If people begin producing food for themselves instead of buying it in markets while total consumption remains unchanged, what may happen to recorded GDP?
Answer and explanation
Correct answer: It may fall if self-production is not properly valued
GDP records market production more reliably than non-market production. When households replace purchased food with food produced for their own use, the market transaction disappears. If that self-produced output is not measured or valued adequately, recorded GDP can fall even though the quantity consumed and actual household welfare remain unchanged. Option B is correct; A invents double counting, C ignores measurement limits, and D is unrelated to domestic self-consumption.
Frequently asked questions
What is the correct answer to this question?
It may fall if self-production is not properly valued
Why is this the correct answer?
GDP records market production more reliably than non-market production. When households replace purchased food with food produced for their own use, the market transaction disappears. If that self-produced output is not measured or valued adequately, recorded GDP can fall even though the quantity consumed and actual household welfare remain unchanged. Option B is correct; A invents double counting, C ignores measurement limits, and D is unrelated to domestic self-consumption.
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.
