"GDP is an imperfect measure of economic well-being because it fails to measure what types of production?"

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01-02-2020
Business

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"GDP is an imperfect measure of economic well-being because it fails to measure what types of production?"

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enyo enyo · Answer 1 · 2020-02-01T19:08:09+01:00

Answer:

GDP is an imperfect measure of Economic well being because of : Production of - Non Monetary Exchange goods , Positive & Negative Externalities goods, Negative Impact goods.

Explanation:

GDP is the total value of goods & services produced by an economy during a period of time.

Although reflecting flow of goods & services in an economy, GDP is still not a perfect measure of well being because :

Non Monetary Exchange Goods : Services of family members (housewives), leisure production (eg painting) are non monetary.
Positive & Negative Externalities Goods: Benefit or harm to un-involved party, without any monetary exchange. Eg - Education, Pollution.
Negative Impact Goods : Goods consumption leading to well being loss rather than well being gain. Eg- Addiction (Alcohol / Smoking).

All these goods change well being : Non Monetary Exchange Goods increase well being , Positive Externalities increase welfare , Negative Externalities decrease welfare , Negative Impact goods decrease welfare.

But, these are still not included in GDP evaluation. So, all these make GDP an imperfect measure of well being.

"GDP is an imperfect measure of economic​ well-being because it fails to measure what types of​ production?"

Respuesta :

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"GDP is an imperfect measure of economic well-being because it fails to measure what types of production?"