If household work is performed unpaid by family members, what is its effect on GDP and welfare?
Answer and explanation
Correct answer: It is excluded from GDP but may contribute to welfare
The governing concept is the distinction between market production and non-market household services. Unpaid cooking, cleaning, or caregiving usually has no recorded market transaction and is therefore excluded from measured GDP. Nevertheless, these services satisfy wants and save household expenditure, so they can raise actual welfare. Option B is correct; A wrongly says the work is included, C confuses GDP measurement with welfare, and D is incorrect because nominal GDP does not specially include unpaid work.
Frequently asked questions
What is the correct answer to this question?
It is excluded from GDP but may contribute to welfare
Why is this the correct answer?
The governing concept is the distinction between market production and non-market household services. Unpaid cooking, cleaning, or caregiving usually has no recorded market transaction and is therefore excluded from measured GDP. Nevertheless, these services satisfy wants and save household expenditure, so they can raise actual welfare. Option B is correct; A wrongly says the work is included, C confuses GDP measurement with welfare, and D is incorrect because nominal GDP does not specially include unpaid work.
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.
