increase in size of GDP may cause increase in welfare of people of the wconoy give reason

Dear student No, Distribution of GDP is an important determinant for taking GDP as an index of welfare. This is because it is possible that even with the rise in the real GDP, the welfare of the people might not increase. The increase in the GNP may be a result of increase in the income of only a few individuals. On the other hand, the majority of the people remain deprived of the benefits of the rise in the GDP. Thus, the rise in GDP may lead to false interpretation of the social welfare. Regards

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Yes , this is true because increase in GDP which means increase in overall output of all 3 sectors which are - Primary , Secondary , Tertiary will increase, which will lead to increase the social outlook and lifestyle of the people.
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No.. I don't think so increase in gdp can increase welfare of people because with increase in gdp there are possibilities that inequalities in income distribution may too increase ie richer gets richer poorer gets poor. .. So therefore it is not completely that increase in gdp will indicate increase in welfare of people..

Regards
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No, increase in GDP doesn't really mean an increase in the welfare of the people. This may be because of the following reasons :-
  • Inequitable distribution - the GDP may be spread unequally among all the sections of the society. The richer sections of the society may account for a majority of the increase in GDP while the poor may not benefit from it. Basically, the rich becomes richer and poor becomes poorer. So increase in GDP doesn't necessarily mean an increase in the welfare of the people.
  • Externalities - Externalities means the benefit or harm caused by and individual or firm for which it isn't paid of penalised. There may be positive externalities such as constructing a park for the citizens as well as negative externalities such as pollution. GDP does not account any externality whether positive or negative.
  • Increase in price - GDP may also rise due to an increase in price and not just the increase in output. When price increases, the people have to spend a much greater part of their income on these goods. This will reduce their welfare.
This states that increase in GDP doesnt necessarily mean an increase in the welfare. There are several other points which I havent mentioned here. Hope this helps though.
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No, because increase in GDP may increase the inequalities of income and wealth , which may in turn,reduce the welfare among the people. So, welfare may not rise as much as the rise in GDP.
Hope it helps you!!
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