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If workplace accidents and medical spending both rise, how might GDP give a misleading picture of welfare?

Answer and explanation

Correct answer: Treatment spending can raise measured output without accounting for the harm caused by accidents

Medical treatment is a service whose market value contributes to measured GDP. But GDP does not fully account for the pain, disability, and loss of quality of life caused by accidents. Thus treatment spending can raise measured output even while welfare is harmed, which is the limitation described in option C.

Related tags

Gdp LimitationsWorkplace AccidentsDefensive ExpenditureWelfareGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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