If the government spends more on prison services because the number of prisoners has increased why cannot higher GDP be treated as higher welfare?
Answer and explanation
Correct answer: The spending may be a response to a social problem rather than a sign of a better life
GDP measures the value of current production, including many publicly provided services, but it does not judge whether the underlying situation is desirable. More prison spending may reflect increased crime, insecurity, or social distress. Thus the expenditure can raise measured GDP while welfare falls. Option B is correct; A and C incorrectly deny the value of public services, and D assumes an unjustified positive relationship.
Frequently asked questions
What is the correct answer to this question?
The spending may be a response to a social problem rather than a sign of a better life
Why is this the correct answer?
GDP measures the value of current production, including many publicly provided services, but it does not judge whether the underlying situation is desirable. More prison spending may reflect increased crime, insecurity, or social distress. Thus the expenditure can raise measured GDP while welfare falls. Option B is correct; A and C incorrectly deny the value of public services, and D assumes an unjustified positive relationship.
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.
