Limiations of Real GDP

population changes

If the real gdp increases by 3 percent and population grows by 8 then theyll have more goods o shar between more population.

Income Distribution

Real GDP doesn’t measure how income is spread and if its spread equally.

Types of Goods

SOL falls because spending on artery has negative externalities

Underground economy

Real GDP doesn’t measure illegal activities such as underground drug trade not accurate and can’t measure SOL.

Subsistence Economy

The subsistence economy is made up of people who produce goods to consume themselves rather than sell.his production is not recorded as the goods are not sold.