Social And Economic Welfare Of A Country Essay

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Developed in 1930s, GDP defined as the value of all the goods and services produced within a country in a given financial year (Heloisa, 2012). GDP is significant as it measures size and performance of an economy. GDP uses growth rate to quantity the economic activity and this assists policy makers to adjust and implement economic policy during recession and depression, as it obliges as a precise indicator of the business climate where it provides all the essential data to government and business so they can adjust and think of ways to survive (Macroeconomics, 2011). Economically it functions as a modest representation for social and economic welfare of a country and this helps economist worldwide to study and compare different countries in terms of life expectancy, wealth, income, education level and many other indicators (Macroeconomics, 2011). However, on the other side GDP has been relentlessly critiqued by many economists as it doesn’t take into account non-market activities such as unpaid voluntary work or illegal trade. Second, criticism of GDP is that it doesn’t not take into consideration the distribution of nation wealth’s, as it only feeds an estimated of each person share of the market economy it ignores the fact that some people level of income is higher than others hence, due to unequal distribution the level of poverty in some countries is difficult to assess. Furthermore, it doesn’t even account for loss of welfare due to natural disasters and also
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