If a country's real GDP rises but leisure time falls sharply what can be said about welfare?
Answer and explanation
Correct answer: No definite conclusion can be drawn from real GDP alone
Real GDP is an indicator of market-valued production at constant prices, not a complete measure of welfare. Leisure has value, and a sharp loss of leisure may reduce well-being even when market output rises. Without information about the size of the leisure loss, distribution, health, environment and other factors, no definite welfare conclusion follows from real GDP alone. Thus C is correct; A and B are unjustified absolutes, while D is unrelated.
Frequently asked questions
What is the correct answer to this question?
No definite conclusion can be drawn from real GDP alone
Why is this the correct answer?
Real GDP is an indicator of market-valued production at constant prices, not a complete measure of welfare. Leisure has value, and a sharp loss of leisure may reduce well-being even when market output rises. Without information about the size of the leisure loss, distribution, health, environment and other factors, no definite welfare conclusion follows from real GDP alone. Thus C is correct; A and B are unjustified absolutes, while D is unrelated.
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.
