What are the limitations of GDP, GNP and CPI?

What are the limitations of GDP, GNP and CPI?

by Neela Sarker -
Number of replies: 1

The limitations of GDP:

  • The exclusion of non-market transactions.
  • The failure to account for or represent the degree of income inequality in society.
  • The failure to indicate whether the nation's rate of growth is sustainable or not.

 

Limitations of Gross National Product (GNP):

  • Economic Versus Social Costs:
  • Distribution of National Output:
  • Income and Output per Capita:
  • Upgrading the Quality of Basic Data:
  • The Value of Leisure:
  • Qualitative Changes in the National Output
The limitations of GDP:
Another limitation is that the CPI cannot be used to measure differences in price levels or living costs between one area and another as it measures only time-to-time changes in each area. A higher index for one area does not necessarily mean that prices are higher there than in another area with a lower index.