Exercise 1.1
After the 1700s, the average living standards of many economies in the world significantly heightened. The period was also characterized by the rise of a new economic system in the form of capitalism. In this kind of dispensation, firms, markets, and private property played a significant role. Production was primarily influenced by the investment in the new technology. However, the capitalist revolution came with a host of negative aspects, including the threats to the natural environment and the rise in the level of inequality. In the 14 th century, Ibn Battuta, a Moroccan scholar, had nothing but praise for Bengal in India. He saw it as a country that had plentiful of rice and the overall agricultural landscape. The “skyscraper” figure is a graph of GDP per capita against the year. It is important to note that Ibn Battuta described the 14 th century India as an economy composed of moderately rich and moderately poor individuals (The Economy). As capitalism continued to take place, the economy expanded significantly. Therefore, as far as the “skyscraper” graph is concerned, it will begin by a slope followed by a slow projection. The resultant figure will be slope whose gradient is less steep than the one illustrated in figure 1.1.
Exercise 1.2
The inequality ration seeks to determine the differences in inequality between the top and bottom entities. It aims to address the differences in wage or salary between the 90 th and the 10 th percentile. The countries that I will choose in this case will be Sweden, Germany, Ethiopia, Canada, and Bangladesh. From the calculations, it is crucial to appreciate that inequality was a significant aspect between 1980 and 1990 in all five countries. It is specifically higher in low-income countries, including Ethiopia and Bangladesh. It, therefore, shows that the economic growth might have differentially benefitted various regions in the country. Sweden, Germany, and Canada have a similar outlook. As demonstrated by the 90/10 ratio, Sweden seems to have the lowest level of inequality.
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| Country | Year | 90/10 ratio |
| Sweden | 1980 1990 2014 | 4.89 5.00 6.28 |
| Germany | 1980 1990 2014 | 5.61 6.54 7.31 |
| Ethiopia | 1980 1990 2014 | 33.89 29.36 44.97 |
| Canada | 1980 1990 2014 | 8.99 7.93 9.24 |
| Bangladesh | 1980 1990 2014 | 8.00 12.06 17.69 |
Exercise 1.3
According to Kennedy, GDP assesses several aspects such as advertising, pollution, cigarette, ambulances, jails, locks, weapons, and forest destruction, among others. He also includes aspects of entertainment such as TV programs including the ones that glorify violence in a bid to increase the toy sales to the children.
Kennedy primarily focuses on manufactured goods. In most countries, such products make a large part of the country's GDP. However, it is imperative to note that such commodities can come with negative impacts on the society, including pollution, which in most cases is not measured. Therefore, in some instances, the neglected aspects such as pollution can also help in conceptualizing the whole idea of GDP.
Kennedy debunks the fact that the GDP fails to consider aspects such as the health of children. He goes ahead to mention additional factors such as the quality of education and the children's attitudes while playing, including joy and happiness.
Kennedy terms these aspects as things that make American citizens proud. It is without a doubt that these factors play a crucial role in promoting the development of a country. However, they cannot be included based on the fact that they are unquantifiable, especially in monetary forms.
Reference
The Economy https://core-econ.org/the-economy/book/text/0-7-resources-list.html#exercises
