What is one limitation of gross domestic product as an economic indicator?

Gross Domestic Product (GDP) serves as a widely used measure of a country's economic performance by capturing the total value of all goods and services produced over a specific time period. However, one of its key limitations is that it does not account for income inequality among the population.

While GDP provides a general picture of economic activity and growth, it does not provide insights into how that wealth is distributed across different segments of society. For example, a country may experience significant GDP growth, but if that growth disproportionately benefits a small segment of the population, many individuals may not experience any improvement in their economic situation. This can lead to a misleading perception of overall economic well-being; thus, policies based solely on GDP figures may overlook the challenges faced by lower-income groups and fail to address systemic inequalities.

Considering the other options, they either reference aspects of GDP that don't pertain to its ability to reflect social equity or emphasize specific areas of economic measurement that are not directly related to income distribution. Thus, the focus on income inequality as a limitation highlights a critical aspect of economic analysis essential for developing comprehensive social and economic policies.