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Why is GDP considered an incomplete indicator of economic welfare?

Answer and explanation

Correct answer: It does not fully show income distribution and non-market activities

GDP is a useful measure of the value of market production, but economic welfare depends on more than output. GDP does not adequately show how income is distributed, whether people enjoy leisure, or the value of unpaid household work. It may also ignore environmental damage and quality differences. Therefore, a rise in GDP does not automatically mean that every person's living standard or welfare has improved.

Related tags

GdpWelfareIncome DistributionNon-Market ActivitiesStandard Of LivingGdp And WelfareNational Income And Related AggregatesEconomics

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