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      Question

       Which of the following statements is/are correct?

      1. GDP can both underestimate as well as overestimate the actual welfare of the economy. 2. The standard of living is all elements that affect people’s happiness, whether these elements are bought and sold in the market or not. 3. GNP can be the main item for the welfare of the economy Select the correct answer using the code given below:
      A 1 only Correct Answer Incorrect Answer
      B 2 only Correct Answer Incorrect Answer
      C 3 only Correct Answer Incorrect Answer
      D Both 1 and 2 Correct Answer Incorrect Answer
      E Neither 1 nor 2 Correct Answer Incorrect Answer

      Solution

      If we take GDP as a measure of the welfare of the economy we shall be overestimating or understating the actual welfare. GDP does not capture leisure, health, a cleaner environment, the possibilities created by new technology, or an increase in variety.

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