INSTRUCTIONS: Answer the questions below short answer Study Questions, to help you focus on the central points of the articles and to help prepare you for the Exam..

Recommendation: Allow yourself time to contemplate the issues.

1. There are many economists (and more politicians) that claim that the free market price system performs better than any governmental regulatory system. Explain (in your own words) three limitations to the price system.

2. The text, program #3, and the article, If the GDP Is Up, Why Is America Down?, all indicate that GNP (or GDP - they are essentially the same for this analysis) mis-measures the total value of goods produced by the economy. Explain how the national accounting system (GNP/GDP) mis-measures national output in the following areas:

a) environmental resources

b) pollution

c) the economic contributions of households

d) distribution of income

e) over-consumption

3) (5 points - one page) Briefly summarize, in your own words, how a Genuine Progress Indicator (GPI) would work according to the authors of the article, If the GDP Is Up, Why Is America Down?.

Have a question? E-mail Phil: martinezp@lanecc.edu