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If volunteers provide free services to flood victims what is correct regarding conventional GDP and social welfare?

Answer and explanation

Correct answer: The value may be unrecorded in GDP while social welfare rises

GDP generally records market transactions with observable prices. When volunteers provide services without payment, no market exchange or recorded wage may exist, so the service can be omitted from conventional GDP. Nevertheless, flood victims receive shelter, care, or assistance, which clearly raises social welfare. Hence option B is correct. A overstates GDP coverage, C reverses the welfare effect, and D misclassifies domestic voluntary work as imports.

Related tags

GdpWelfareVolunteer-WorkNon-Market-ServiceGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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