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If people begin producing food for themselves instead of buying it in markets while total consumption remains unchanged, what may happen to recorded GDP?

Answer and explanation

Correct answer: It may fall if self-production is not properly valued

GDP records market production more reliably than non-market production. When households replace purchased food with food produced for their own use, the market transaction disappears. If that self-produced output is not measured or valued adequately, recorded GDP can fall even though the quantity consumed and actual household welfare remain unchanged. Option B is correct; A invents double counting, C ignores measurement limits, and D is unrelated to domestic self-consumption.

Related tags

Non-Market-ProductionSelf-ConsumptionGdp-MeasurementWelfareGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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