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What is a main reason for the difference between GDP and welfare?

Answer and explanation

Correct answer: GDP does not measure all social and environmental effects

GDP measures the market value of final goods and services produced within an economy, but welfare is broader. Welfare also depends on health, education, safety, leisure, income distribution and environmental quality. Many of these effects are not fully recorded in GDP. Hence option D is correct; the other options incorrectly describe GDP or welfare as measures of only population, prices or exports.

Related tags

Gdp LimitationsWelfareSocial And Environmental EffectsGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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