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Why may GDP rise when hospital and construction services increase after a natural disaster?

Answer and explanation

Correct answer: Because treatment and reconstruction are market services

The governing concept is that GDP records the market value of current final goods and services, not whether the spending arose from a beneficial event. Paid medical treatment and reconstruction generate market transactions and are therefore counted in GDP, so option D is correct. However, this does not mean welfare necessarily rises, because the disaster caused losses, suffering, and destruction that GDP may not fully show.

Related tags

Natural DisasterReconstructionMedical ServicesGdpGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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