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Volunteer services increase in an economy while market output remains constant. What is the likely effect on welfare and GDP?

Answer and explanation

Correct answer: Welfare may rise while GDP remains unchanged

The governing distinction is between market production and non-market activity. Volunteer work can provide care, education, cleaning, or community support and therefore improve people’s well-being. If it is unpaid and no market transaction occurs, its value is generally not recorded in GDP. Since the question says market output stays constant, option A is correct. The words “must” in options B, C, and D make them unjustified conclusions.

Related tags

Volunteer ServicesNon-Market ActivityWelfareGdp MeasurementGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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