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What is meant by economic welfare Explain how GDP is an indicator of economic welfare. |
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Answer» Economic welfare refers to the level of prosperity and quality of living standards in an economy. Economic welfare can be measured through a variety of factors such as GDP and other indicators which reflect the standard of living of people through the level of literacy, level of health facilities, and quality of the environment. GDP is not a robust measure of economic welfare. GDP is an indicator of the standard of living of people in a country. GDP does not directly account for leisure, levels of literacy and health, environmental quality, changes in inequality of income, improvements in technology. However, GDP tends to have a positive relationship with factors that indicate economic welfare. So, a higher GDP is likely to indicate a higher standard of living and economic welfare. |
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