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प्रश्न
Explain how ‘distribution of gross domestic product’ is a limitation in taking gross domestic product as an index of welfare.
उत्तर
GDP refers to the market value of all the final goods and services produced within the domestic territory during an accounting year. GDP as an index of welfare depends on the distribution of income in the economy. It is possible that even with the rise in the real GDP, the welfare of the people might not increase. This is because an increase in the GDP may be a result of the increase in the income of only a few individuals while, the majority of people remain deprived of the benefits of the rise in the GDP. In such a situation, a rise in the GDP does not enhance the economic welfare. In other words, a rise in national income may lead to false interpretation of the social welfare. Thus, it can be said that distribution of GDP is a limitation as a measure of economic welfare.
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संबंधित प्रश्न
How will you treat the following while estimating domestic product of a country? Give reasons for your answer:
Purchase of goods by foreign tourists
If the Nominal Gross Domestic Product = Rs 4,400 and the Price Index (base = 100) = 110, calculate the Real Gross Domestic Product.
Write down the three identities of calculating the GDP of a country by the three methods. Also briefly explain why each of these should give us the same value of GDP.
Define the Gross Domestic Product.
Match the following:
| 1 | Prime Minister | A | Seeds that give a large proportion of output |
| 2 | Gross Domestic Product | B | Quantity of goods that can be imported |
| 3 | Quota | C | Chairperson of the planning commission |
| 4 | Land Reforms | D | The money value of all the final goods and services produced within the economy 'in one year |
| 5 | HYV Seeds | E | Improvements in the field of agriculture to increase its productivity |
| 6 | Subsidy | F | The monetary assistance given by the government for production activities |
Which of the following are the limitations of using GDP as an index of the welfare of a country?
GDP is not an appropriate indicator of welfare because of:
Consider the following statements:
-
The use of public parks increases welfare
-
The distribution of GDP increases welfare
-
Higher GDP always causes higher welfare
Which of the above statements are false?
______ is shown by Nominal GDP.
Real GDP is considered as an index of:
Read the below case and answer the question that follows:
|
The country's real gross domestic product (GDP) is likely to expand by 11 percent in the next financial year due to a faster economic recovery and on a low base, says a report. The report by domestic rating agency Brickwork Ratings said economic activities are slowly reaching PRE-COVID levels following the relaxation of the lockdown, except in sectors that remain affected by social distancing norms. "With progress in developing an effective vaccine for COVID-19 and signals of faster-than-expected recovery in the domestic economy, and also supported by a low base, we expect the real GDP to grow at 11 percent in F/Y 22, from the estimated contraction of 7 percent to 7.5 percent in F/Y 21," the agency said. According to the first advance estimates of national income released by the National Statistical Office (NSO), the country's GDP is estimated to contract by a record 7.7 percent during the current financial year. |
What will be the growth rate of GDP according to the NSO?
Which of the following statements is false?
Read the below case and answer the questions that follow:
The Centre on Saturday increased the budgetary allocation for the environment ministry from last fiscal by nearly five percent for 2020-21 with no change in the amount allotted to pollution abatement and climate change action plan. Union Finance Minister, Nirmala Sitharaman, allocated ₹3,100 crores for the ministry out of which ₹460 crores were allotted to control pollution, which is the same as the money it received in the last budget. Control of pollution has been conceptualized to provide financial assistance to Pollution Control Boards/Committees and funding to National Clean Air Programme (NCAP). Similarly, the budget for pollution abatement, which was cut by 50 percent last year from 2018-to 19, remained unchanged at ₹10 crores. The minister also announced that states, which are formulating and implementing plans for ensuring cleaner air in cities above one million population should be encouraged.
- Budget 2020: Allocation for Environment Ministry up 5% to ₹3,100 crore - Business Standards, 1st February 2020
Real GDP and Welfare are ______ related to each other.
From the following, calculate the value of net domestic product at factor cost:
| S.No. | Items | Amount in (₹ crore) |
| (i) | Royalty | 5 |
|
(ii) |
Rent | 75 |
| (iii) | Interest | 30 |
| (iv) | Compensation of Employees |
600 |
| (v) | Profit | 45 |
| (vi) | Dividends | 20 |
| (vii) | Mixed Income of self employed |
100 |
For a closed economy (with no foreign trade), which one of the following is correct?
On the basis of the data given below for an imaginary economy, estimate the Net Domestic Product at Factor Cost (NDPFC):
| S.NO. | Items | Amount (₹ in crore) |
| (i) | Household Consumption Expenditure | 3,000 |
| (ii) | Government Final Consumption Expenditure | 1,000 |
| (iii) | Net Domestic Fixed Capital Formation | 1,000 |
| (iv) | Change in Stock | 200 |
| (v) | Exports | 500 |
| (vi) | Indirect Taxes | 350 |
| (vii) | Imports | 300 |
| (viii) | Subsidies | 50 |
Calculate the value of Domestic Income from the following data:
| S.NO. | Particulars | Amount (₹ in crore) |
| (i) | Rent and Royalties | 1,300 |
| (ii) | Net Indirect Taxes | 200 |
| (iii) | Wages & Salaries ( in cash & in kind) | 1,700 |
| (iv) | Corporate Tax | 400 |
| (v) | Depreciation | 400 |
| (vi) | Retained Earnings | 300 |
| (vii) | Dividends | 400 |
| (viii) | Net Factor Income from Abroad | (-) 120 |
| (ix) | Mixed Income of Self Employed | 1,400 |
| (x) | Change in Stock | (-) 200 |
State whether the following items will be included in the estimation of National Income or not? Give a reason for your answer.
Wooden cupboard purchased by a family.
