If healthcare spending rises because of a pandemic why does GDP growth alone not prove an improvement in welfare?
Answer and explanation
Correct answer: Because higher spending may result from greater illness
GDP counts paid healthcare services as production, so emergency treatment can increase measured GDP. But the same increase in spending may be caused by more infections, suffering, lost work, and defensive medical care rather than improved health. Hence GDP growth alone cannot establish higher welfare. B is correct; A excludes a counted service, C is an unjustified absolute claim, and D denies the clear welfare importance of health.
Frequently asked questions
What is the correct answer to this question?
Because higher spending may result from greater illness
Why is this the correct answer?
GDP counts paid healthcare services as production, so emergency treatment can increase measured GDP. But the same increase in spending may be caused by more infections, suffering, lost work, and defensive medical care rather than improved health. Hence GDP growth alone cannot establish higher welfare. B is correct; A excludes a counted service, C is an unjustified absolute claim, and D denies the clear welfare importance of health.
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.
