BUSINESS ADMINISTRATION
BUSINESS POLICY
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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GDP isn’t reliable
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GDP is commuted in dollars
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GDP always includes inflation
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GDP does not include work done at home such as house renovations
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Detailed explanation-1: -Cons. GDP does not capture welfare or human well-being. GDP may not be a strong basis to predict economic growth in times of high uncertainty. As international accounting standards are slow to change and require international consensus, GDP is slow to reflect changes in the world.
Detailed explanation-2: -A shortcoming of using real GDP as a measure of economic well-being is that it does not measure changes in: leisure time. environmental quality.
Detailed explanation-3: -Answer and Explanation: Even though the GDP functions as an indicator of the standards of living of a society. Therefore, it only acts as a rough indicator and cannot be used to gauge economic growth.
Detailed explanation-4: -GDP ignores the welfare component as the goods and services produced may or may not add to the welfare to a society. For example, the production of goods, like guns, narcotic drugs, high-end luxurious goods increase the monetary value of production, but they do not add to the welfare of the majority of population.