What is a main reason for the difference between GDP and welfare?
Answer and explanation
Correct answer: GDP does not measure all social and environmental effects
GDP measures the market value of final goods and services produced within an economy, but welfare is broader. Welfare also depends on health, education, safety, leisure, income distribution and environmental quality. Many of these effects are not fully recorded in GDP. Hence option D is correct; the other options incorrectly describe GDP or welfare as measures of only population, prices or exports.
Frequently asked questions
What is the correct answer to this question?
GDP does not measure all social and environmental effects
Why is this the correct answer?
GDP measures the market value of final goods and services produced within an economy, but welfare is broader. Welfare also depends on health, education, safety, leisure, income distribution and environmental quality. Many of these effects are not fully recorded in GDP. Hence option D is correct; the other options incorrectly describe GDP or welfare as measures of only population, prices or exports.
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.
