Question

In what way(s) does GDP per capita not provide an accurate representation of living standards? SELECT ALL THAT APPLY.

- GDP per capita does not measure production that occurs outside of the market economy.
- GDP per capita does not account for how people distribute their time between work and leisure.
- GDP per capita does not account for changes in environmental quality.
- GDP per capita does not account for all final goods and services sold in markets.

Answer 1

Answer:

GDP per capita does not measure production that occurs outside of the market economy.

GDP per capita does not account for how people distribute their time between work and leisure.

GDP per capita does not account for changes in environmental quality.

✗ GDP per capita does not account for all final goods and services sold in markets.

Explanation:

Although GDP per capita is useful as a rough indicator of living standards in a country, it ignores certain factors that can be quite important. In particular, it ignores anything that lacks a market price. Notable ommissions thus include leisure time, environmental quality, and nonmarket economic activities.

GDP per capita does account for all final goods and services sold in markets. So that option is not correct. GDP is just a growth indicator of an economy. It doesn’t take any major factors like literacy, distribution of income, standard of living etc. into account.