What are the limitations of using GDP as an index of welfare of a country?
A) The N.I. figures provide no indication of the population, skill and resource of the country. Thus the levels of welfare stay low.
B) A higher N.I. might be due to bigger area or due to concentration of some resources in one specific country.
C) N.I. doesn’t consider the level of prices in country. People might be having high income however due to high prices they may not be able to benefit from a high standard of living.
D) High N.I. of a country might be due to big contributions made by few industries.