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.
Similar Questions
- What was the main rationale for the policy of import substitution during the first seven Five Year Plans?
- Read the below statements marked as Assertion (A) and Reason (R). Mark the correct option:
Assertion (A): In macroeconomics, treating a single commodity as representative of all goods allows simplification of aggregate analysis.
Reason (R): This is because all individual goods always behave identically under inflationary trends. - What was the primary aim of import substitution policy in India’s early planning era?
- The term 'Navratnas' in public sector reform refers to:
- Expansionary fiscal policy is NOT characterized by:
- What was a key equity-based goal of land reforms implemented after independence?
- Economic reforms in India were introduced in which year?
- Which of the following is an example of a capital receipt?
- How does Indian planning demonstrate responsiveness to feedback?
- What does "P" in LPG reforms stand for?
Important Questions from Economy
The Five Year Plan was first launched in
Which of the following was/were the feature(s) of Lenin’s New Economic Policy (NEP) for the Soviet Union?
1) Private retail trading was strictly forbidden
2) Private enterprise was strictly forbidden
3) Peasants were not allowed to sell their surplus
4) To secure liquid capital, concessions were allowed to foreign capitalists, but the State retained the option of purchasing the product of such concerns
Select the correct answer using the code given below:
Which one of the following was set as a target of average growth of GDP of India over the plan period 2012-2017 by the Approach Paper to the Twelfth Five year Plan?
In ________ economies, all productive resources are owned and controlled by the government.
Private ownership of the means of production is a feature of a _______ economy.
