Final answer:
GDP is a rough indicator of standard of living, missing aspects like leisure, environmental quality, and inequality. While useful for measuring production and associated with other life improvements, it should not be the sole focus of macroeconomic policy. It does not measure societal values or non-market activities.
Step-by-step explanation:
GDP is commonly used as an indicator of a society's standard of living, but it should be regarded as a rather rough measure of economic or social welfare. This is because GDP does not take into account several factors that contribute to the well-being of a society. It does not directly measure non-market activities such as leisure, nor does it reflect the environmental quality, levels of health and education, or activities conducted outside the formal market economy. Additionally, GDP does not capture changes in income inequality, the variety and quality of goods and services, advancements in technology, or the societal value placed on different types of output.
While GDP is useful for measuring production and material wealth, which can be associated with jobs and incomes, it does not encapsulate the broader aspects of living standards. Governments and policymakers should therefore not view a high level of GDP as the only goal of macroeconomic policy. Significantly higher GDP per capita is often correlated with improvements in many aspects of life, such as education, health, and environmental protection, but these correlations are not directly measured by GDP itself.