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‘Composition of GDP may also be …

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‘Composition of GDP may also be a limitation of Using GDP as an index of social welfare’ . Justify the given statement with the help of an example.
  • 1 answers

Gaurav Seth 4 years, 9 months ago

GDP doesn't account for externalities. 

Externalities are basically:
Positive Externality: Example: Saving commuting time due to construction of a fly-over, increases welfare, GDP as an index understates welfare. 
Negative Externality: Example: Pollution from factories, decreases welfare, GDP overstates welfare. 

http://mycbseguide.com/examin8/

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