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Which statement best describes the relationship between GDP and social welfare?

Answer and explanation

Correct answer: GDP is a useful but incomplete indicator of welfare

GDP, especially real GDP per person, can provide useful information about the availability of goods, services, and average material living standards. However, social welfare also depends on income distribution, health, education, leisure, environmental quality, security, and unpaid household work. These factors may change without a matching movement in GDP. Therefore, GDP is relevant but incomplete rather than perfectly proportional to welfare or completely unrelated to it.

Related tags

Social WelfareGdp IndicatorGdp LimitationsGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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