'GDP as an index of welfare may understate or overstate welfare. Explain the statement using examples of a positive and a negative externally'.

'GDP as an index of welfare may understate or overstate welfare. Explain the statement using examples of a positive and a negative externally'.

Monjur Alahi

4 views

2025-01-04 04:42

1 Answers

Salim Ahmed Kawsar

GDP doesn't account for externalities

Positive Externality: eg: saving commuting time due to the construction of a fly-over, increases welfare, GDP as an index understates welfare

Negative Externalities: eg: Pollution from factories, decreases welfare, GDP overstates welfare.

4 views Answered 2023-02-05 15:29

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