@econ101b Principles of Macroeconomics Assignment 1 Q 2
My own measure of national output would contain some of the key features of the current GDP measure, taking an average measurement of the output, income and expenditure methods. This is because all three of these measures seem to have some sense - earnings are important, as is expenditure and the amount of goods/services that firms are producing. However an important addition to this measure is a percentage measurement of employees' feelings of satisfaction of the efficiency of the production process of the firm for which they work. This is because I believe, as it has been seen with the NHS, that whilst this is overlooked, the every-day employee has very specialised knowledge of their company and can be very aware of simple ways in which productivity can be increased. Measured as a percentage of satisfaction that the firm is working as efficiently as it could be, this would give some indication as to the potential for productivity increases across the entire economy - also giving a suggestion as to the efficacy of management in organising the most efficient production process. When combined with measures of consumption as per GDP, income, and also savings ratio, this complicated measure should give a clear impression as to several factors which seem key to the health of the economy - 1) whether people are more inclined to spend or save, indicative of confidence in economic conditions as per Keynesian theory. 2) Whether or not workers believe that their company is running a smooth and effective production process which leads to an optimal level of output. 3) The general expenditure, consumption and income of a country's citizens - indicative of their economic welfare. Whilst this draws on many features of the GDP measure, this also is beneficial as it takes into account the potential productivity gap which exists in many firms in the country.