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If GDP remains unchanged but the government provides better education and health services to the poor, what may happen to social welfare?

Answer and explanation

Correct answer: Social welfare may rise

GDP can remain unchanged while the distribution and quality of public services improve. Better schooling and healthcare may expand capabilities, reduce inequality, improve health, and increase opportunities for poor households. These welfare gains are not necessarily shown by a change in total GDP, so D is correct. A is opposite to the likely effect, B is irrelevant, and C wrongly assumes that welfare depends only on aggregate output.

Related tags

Public ServicesRedistributionEducationHealthWelfareGdp And WelfareNational Income And Related AggregatesEconomics

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