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If the quality of public education improves without an increase in fees, how might actual welfare differ from GDP?

Answer and explanation

Correct answer: Welfare may rise even if the full value of the quality improvement is not reflected in GDP

Publicly provided education is generally recorded in GDP using the cost of providing it, rather than by fully measuring changes in its quality. Better education can improve students’ skills and welfare even when fees and recorded costs do not rise. Thus C is correct; public education is not simply excluded from GDP.

Related tags

Gdp And WelfarePublic EducationNational Income And Related AggregatesEconomicsClass 11 Mcq

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