Consider the following statements :
1. Per capita income is more representative of economic progress compared to GDP.
2. GDP includes goods and services produced and sold in both legal and illegal markets.
3. GDP may not be an adequate index of social and economic welfare.
Which of the statements given above is/ are correct?
(a) 1 and 2 only
(b) 2 and 3 only
(c ) 1 and 3 only
(d) 1, 2, and 3
Explanation Statement 1 is correct : While both GDP and per capita income are important economic indicators, per capita income (GDP per capita) is often considered a more representative measure of economic progress because it reflects the average standard of living and economic well-being per person
Statement 2 is not correct : GDP includes goods and services that are legally produced and sold in the marketplace, such as cars, haircuts, restaurant meals, and medical services, excludes activities like unpaid work, the black market, transfer payments, and illegal activities like drug trafficking or prostitution, as these are not recorded in official economic statistics.
Statement 3 is correct : There are certain limitations of GDP as a welfare indicator because it ignores Income Distribution, does not capture Non-Market Activities, Ignores Quality of Life.
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