"limitations of GDP as a measure of welfare"

A) Distribution of GDP:
If the increase in income through increased production is concentrated in hands of a few individuals or firms, then an increase in GDP cannot be seen as an increase in welfare as well.

B) Externalities of production:
The benefits and losses that emanate in the process of production by firms, which have an incidental impact on the general society are called externalities. These externalities are of course positive or negative. Eg. electricity( Positive) in a thermal plant situated near a river also leads to pollution( Negative).

C) Non-monetary exchanges:
Example the services provided by the women as part of house-work is not paid for and therefore remains excluded from GDP.

#Economy #prelim_2020 #Essay #Concept #mains

Also Know!
GDP as a measure of welfare?
Green GDP

GDP deflator:
@ Nominal GDP is the value, which is calculated using the current prices in the economy.
@ real GDP is the value calculated using a constant set of prices.
@ By affixing a base year for these constant prices, value of the GDP can be calculated to ascertain the scale of change in the production levels.
@ The change in prices is calculated by an index of prices called the GDP deflator, which is nothing but the ratio of the nominal GDP to the real GDP.

# # i.e., GDP Deflator = Nominal GDP/ Real GDP
#Economy #Concept #prelim_2020 #Target_Shots
Also Know!
Different ways to measure the change in prices?

"Public Account of India":
@ Public Account of India accounts for flows for those transactions where the government merely acts as a banker.
@ These funds do not belong to the government and have to be paid back at some time to their rightful owners.
@ Expenditures from this account are not required to be approved by the Parliament.
@ This fund is constituted under Article 266 (2) of the Constitution.
@ Examples of these are provident funds, small savings.

#prelim_2020 #Polity #Concept #target_shots

@ Photoluminescence: Photoluminescence is a process in which a molecule absorbs a photon in the visible region, exciting one of its electrons to a higher electronic excited state, and then radiates a photon as the electron returns to a lower energy state.

@ Optoelectronics: Optoelectronics concerns the study and application of electronic devices that source, detect and control light.

#Science #Pre_2020 #Concept

🧠 This one diagram will clear all your basics Ethics concepts.


✨ Core Beliefs → Values → Morals (personal), Ethics (societal), Attitude (towards objects)

If you ever feel stuck in GS4, go back to this.

#Sankalp
#concept
@target30upsc