ECONOMICS
BUSINESS CYCLES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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It does not include intermediate goods.
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It does not show how the economy is doing over time.
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It does not include non-durable goods
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It does not measure health and happiness
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Detailed explanation-1: -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.
Detailed explanation-2: -However, it has some important limitations, including: The exclusion of non-market transactions. The failure to account for or represent the degree of income inequality in society. The failure to indicate whether the nation’s rate of growth is sustainable or not.
Detailed explanation-3: -GDP makes no additions to take into account the health of the population, the quality of education, the strength of social relationships, the intelligence of public debate or the integrity of public institutions, nor subtractions to account for social strife, inequality or environmental degradation.