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Why is real GDP per capita an incomplete indicator of living standards?

Answer and explanation

Correct answer: It does not fully reflect income distribution, non-market services, the environment and leisure

Real GDP removes the effect of price changes, and dividing it by population gives average real market output per person. However, living standards also depend on income distribution, unpaid household work, public and non-market services, environmental quality, health, security and leisure. Option B is correct because these dimensions are not fully captured; option A contradicts the meaning of real GDP.

Related tags

Living StandardsReal Gdp Per CapitaGdp LimitationsWelfareGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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