What is GDP?
Gross domestic product (GDP) is a monetary measure of the market value of all final goods and services manufactured in a time frame, often yearly or quarterly. Nominal GDP evaluates are commonly utilized to decide the economic performance of a whole country or region and to make international comparisons.
GDP (nominal) per capita does not, however, contemplate differences in the cost of living and inflation rates of the nations; hence using a basis of GDP per capita at purchasing power parity (PPP) is possibly more functional when contrasting differences in living standards between countries.
What is Welfare?
The welfare definition of economics is an effort by Alfred Marshall, an explorer neoclassical economist, to reanalyze his field of study. This definition elucidates the stream of economic science to a larger study of humanity. Particularly, Marshall’s view is that economics studies all the pursuits that people take in order to attain economic welfare. In the words of Marshall, “man earns money to get material welfare.” This definition expanded the scope of economic science by foregrounding the study of wealth and humanity simultaneously, rather than wealth alone.
If a person has more earnings, he or she can purchase more commodities and services and his or her material well being enhances. So, it may seem rational to treat his or her income degree as his or her degree of well being. GDP is the total of the value of commodities and services created within the geographical frontier of a nation in a particular year. It gets allocated among the people as earnings (except for retained incomes). So we may be persuaded to treat the higher degree of GDP of a nation as a hint of greater well being of the people of that nation (to account for cost price changes, we may take the value of real GDP instead of nominal GDP).
The above mentioned is the concept that is explained in detail about GDP and Welfare. To know more, stay tuned to BYJU’S.