If arms production rises after a conflict, GDP may rise, but why may economic welfare not rise?
Answer and explanation
Correct answer: Because output does not reflect the loss of quality of life and safety
GDP records the value of market production, including legally produced arms, but it is not a complete measure of human welfare. A conflict may cause deaths, insecurity, displacement, psychological harm, and destruction of homes and infrastructure. These social costs may be absent from GDP or inadequately measured. Consequently, higher arms production can increase GDP while overall welfare falls. Option A is correct.
Frequently asked questions
What is the correct answer to this question?
Because output does not reflect the loss of quality of life and safety
Why is this the correct answer?
GDP records the value of market production, including legally produced arms, but it is not a complete measure of human welfare. A conflict may cause deaths, insecurity, displacement, psychological harm, and destruction of homes and infrastructure. These social costs may be absent from GDP or inadequately measured. Consequently, higher arms production can increase GDP while overall welfare falls. Option A is correct.
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.
