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Which of the following is counted in GDP but does not necessarily increase welfare?

Answer and explanation

Correct answer: Market expenditure on cleaning pollution

GDP records market-valued production and expenditure, not every improvement in people’s well-being. Expenditure on cleaning pollution is paid market activity and therefore adds to measured output. However, it may merely repair damage created earlier, so the increase in GDP does not necessarily mean that people are better off overall. Unpaid cooking, free help and leisure are normally outside measured GDP.

Related tags

Pollution CleanupRemedial SpendingGdpGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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