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If use of a free artificial-intelligence service rises while its market price remains zero, which limitation of the deflator appears?

Answer and explanation

Correct answer: The full market value of consumer benefit is not recorded

A GDP deflator is constructed from recorded prices and the value of measured domestic production. A free service has a zero observed market price, even though increased use may generate substantial time savings, convenience, knowledge, or other consumer benefits. Those benefits are not fully represented by the price index or GDP. Therefore, option A correctly identifies the limitation; the other statements do not logically follow.

Related tags

Free Digital ServicesConsumer BenefitGdp DeflatorWelfare MeasurementGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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