What is the correct reason for treating GDP as a useful but incomplete indicator of welfare?
Answer and explanation
Correct answer: It measures production but not all effects on equality, health and the environment
The governing concept is the multidimensional nature of welfare. GDP is useful because it measures the value of production and provides information about economic activity. However, it is incomplete because it does not fully show income equality, health, environmental damage, safety or other quality-of-life outcomes. Therefore option B is correct; the other options wrongly describe what GDP measures.
Frequently asked questions
What is the correct answer to this question?
It measures production but not all effects on equality, health and the environment
Why is this the correct answer?
The governing concept is the multidimensional nature of welfare. GDP is useful because it measures the value of production and provides information about economic activity. However, it is incomplete because it does not fully show income equality, health, environmental damage, safety or other quality-of-life outcomes. Therefore option B is correct; the other options wrongly describe what GDP measures.
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.
