Correct option is D
The correct answer is. (d) Only 1 and 2
To determine which statements are correct, we need to understand the relationship between GDP (Gross Domestic Product) and welfare:
1. Statement 1: GDP of a country is an indicator of welfare of the people.
· This statement is correct. GDP is often used as an indicator of a country's economic performance and, indirectly, the welfare of its people. It measures the total value of goods and services produced, which can reflect the economic opportunities and standard of living. However this does not always happen. There are certain reason or limitations why GDP cannot always be taken as a perfect index of economic welfare.
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2. Statement 2: If GDP is rising, the welfare may not rise equally.
· This statement is correct. While GDP growth indicates economic progress, it does not necessarily mean that the welfare of all citizens is improving. Economic growth might be unevenly distributed, and factors like inequality, environmental degradation, and social issues may affect welfare even if GDP rises.
3. Statement 3: GDP and Welfare both are not related to each other.
· This statement is incorrect. While GDP and welfare are not perfectly correlated, they are related. GDP provides an economic measure that is often used to infer welfare, although it may not capture all aspects of well-being. Therefore, they are connected, though not always directly proportional.
Thus, the correct options are 1 and 2 only.
Information Booster:
Definition: GDP measures the total value of goods and services produced within a country's borders over a specific period, reflecting economic performance.
Types of GDP:
- Nominal GDP: Current market prices, unadjusted for inflation.
- Real GDP: Adjusted for inflation, showing actual growth.
- Per Capita GDP: GDP divided by population, indicating average income.
Calculation Methods:
- Production Approach: Adds value at each production stage.
- Income Approach: Sums wages, profits, and rents.
- Expenditure Approach:GDP=C+I+G+(X−M)GDP = C + I + G + (X - M)GDP=C+I+G+(X−M)
Importance:
- Measures economic health and guides policies.
- Facilitates global comparisons of economies.
Limitations:
- Ignores income inequality, environmental impact, and non-market activities.
- Doesn't directly measure quality of life or well-being.
Alternatives to GDP:
- HDI: Measures health, education, and income.
- Green GDP: Adjusts for environmental costs.
- Gross National Happiness (GNH): Focuses on well-being.
Key Indicators:
- GDP Growth: Reflects economic expansion.
- GDP Deflator: Measures inflation.
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