Which of the following makes GDP an inappropriate index of welfare?

(A) Distribution of GDP.

(B) Externalities.

(C) Non-monetary exchanges.

(D) Price Index.

Choose the correct answer from the options given below:

Option 1 -> Includes (D) Price Index, which is not a limitation but rather a tool used to adjust GDP.

Option 2 -> Excludes (A) Distribution and (C) Non-monetary exchanges, both of which are valid limitations.

Option 3 -> Includes (D) Price Index, which is not a limitation of GDP as a welfare measure.

Option 4 -> Correctly includes Distribution of GDP (unequal distribution isn't captured), Externalities (pollution, environmental degradation not reflected), and Non-monetary exchanges (household work, barter excluded).

Hence, Option 4: (A), (B) and (C) only -> GDP fails as a welfare index because: (A) it doesn't show how income is distributed among population - high GDP with inequality means poor welfare for many; (B) it ignores externalities like pollution and environmental costs that reduce welfare; (C) it excludes non-market activities like household work, volunteer services, and barter that contribute to well-being. Price Index (D) is actually a corrective tool to convert nominal GDP to real GDP, not a limitation. -> correct