question_answer

Explain 'non-monetary exchanges' as a limitation of using gross domestic product as an index of welfare of a country.

Or

How will you treat the following while estimating domestic product of a country? Give reasons for your answer:

(a) Profits earned by branches of country's bank in other countries

(b) Gifts given by an employer to his employees on Independence Day

(c) Purchase of goods by foreign tourists

 

Answer:

Many activities in an economy are not evaluated in monetary terms, for Eg. Non?market transactions like services of house wife, kitchen gardening, etc. are not included in GDP due to non?availability of data.

Or

(a) Not included in domestic income as it?s earned outside the domestic territory of the country.

(b) Included as it?s a factor income.

(c) Included as the expenditure is done within the domestic territory.