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If better health reduces hospital admissions and medical spending what effect on GDP and welfare is possible?

Answer and explanation

Correct answer: GDP growth may slow while welfare rises

GDP counts market expenditure on hospital and medical services, so fewer admissions can reduce some recorded production and make GDP growth slower. Welfare can nevertheless improve because people experience better health, fewer days of illness, lower treatment burdens, and greater productive time. Spending is not identical to well-being. Hence option A is correct, while the other choices incorrectly assume that lower medical spending must reduce welfare.

Related tags

GdpWelfareHealthMedical SpendingDefensive ExpenditureGdp And WelfareNational Income And Related AggregatesEconomics

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