If the quality of a public service improves while its cost remains unchanged, what measurement problem may arise in GDP?

Correct answer: The full value of the quality improvement may not appear in GDP

Many non-market government services are valued in national accounts using their cost of production, such as wages and operating expenses. If the service becomes better but its measured cost does not change, the improvement may not increase recorded GDP proportionately. Thus option C is correct. Option A is too absolute, B is false because public services are included, and D does not necessarily follow.