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Which statement best describes the relationship between GDP and welfare?

Answer and explanation

Correct answer: GDP is a useful but incomplete indicator of welfare

GDP is useful because it measures the value of final goods and services produced and provides information about economic activity, income, and material availability. However, welfare also depends on income distribution, health, education, environmental quality, leisure, security, and unpaid services. GDP may therefore rise while some people’s living conditions worsen. Option A states the balanced conclusion. Option B is too absolute, whereas C and D wrongly deny important economic and social relationships.

Related tags

Gdp IndicatorWelfareGdp LimitationsGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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