In one country much household work is unpaid while in another the same services are purchased in markets. Despite equal real services whose GDP will appear higher?
Answer and explanation
Correct answer: The country purchasing services in markets
GDP records most paid market production, including purchased childcare, cooking, cleaning, and repair services. Comparable unpaid household work usually has no market transaction and is therefore excluded from measured GDP, even though it creates real services and may contribute substantially to welfare. Consequently, option C is correct. This is why GDP comparisons can be distorted when countries differ in the extent to which household work is commercialized.
Frequently asked questions
What is the correct answer to this question?
The country purchasing services in markets
Why is this the correct answer?
GDP records most paid market production, including purchased childcare, cooking, cleaning, and repair services. Comparable unpaid household work usually has no market transaction and is therefore excluded from measured GDP, even though it creates real services and may contribute substantially to welfare. Consequently, option C is correct. This is why GDP comparisons can be distorted when countries differ in the extent to which household work is commercialized.
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.
