Question

Write briefly about national income and welfare.

Answer 1

National Income is considered as an indicator of the economic wellbeing of a country. The per capita income as an index of economic welfare suffers from limitations which are stated below:

1. Economic welfare depends upon the composition of goods and services provided. The greater the proportion of capital goods over consumer goods, the improvement in economic welfare will be lesser.
2. Higher GDP with greater environmental hazards such as air, water, and soil pollution will be little economic welfare.
3. The production of war goods will show an increase in national output but not welfare.
4. An increase in per capita income may be due to the employment of women and children or forcing workers to work for long hours. But it will not promote economic welfare.