It may be incorrect to treat GDP as an index of the welfare of the country for the following reasons.

(A) Externalities.
(B) Distribution of GDP is not uniform.
(C) Monetary exchanges.
(D) Non-monetary exchanges.

Choose the correct answer from the options given below:

(A), (B) and (D) only

The correct answer is Option (1) → (A), (B) and (D) only

While GDP measures the total value of goods and services produced in a country, it does not accurately reflect the overall welfare of the population for the following reasons:

(A) Externalities – GDP does not account for negative externalities like pollution, or positive externalities like education benefits. These affect welfare but are not reflected in GDP figures.

(B) Distribution of GDP is not uniform – GDP may rise, but if the income is unequally distributed, most of the population may not experience improved living standards, leading to misleading conclusions about welfare.

(D) Non-monetary exchanges – GDP includes only market-based transactions. It ignores non-monetary exchanges, such as household work or barter transactions, which contribute to well-being but are not recorded.

(C) Monetary exchanges – This refers to the core of GDP itself and is not a reason why GDP misrepresents welfare. In fact, GDP is based on monetary exchanges by definition.