Answer to Question #256870 in Macroeconomics for Veenika

Question

According to you is Gross Domestic Product (GDP) a true indicator of welfare of the society ? Give arguments in favour of your opinion.

Answer 1

GDP is an accurate indicator of the size of an economy and the GDP growth rate is probably the single best indicator of economic growth, while GDP per capita has a close correlation with the trend in living standards over time. GDP has always been a measure of output, not of welfare. Using current prices, it measures the value of goods and services produced for final consumption, private and public, present and future. But although GDP is not a measure of human welfare, it can be considered a component of welfare.