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In which situation may GDP rise without necessarily raising social welfare?

Answer and explanation

Correct answer: Excessive spending on weapons

GDP measures the value of production and spending, not whether every component of output improves social welfare. Excessive weapons expenditure can increase production, employment, and recorded market value, so GDP may rise. However, it may not improve ordinary living conditions and can divert resources from education, health, housing, or other peaceful needs. Therefore option D is correct; schools, clean water, and employment generally have more direct welfare benefits.

Related tags

Gdp And WelfareWeapons SpendingComposition Of OutputSocial WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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