Question

Increase in real gdp is often interpreted as increase in welfare" what are the problems with this interpretation?

Answer 1

there are four problems with this interpretation

1.distribution of income : if distribution of income tones unequal GDP growth fails to reflect arising social welfare

2.composition of GDP : composition of GDP may not be welfare oriented

3.non monetary exchanges : non monetary exchanges are not recorded to calculate GDP

4.externalities : externalities refers to good and bad impact of an economic activity without paying the price or penalty for that

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Answer 2

explain it with detail in the shape of assignment for microeconomic?