Read the below statements marked as Assertion (A) and Reason (R). Mark the correct option:
Assertion (A): GDP doesn't really tell the whole story when it comes to how well people in a country are actually doing.
Reason (R): That's mainly because it doesn't take into account stuff like wear and tear of machines, pollution, or even how the money is divided among people.
Show answer & explanation
Correct answer: A
Explanation
The correct answer is option 1 i.e. Both A and R are true, and R is the correct explanation of A.
The correct option is that both (A) and (R) are true, and (R) is the correct explanation of (A).
While Gross Domestic Product (GDP) measures the market value of all final goods and services produced within a country, it is an imperfect indicator of human welfare. Assertion (A) is true because GDP focuses on production volume rather than quality of life or sustainability.
Reason (R) correctly identifies the structural gaps in GDP. It fails to account for depreciation (capital consumption), negative externalities like environmental degradation, and income inequality. If a country’s wealth is concentrated in the hands of a few, the average citizen may struggle despite a high GDP. Therefore, GDP reflects economic scale, but not necessarily economic "health" or equity.