Question

write one limitation of calculating the GDP of a nation

Answer 1

·Changes in quality and the inclusion of new goods - higher quality

Answer 2

Answer:

‘GDP’ does not take into account any measures of welfare.

Explanation:

GDP includes the ‘value of all goods’ which are produced in an economy over a specific ‘period of time’. There are many ways of calculating and measuring the GDP of the country.

But it does not include any aspect of welfare or well-being. It does not calculate the various aspects of welfare and only includes ‘market transactions’. Therefore GDP calculations are limited in this aspect and cannot be called valid.