If a country's GDP rises but working hours increase substantially and leisure falls, what caution should be kept about welfare?
Answer and explanation
Correct answer: Welfare may not have increased in the same proportion
GDP records the market value of final goods and services produced, but it does not directly value leisure, unpaid household work, stress, or the disutility of longer working hours. Thus, GDP may increase while an important non-monetary component of welfare declines. GDP growth alone cannot prove proportional growth in overall welfare.
Frequently asked questions
What is the correct answer to this question?
Welfare may not have increased in the same proportion
Why is this the correct answer?
GDP records the market value of final goods and services produced, but it does not directly value leisure, unpaid household work, stress, or the disutility of longer working hours. Thus, GDP may increase while an important non-monetary component of welfare declines. GDP growth alone cannot prove proportional growth in overall welfare.
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.
