Discuss two reasons why the per capital real income is considered to b

1.	Discuss two reasons why the per capital real income is considered to be a better index of economic welfare than gross domestic product.
Answer» Per capital Real income is considered to be a better index of economic welfare than GDP because of following ing reasons: (i) Only per capital, real income shows a change in per capital av ailability 1 of goods and sen ices to the people of a country which leads to an improvement in the living standard of people as well as economic development. (ii) Change in Level of Economic Activity: Increase in per capital real income implies an increase in the level of economic activity (in terms of increase in level production not in terms of an increase in market prices).

Discuss two reasons why the per capital real income is considered to be a better index of economic welfare than gross domestic product.

Answer»

Per capital Real income is considered to be a better index of economic welfare than GDP because of following ing reasons:

(i) Only per capital, real income shows a change in per capital av ailability 1 of goods and sen ices to the people of a country which leads to an improvement in the living standard of people as well as economic development.

(ii) Change in Level of Economic Activity: Increase in per capital real income implies an increase in the level of economic activity (in terms of increase in level production not in terms of an increase in market prices).

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