ECONOMICS
GDP
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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GDP is the single best measure of welfare
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GDP is not used to measure welfare
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GDP have some limitations as a measure of welfare
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GDP is not at all a measure of welfare
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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: -The main metric has been differences in income or gross domestic product per person. But economists have long known that GDP is an imperfect measure of well-being, counting just the value of goods and services bought and sold in markets.
Detailed explanation-3: -It means that any product made by the country’s residents must be included in the national income, whether inside or outside the country. However, gross domestic product (GDP) does not include the profits of domestic companies operating abroad, which is one of the limitations of GDP.
Detailed explanation-4: -GDP is also an indicator of human welfare. In cross-country data, GDP per capita is highly correlated with other factors that are important for welfare. In particular, it is positively correlated with life expectancy and negatively correlated with infant mortality and inequality.