If better health reduces hospital admissions and medical spending what effect on GDP and welfare is possible?
Answer and explanation
Correct answer: GDP growth may slow while welfare rises
GDP counts market expenditure on hospital and medical services, so fewer admissions can reduce some recorded production and make GDP growth slower. Welfare can nevertheless improve because people experience better health, fewer days of illness, lower treatment burdens, and greater productive time. Spending is not identical to well-being. Hence option A is correct, while the other choices incorrectly assume that lower medical spending must reduce welfare.
Frequently asked questions
What is the correct answer to this question?
GDP growth may slow while welfare rises
Why is this the correct answer?
GDP counts market expenditure on hospital and medical services, so fewer admissions can reduce some recorded production and make GDP growth slower. Welfare can nevertheless improve because people experience better health, fewer days of illness, lower treatment burdens, and greater productive time. Spending is not identical to well-being. Hence option A is correct, while the other choices incorrectly assume that lower medical spending must reduce 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.
