Does an increase in NDP always prove an increase in public welfare?
Answer and explanation
Correct answer: No, because income distribution, the environment, and leisure also matter
An increase in NDP indicates higher net domestic production, but it is not a complete measure of welfare. Welfare also depends on how income is distributed, whether production causes pollution, the quality of goods and services, leisure, health, security, and unpaid activities. Therefore, NDP may rise while some groups experience no improvement or environmental damage increases.
Frequently asked questions
What is the correct answer to this question?
No, because income distribution, the environment, and leisure also matter
Why is this the correct answer?
An increase in NDP indicates higher net domestic production, but it is not a complete measure of welfare. Welfare also depends on how income is distributed, whether production causes pollution, the quality of goods and services, leisure, health, security, and unpaid activities. Therefore, NDP may rise while some groups experience no improvement or environmental damage increases.
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.
