Question

Mention any two reasons why national income is not a true measure of economic welfare.

Answer 1

The national income of any nation can not be regarded as the true measure of economic welfare for the following two reasons:

1. Due to the growing disparities in the distribution of national income among different groups of people, an increase in national income may not necessarily translate to an improved standard of living for the general population.
2. The rising social costs of expanding GNP, such as the social costs of environmental damage brought on by industrialization, are not taken into consideration when national income rises.