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If the GDP deflator falls while the quality of health and education services also declines, what can be concluded about welfare?

Answer and explanation

Correct answer: The deflator alone does not support a definite conclusion

The GDP deflator measures the price level of domestically produced final goods and services; it is not a complete measure of welfare. A lower deflator does not tell us whether service quality, access, or outcomes have improved. Since health and education quality has declined, welfare may be affected, but the deflator alone cannot establish the overall change. Option C is correct.

Related tags

Gdp DeflatorWelfareService QualityGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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