If a country's real GDP rises but access to clean drinking water declines, what is the most appropriate conclusion regarding welfare?
Answer and explanation
Correct answer: Health-related welfare may fall despite rising real GDP
The governing concept is the limitation of GDP as a welfare measure. Real GDP records the inflation-adjusted value of market production, but it does not fully capture health, environmental quality, distribution, or access to essential services. If clean drinking water becomes less available, illness risk and quality of life may worsen even while output rises. Therefore option C is correct. The other choices wrongly assume GDP and welfare always move proportionally or make unsupported claims about nominal GDP.
Frequently asked questions
What is the correct answer to this question?
Health-related welfare may fall despite rising real GDP
Why is this the correct answer?
The governing concept is the limitation of GDP as a welfare measure. Real GDP records the inflation-adjusted value of market production, but it does not fully capture health, environmental quality, distribution, or access to essential services. If clean drinking water becomes less available, illness risk and quality of life may worsen even while output rises. Therefore option C is correct. The other choices wrongly assume GDP and welfare always move proportionally or make unsupported claims about nominal GDP.
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.
