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.
Frequently asked questions
What is the correct answer to this question?
Welfare may improve greatly while GDP changes little
Why is this the correct answer?
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.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates. Topic: GDP and Welfare.
