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Explain how ‘non-monetary exchanges’ are a limitation in taking gross domestic product as an index of welfare. |
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Answer» Non-monetary transactions are quite evident in rural areas where payments for farm-labour are often made in kind rather than cash. But such transactions are not recorded, because they are outside the monetary system of exchange. To this extent GDP remains underestimated. Thus, non monetary exchanges make gross domestic product an inappropriate index of welfare. |
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