What happens to measured GDP if a person leaves a paid job and performs the same service unpaid at home?
Answer and explanation
Correct answer: It may fall
GDP mainly records market production valued through monetary transactions. When a person provides a service in a paid job, the payment is counted as market output and income. If the identical service is moved to unpaid household work, it is generally not recorded in GDP, even though the real service and possible welfare benefit remain. Thus measured GDP may fall, making option C correct; it need not double or remain unchanged.
Frequently asked questions
What is the correct answer to this question?
It may fall
Why is this the correct answer?
GDP mainly records market production valued through monetary transactions. When a person provides a service in a paid job, the payment is counted as market output and income. If the identical service is moved to unpaid household work, it is generally not recorded in GDP, even though the real service and possible welfare benefit remain. Thus measured GDP may fall, making option C correct; it need not double or remain unchanged.
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.
