GDP is not a perfect measure of welfare because it
A) treats a dollar spent on candy bars the same as a dollar spent on education
B) treats a dollar spent on exports the same as a dollar spent on imports
C) double counts the value of leisure time
D) double counts depreciation
E) counts illegal activities in the underground economy

Question

Quizplus · Accepted Answer

GDP only measures the value of goods and services produced in the economy, it doesn't account for other factors that affect the overall welfare of citizens such as income distribution, environmental factors, and work-life balance. Additionally, GDP counts every dollar spent on goods and services equally, ignoring its impact on quality of life. For example, a dollar spent on education provides benefits for years to come, whereas a dollar spent on candy bars only provides temporary satisfaction.

GDP Is Not a Perfect Measure of Welfare Because It