In which example may actual welfare exceed recorded GDP?
Answer and explanation
Correct answer: Volunteers providing free educational services
GDP measures market-valued final goods and services, but it does not fully capture unpaid or non-market benefits. Volunteer teaching creates educational and social value even though no market payment is made, so the service may be absent from recorded GDP while increasing actual welfare. Pollution, crime-related security spending and deforestation can raise measured transactions but may reduce welfare through illness, insecurity or environmental loss.
Frequently asked questions
What is the correct answer to this question?
Volunteers providing free educational services
Why is this the correct answer?
GDP measures market-valued final goods and services, but it does not fully capture unpaid or non-market benefits. Volunteer teaching creates educational and social value even though no market payment is made, so the service may be absent from recorded GDP while increasing actual welfare. Pollution, crime-related security spending and deforestation can raise measured transactions but may reduce welfare through illness, insecurity or environmental loss.
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.
