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A country provides free clean drinking water and waterborne diseases decline. If government spending is very small what may be the relationship between GDP and welfare?

Answer and explanation

Correct answer: Welfare may improve greatly while GDP changes little

GDP mainly records measured market production and government expenditure, whereas welfare includes health, survival, time saved, and the value of services received without a market payment. If clean water is supplied efficiently with little recorded spending, disease may fall substantially while GDP changes only slightly. Option A is correct; B confuses expenditure with welfare, and C and D are plainly unsupported.

Related tags

Clean WaterPublic HealthNon-Market BenefitsGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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