ECONOMICS
ECONOMIC GROWTH
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Why may GDP not be a good measure to compare the living standard of two countries?
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It does not include government expenditure
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It does not take account of population size
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It is based on sample basket of goods
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It only compares export prices with import prices
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Explanation:
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: -GDP is a misleading measure of national wealth and wellbeing. Many key goods, including peacefulness, environmental protection or family bonding, are not measured in GDP because they do not involve transactions.
Detailed explanation-3: -How does the size of a country’s GDP affect the quality of life of the country’s people? Generally, the more goods and services people have, the better of they are.
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