Why is GDP not considered a complete measure of welfare?
Answer and explanation
Correct answer: Because it does not fully show distribution and non-market activities
GDP measures the monetary value of current market production, but welfare also depends on factors such as income distribution, leisure, health, safety, environmental quality, and unpaid household work. A higher GDP can therefore coexist with inequality or serious social and environmental costs.
Frequently asked questions
What is the correct answer to this question?
Because it does not fully show distribution and non-market activities
Why is this the correct answer?
GDP measures the monetary value of current market production, but welfare also depends on factors such as income distribution, leisure, health, safety, environmental quality, and unpaid household work. A higher GDP can therefore coexist with inequality or serious social and environmental costs.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates. Topic: GDP and Welfare.
