If free community care services increase in an economy, what difference between GDP and welfare is possible?
Answer and explanation
Correct answer: Welfare may rise while GDP changes very little
The governing concept is that GDP mainly records the market value of measured final production, whereas welfare also includes valuable non-market services. If unpaid community care expands, people may receive more support, safety, and well-being without a comparable market transaction. Therefore welfare can rise while recorded GDP changes very little. Option B is an unjustified certainty, while C and D ignore the social value of care.
Frequently asked questions
What is the correct answer to this question?
Welfare may rise while GDP changes very little
Why is this the correct answer?
The governing concept is that GDP mainly records the market value of measured final production, whereas welfare also includes valuable non-market services. If unpaid community care expands, people may receive more support, safety, and well-being without a comparable market transaction. Therefore welfare can rise while recorded GDP changes very little. Option B is an unjustified certainty, while C and D ignore the social value of care.
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.
