If domestic output rises but a large share is exported and domestic consumption of essential goods falls, what is possible?
Answer and explanation
Correct answer: GDP may rise while domestic consumption welfare falls
GDP records the value of production, including output sold abroad, so increased exports can raise GDP. However, welfare also depends on whether residents can obtain essential goods and how output is distributed. Option A is correct: average production may increase while domestic consumption welfare declines. B is too absolute, C contradicts the stated rise in output, and D ignores basic consumption needs.
Frequently asked questions
What is the correct answer to this question?
GDP may rise while domestic consumption welfare falls
Why is this the correct answer?
GDP records the value of production, including output sold abroad, so increased exports can raise GDP. However, welfare also depends on whether residents can obtain essential goods and how output is distributed. Option A is correct: average production may increase while domestic consumption welfare declines. B is too absolute, C contradicts the stated rise in output, and D ignores basic consumption needs.
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.
