Which of the following best describes the difference between the Human Development Index (HDI) and Gross Domestic Product (GDP) in terms of what they measure?

• A. GDP focuses on environmental sustainability, while HDI focuses on economic growth.
• B. HDI and GDP both measure only the income per capita of a country.
• C. GDP measures the total value of goods and services produced in a country, while HDI includes economic output as well as health and education indicators.
• D. HDI measures economic output only, while GDP measures both economic output and social indicators.

Answer: (C)

Verified step by step guidance

1. Step 1: Understand what GDP (Gross Domestic Product) measures. GDP is the total monetary value of all final goods and services produced within a country's borders in a specific time period. It primarily focuses on economic output and does not directly account for social or health factors.
2. Step 2: Understand what HDI (Human Development Index) measures. HDI is a composite index that includes not only economic output (usually measured by income per capita) but also incorporates social indicators such as life expectancy (health) and education levels. This makes HDI a broader measure of human well-being.
3. Step 3: Compare the scope of GDP and HDI. GDP is a purely economic measure focusing on production and income, while HDI combines economic data with social dimensions to provide a more comprehensive view of development.
4. Step 4: Evaluate the answer choices based on these definitions. The correct description should highlight that GDP measures total economic output, whereas HDI includes economic output plus health and education indicators.
5. Step 5: Conclude that the best answer is the one stating: 'GDP measures the total value of goods and services produced in a country, while HDI includes economic output as well as health and education indicators.'