It may be incorrect to treat GDP as an index of the welfare of the country for the following reasons.

(A) Externalities.

(B) Distribution of GDP is not uniform.

(C) Monetary exchanges.

(D) Non-monetary exchanges.

Choose the correct answer from the options given below:

Option 1 -> Includes externalities, distribution issues, and non-monetary exchanges - these are all valid limitations of GDP as a welfare measure.

Option 2 -> Incorrectly includes monetary exchanges as a limitation, which is actually what GDP is designed to measure.

Option 3 -> Incorrectly includes monetary exchanges (C) as a limitation of GDP.

Option 4 -> Excludes externalities (A) which is a major limitation, and incorrectly includes monetary exchanges (C).

Hence, Option 1: (A), (B) and (D) only -> GDP fails as a welfare index because: (A) Externalities like pollution and environmental damage aren't captured; (B) Distribution of GDP - high GDP doesn't mean equitable distribution, wealth concentration reduces overall welfare; (D) Non-monetary exchanges like household work, volunteer services, and barter aren't included. Note that (C) monetary exchanges is NOT a limitation - GDP is designed to measure monetary market transactions. The problem is what GDP excludes (non-monetary activities), not what it includes. -> correct