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Question
Explain the limitations of GDP.
Solution
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Non – Marketed items are left out of GDP: GDP includes only the goods and services that are sold in the market, Non-Marketed items are not included. Eg: Services provided by parents to their children, clean air has no market value (or) price. Hence it is left out of GDP.
(ii) GDP measures only quantity not quality: At times, we can see some products which are available at large quantities in the product, at a very low price. Only the quantity sold and its price are measured in GDP. The quality of the product is not taken care of.
(iii) Income Distribution: The GDP of a country may be growing rapidly. But income may not be distributed equally. This brings a lot of unequal distribution of income and wealth. GDP actually does not suggest on income distribution.
(iv) Way of life of the people: A high level of Per-Capita real GDP, may lead to a very low health condition of the people, and undemocratic political system, High pollution, High suicidal rate.
