Why might GDP per capita fail to fully reflect economic well-being?

Multiple choice question for Long Term Economic Growth. Select an option, then review the explanation below.

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It does not account for the worth of free timeIt ignores environmental and social external effectsIt excludes goods that are not bought or sold in marketsIt overlooks shifts in how income is distributedAll of these factors are excluded

Explanation

GDP per capita is an incomplete indicator of economic welfare because it leaves out several important elements: the value of leisure time, the impact of externalities, goods that are not traded in markets, and changes in income distribution. Therefore, all these aspects contribute to its limitations.

Practice related questions from the same subject.

1.According to real business cycle theory, what is the suggested approach to address deviations from the optimal growth trajectory?
2.What constraint does the fact that gross investment cannot be negative place on variations in which economic measure?
3.According to the multiplier-accelerator model, what is investment dependent on?
4.Which of the following is NOT considered a phase of the business cycle?
5.What does the business cycle represent in terms of output variation?

Why might GDP per capita fail to fully reflect economic well-being?

Explanation

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