A country's GDP rises because weapons production increases. Why does this not automatically imply higher citizen welfare?
Answer and explanation
Correct answer: The composition and social use of output also affect welfare
GDP measures the monetary value of final production, including eligible government purchases, but it does not judge whether the output improves social welfare. Weapons may provide security in some circumstances, yet increased production can also reflect conflict, opportunity costs or resources diverted from health and education. Option A is correct. B, C and D are false because weapons can be final goods, government purchases count, and production need not be imported.
Frequently asked questions
What is the correct answer to this question?
The composition and social use of output also affect welfare
Why is this the correct answer?
GDP measures the monetary value of final production, including eligible government purchases, but it does not judge whether the output improves social welfare. Weapons may provide security in some circumstances, yet increased production can also reflect conflict, opportunity costs or resources diverted from health and education. Option A is correct. B, C and D are false because weapons can be final goods, government purchases count, and production need not be imported.
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.
