RMIT UNIVERSITY VIETNAM

ECON1192 - Macroeconomics 1

Assignment name: Individual Problem Set 1

Subject Code: ECON1192

Subject Name: Macroeconomics 1

Location & Campus: RMIT University Vietnam, Saigon South

Campus

Student Name: Vo Thi Minh Ngoc

Student Number: 3798547

Teacher’s Name: Tra P.

Word Count: 440

Question 1:
i. According to The World Bank, Norway is a developed country with GDP per capita
above US$ 12,000.
Norway’s GNI per capital (Capita ?) in 2017 is US$ 68,012; ranks the 5th place.
Norway ranks the first place in HDI in 2017.
ii. Both rankings of Norway are incredibly high; HDI has a higher ranking than GNI. The
difference is not significant but it can tell Norway is doing better in taking care of the
people. GNI per capita only reflects the average income of a country. While HDI
includes other factors of a decent living standard like life expectancy, education and
GNI per capita.

According to UNDP (2018), Norway’s GNI per capita increased by 62.9% and HDI
increased (by) 12.1% between 1990 and 2017. Since the late 19th, Norway’s economic
relied on electricity from Hydropower (McKay 2019). From that, GNI of Norway has
grown drastically since then.
Norway not only focuses on economic growth but improving the social system by
offering free education and health care. So it results in high GNI and better human
development outcomes.

Question 2:
i. Compared to Norway, Finland has lower rankings of HDI and GNI per capita (ranks 10
in GNI and ranks 15 in HDI). Due to UNDP, between 1990 and 2017, GNI per capita
increased by 45.7% and HDI increased by 17.3% (which is faster than the growth of
Norway in this period of time).
 Due to the 2019 World Happiness Report, the similarity of Norway and Finland is both
countries have very high life expectancy, GDP per capita, social support, freedom to
make life choices, generosity and corruption levels. Even though HDI ranking of
Finland is lower than Norway, it is obvious that Finland put more effort on (into)
improving the quality of life due the being the “Most Happiest Country in 2019”.

ii. GDP as a measure of well-being is not sufficient. GDP shows the total value of services
and goods produced of (in or by) a country in a period of time. It might show how rich a
country.
It might indicate the well-being of a country but only the economic aspects. It does not
reflect the quality of life and the contribution in GDP can show the quality of money is
spent on healthcare or education but it does not mean better health or education (Khan
Academy). For example, people spend more money on hospitals because they are sick; it
means the GDP is increase (increases) but not the people’s well-being.
GDP does not keep track of home production and black market activities (Thoma 2016).
Also it only includes production (products ?) that was trade off in the official market, not
production that was not trade off.
 Reference

Finland, Human Development Indices and Indicators: 2018 Statistical Update, viewed 5 July 2019,
< http://hdr.undp.org/sites/all/themes/hdr_theme/country-notes/FIN.pdf >.
Helliwell, J, Huang, H, & Wang, S 2019, Changing World Happiness, World Happiness Report
2019, viewed 5 July 2019, <https://s3.amazonaws.com/happiness-report/2019/WHR19.pdf>.
How well GDP measures the well-being of society, Khan Academy, viewed 5 July 2019,
<https://www.khanacademy.org/economics-finance-domain/macroeconomics/macro-economic-
indicators-and-the-business-cycle/macro-limitations-of-gdp/a/how-well-gdp-measures-the-well-
being-of-society-cnx>.
McKay, A 2019, Hydropower in Norway, Life in Norway, viewed 5 July 2019,
<https://www.lifeinnorway.net/hydropower-in-norway/>.
Norway, Human Development Indices and Indicators: 2018 Statistical Update, viewed 5 July 2019,
<http://hdr.undp.org/sites/all/themes/hdr_theme/country-notes/NOR.pdf>.
Table 1. Human Development Index and its components, Human Development Reports, viewed 5
July 2019, <http://hdr.undp.org/en/composite/HDI>
The Evolution Institute 2019, Norway Quality of Life, viewed 5 July 2019, <https://evolution-
institute.org/projects/norway/>.

Thoma, M 2016, Why GDP fails as a measure of well-being, CBS News, viewed 5 July 2019,
<https://www.cbsnews.com/news/why-gdp-fails-as-a-measure-of-well-being/>.