Question

A shortcoming of using real gross domestic product (gdp) as a measure of economic well-being is that it does not measure changes in _______

a) production.
b) prices.
c) environmental quality.
d) national income

Answer 1

Real GDP measures a nation's economic output but fails to account for environmental quality, which is a limitation as it might lead to an overestimation of societal well-being despite potential environmental degradation.

Step-by-step explanation:

Real Gross Domestic Product (GDP) is a common economic measure used to estimate the economic well-being of a nation. It is calculated by using market prices to sum up the total market value of all final goods and services produced in a country during a specific time period.

However, real GDP has a significant shortcoming in that it does not reflect changes in environmental quality. This limitation matters because it means that while GDP might be increasing, it does not take into account potential environmental degradation that could harm the well-being of society in the long term. Moreover, GDP does not account for leisure, health, and educational levels, work done outside the market, changes in income inequality, increases in the variety of goods and services, advancements in technology, or societal values placed on different types of outputs.