GDP may not be an appropriate index of welfare of the people. how? explain.
Yes,GDP is not an appropriate index of welfare because;
1. GDP does not include externalities like,factor income from abroad.
2. GDP just quantify all the goods and services but ignore quality.
3. It does not include transfer income/payment which contribute alot in GDP
4. It does not include household works which are an essential part of welfare.
1. GDP does not include externalities like,factor income from abroad.
2. GDP just quantify all the goods and services but ignore quality.
3. It does not include transfer income/payment which contribute alot in GDP
4. It does not include household works which are an essential part of welfare.