for anyone looking for them

[@breonphifer684]

bless

[@Arvy565]

can someone explain the reason behind question #2's answer?

[@nandanramesh9490]

An increase in pollution does not have to be from industrial processes, it could be people starting riots and burning down stuff as well. A decrease in household production however, reduces the income from 'The Shadow Economy' and is probably spent as household consumption, where it counts towards the real GDP.

[@jinooh9241]

Hi, For question 2, why would a decrease in household production result in a short term increase in real GDP per capita? Are we assuming that people who were engaged in household production are now participating in GDP components such as consumption?

[@akhilpuli7592]

its because household production is part of the "s" in the PIES acronym. People making stuff at home does not count towards GDP, so if they start producing outside (and not in their home), then the GDP increases.

[@ayushibatwara]

@@akhilpuli7592 thank you!! this was helpful

[@nandanramesh9490]

An increase in pollution does not have to be from industrial processes, it could be people starting riots and burning down stuff as well. A decrease in household production however, reduces the income from 'The Shadow Economy' and is probably spent as household consumption, where it counts towards the real GDP.

[@yahyamotara7590]

4:13 "Some pies are being used to barter for other things" Just me or is everyone else also seeing two men in black coats wearing shades, carrying suitcases in an alleyway with one of them holding a pie and the other holding a chocolate slab? Well now you are :D

[@yahyamotara7590]

Not to mention Illegal Pies :¬D

[@ntsakisikhubayi3989]

Economics is not a science, it is mostly theoretical. As you have mentioned, their predictions are almost always wrong. Their role is very important. We can only admit to their use by meditating on their absence and discredit them for their wrong predictions. It is good to have them in the boardroom or parliament, but never alone.

[@pigwartisubscribeback8198]

Are the answeres ADC? i dont see them anywhere

[@toastom]

... missed a question on my test today about limitations...

[@malita354]

Ourside the gov, no one can audit exactly the gdp. This allows for creative accounting eg. Africa or China

[@chiph68]

In question 2, why the answer was E? Can anyone explain for me pls

[@javierperalta7648]

Another thing that GDP Per capita doesn't take into account is differing purchasing power although there is now a new measure that does take it into account. If you earn 1000 USD in the USA you can buy way more than if you earn 1000 USD in France. So this should be taken into account

[@traviswall1982]

People tend to confuse Economics with Econometrics. Econometrics is just what Econometricians believe will happen using statistics. Economics is Numbers+Psychology+History

[@cathubbard756]

Is that a half full gallon of milk on your shelf in the background? 4:35

[@kaychaudhry6799]

How is second question has answer E? Why not C???

[@harishsiddharth4291]

Love from India #Answers pls

[@HadiKhan-vp6he]

Haha 3:14 tree hugger, I get it.

[@evelynnabil4064]

What are the answers I cant find them in the comments

[@jesslyn5081]

Can anyone pls explain why the decrease in household production will cause an increase in real per capita GDP??? plss

[@sergeykhon4701]

ok so im no econ professor but the way i see it (because i assumed the answer ot that question was d) is that because household production decreased, and the demand for the same goods that would have been produced still remains the same, companies rush to meet the demand and produce those goods themselves, which counts towards gdp

[@awoooooga23]

The question actually asks why the decrease would cause an increase in real per capita INCOME, not gdp. Looking back at the previous unit, the supply curve would shift left because the households being produced decreases. Assuming demand stays the same, then the price would go up. People don't want to buy expensive houses, so they'll hold onto their money until price of households goes down, meaning they'd have a temporary boost in income to spend on other stuff, which contributes to an increase in real per capita income. (but i'm not econ prof, so idk if this is 100% correct--this is just how i thought about it)

[@nandanramesh9490]

@@awoooooga23 You've got this all wrong. "Household Production" refers to goods and services being produced within a household, without spending money in the market (Something like being self-sustained). It's not the actual "Production of Houses" 🤣

[@stinky4353]

@@awoooooga23 bro thought they was making whole houses in the context of this question

[@Money_Fox]

E for question 2 doesn't make sense

[@bookvendor4657]

Where are the answers to those questions please ?

[@CounterBalance567]

Adamson Oluwatobi it’s in the description

[@user-pn2kh4mw8d]

for the second question, E is correct but whats the problem with D???

[@nandanramesh9490]

An increase in pollution does not have to be from industrial processes, it could be people starting riots and burning down stuff as well. A decrease in household production however, reduces the income from 'The Shadow Economy' and is probably spent as household consumption, where it counts towards the real GDP.

[@itsabbyisabell]

Your answer key for the pop quiz is missing.

[@arric11]

check below the description

[@scottdunstan4117]

Jacob, it IS a science. It's the science of Human Action. But it's not an empirical science, like physics. It is a deductive science, closer to logic. At its heart it is NOT about statistics. It seeks to discover axiomatic laws. Statistics can be used to illustrate these laws. But statistical models should not be used to derive policies - when that happens, as you say, "Economists are notorious for making false predictions". So it should not be considered STEM.

[@siddharthajain6944]

India’s shadow economy is greater than formal economy.

[@ameliarussell5023]

the material in this video doesn't line up with the questions on the review packet. still helpful but not if ur trying to answer the packet

[@philipayad1330]

ive got an advice to increase your views Just give economics edexcel revision session for the whole syllabus and the same for cambridge

[@nadeemamode]

This was before covid economics 😅

[@cyrussuleman1982]

5:46

[@alboss52]

1:49

[@davidyuan5793]

Why is the second quiz question E?

[@DrWalrustubtub]

Because household production doesn't count toward real GDP. Through the process of elimination, answer E is the only one that makes the most sense even if it doesn't state that the household worker will start producing for consumers.

[@brettdobson3122]

@@DrWalrustubtub I was trying to figure this one out as well. Wouldn't consumers buy more stuff if they were not producing it at home? Thus raising GDP?

[@DrWalrustubtub]

@@brettdobson3122 Yes 👍

[@rhythmandacoustics]

They should had instead measured the prosperity of a nation instead of wealth. GDP doesn't care about crime rates, obesity rates, cancer rates, unemployment, and so on.

[@pedropeders2042]

Other pies are made outta love 😵‍💫😂

[@kb8481]

is this about Andrew Yang? I sense that you got some inspiration from him :) #AndrewYang #YangGang

[@kcg1629]

OK, so why this guy is not verified is crazy to me.

[@applesaucenickimanaj]

I guess the answers arent here yet.

[@JacobAClifford]

See the first comment

[@limpinggabriel6658]

>Illegal pies

[@brittanydunlap1878]

Ooga

[@RuchiraJayakody]

Please put less effects and other videos or clips. To make it engaging because it distracts and disrupts the ability to grasp key information.

[@Luna-oq8cy]

illegal pies🤣

[@siddharthajain6944]

Question 1 - Answer is E. Per capita GDP has to be compared with cost of living so it doesn’t tell much. Question 2 - Answer is B Question 3 - Answer is C

[@onlystuntin1905]

siddhartha jain you in macro right now?🤣

[@JacobAClifford]

This is incorrect. The right answers are in my first comment above.

[@siddharthajain6944]

@@JacobAClifford I think Economic growth can be best defined by various parameters such as low income inequality, low unemployment, moderate difference between per capita GDP and cost of living, affordable Healthcare, low food inflation etc.

[@shashankjayaram]

@@JacobAClifford is it a d c

[@jahangeerjamal8096]

@@JacobAClifford I can't see your comment

[@lukehamilton8023]

you're not funny