If real GDP rises but average working hours increase sharply what is the correct welfare assessment?
Answer and explanation
Correct answer: Total welfare may be limited because leisure declines
The governing concept is that GDP measures marketed production, not complete human welfare. If real GDP rises, output has increased in inflation-adjusted terms, but sharply longer working hours reduce leisure, which is itself valuable. Thus option B is correct: welfare may rise less than GDP suggests or even face offsetting costs. A ignores leisure, while C and D are unsupported.
Frequently asked questions
What is the correct answer to this question?
Total welfare may be limited because leisure declines
Why is this the correct answer?
The governing concept is that GDP measures marketed production, not complete human welfare. If real GDP rises, output has increased in inflation-adjusted terms, but sharply longer working hours reduce leisure, which is itself valuable. Thus option B is correct: welfare may rise less than GDP suggests or even face offsetting costs. A ignores leisure, while C and D are unsupported.
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.
