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'GDP as an index of welfare may understate or overstate welfare. Explain the statement using examples of a positive and a negative externally'. |
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Answer» GDP doesn't account for externalities Positive Externality: eg: saving commuting time due to the construction of a fly-over, increases welfare, GDP as an index understates welfare Negative Externalities: eg: Pollution from factories, decreases welfare, GDP overstates welfare. |
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