Limitations of GDP, GNP and CPI

Limitations of GDP, GNP and CPI

by Md. Tanbir Hossain -
Number of replies: 0


Limitations of GDP
  • GDP does not incorporate any measures of welfare.
  • GDP only includes market transactions.
  • GDP does not describe income distribution.
  • GDP does not describe what is being produced.
  • GDP ignores externalities

Limitation of GNP

  • 1. Exchange rate
  • 2. Can't tell if the economy is growing
  • 3. GNP inflated due to expatriates
  • 4. GNP decreased due to foreign direct investment

Limitation of CPI
It does not measure price changes in regional, rural or remote areas
. The CPI also does not take into account the differences in spending patterns between individual households