If a disease outbreak greatly increases sales of medicines and hospital services, what may be the relationship between GDP and welfare?

Correct answer: GDP may rise while welfare falls because of the disease

Medical treatment purchased in markets is recorded as final expenditure and can raise measured GDP. But the disease creates pain, lost health, reduced activity, and other welfare losses. The increase in medical sales may therefore reflect defensive spending needed to repair harm rather than improved well-being. Option B correctly separates production measurement from welfare. Option C is false because medical services can be final services, and A and D overstate the evidence.