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What problem arises when leisure time is ignored while using NNP as an indicator of welfare?

Answer and explanation

Correct answer: Assessment of real quality of life may be incomplete

NNP measures the monetary value of final goods and services after allowing for depreciation, but it does not fully capture non-market dimensions of well-being. Leisure is valuable because it contributes to quality of life, even though it usually has no market price. If people work longer and lose leisure, NNP may rise without an equivalent improvement in welfare. Therefore, ignoring leisure makes the welfare assessment incomplete.

Related tags

EconomicsNnpWelfareLeisureQuality Of LifeGdp And WelfareNational Income And Related AggregatesClass 11 Mcq

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