Assertion (A): GDP doesn’t really tell the whole story when it comes to how well people in a country are actually doing.
Reason (R): That’s mainly because it doesn’t take into account stuff like wear and tear of machines, pollution, or even how the money is divided among people.
Analyzing Assertion (A): GDP as an Incomplete Measure
Assertion (A) states that Gross Domestic Product (GDP) doesn't fully reflect the actual well-being of people in a country.
- GDP measures the total monetary value of goods and services produced.
- It primarily indicates economic activity and output, not necessarily the quality of life or living standards.
- Therefore, Assertion (A) is true.
Analyzing Reason (R): Factors Missing in GDP Calculation
Reason (R) identifies specific factors that GDP calculations often overlook, such as the depreciation of assets, pollution, and income distribution.
- Depreciation: The wear and tear on machinery and capital, representing a cost of production, is not always fully subtracted in basic GDP measures.
- Pollution: Negative externalities like environmental damage resulting from production are not deducted from GDP.
- Income Distribution: GDP doesn't show how income is spread across the population; a high GDP could coexist with significant inequality.
- These factors directly impact the actual economic condition and well-being of citizens.
- Therefore, Reason (R) is also true.
Evaluating Reason (R) as Explanation for Assertion (A)
Reason (R) explains exactly *why* GDP is an incomplete measure mentioned in Assertion (A). The limitations listed (depreciation, pollution, income inequality) are key reasons why GDP fails to capture the full picture of national well-being.
Because GDP ignores these crucial aspects that affect people's lives and economic reality, it doesn't tell the whole story of how well people are doing. Thus, Reason (R) provides a correct explanation for Assertion (A).
The correct option is that both A and R are true, and R is the correct explanation of A.
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When goods are produced by exploiting natural resources, it is an activity associated with:
A system in which local farmers were allowed to cultivate temporarily within a plantation is known as:
Which goods from India dominated the international textile markets before the age of mechanized industries?
Which type of farming is practiced in areas of high population pressure on land?
The major economic attribute for comparing countries is their:
