In which situation is GDP more meaningful as an indicator of welfare?
Answer and explanation
Correct answer: When it is studied with income distribution and social indicators
GDP measures the market value of current production, but welfare also depends on distribution, health, education, safety and environmental conditions. GDP therefore becomes more meaningful when it is interpreted together with income distribution and social indicators. Option C is correct. A is incomplete, while B and D conceal or ignore important factors that affect people’s well-being.
Frequently asked questions
What is the correct answer to this question?
When it is studied with income distribution and social indicators
Why is this the correct answer?
GDP measures the market value of current production, but welfare also depends on distribution, health, education, safety and environmental conditions. GDP therefore becomes more meaningful when it is interpreted together with income distribution and social indicators. Option C is correct. A is incomplete, while B and D conceal or ignore important factors that affect people’s well-being.
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.
