What may generally happen if the government increases spending on primary schools?
Answer and explanation
Correct answer: Both GDP and future welfare may rise
Government spending on primary schools purchases education services and can therefore contribute to current measured production and GDP. At the same time, schooling builds human capital by improving literacy, skills, health awareness, and future productivity. Consequently, both present output and future welfare may rise, making option A correct. The other options state effects opposite to the usual expected direction and ignore education’s productive and social benefits.
Frequently asked questions
What is the correct answer to this question?
Both GDP and future welfare may rise
Why is this the correct answer?
Government spending on primary schools purchases education services and can therefore contribute to current measured production and GDP. At the same time, schooling builds human capital by improving literacy, skills, health awareness, and future productivity. Consequently, both present output and future welfare may rise, making option A correct. The other options state effects opposite to the usual expected direction and ignore education’s productive and social benefits.
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.
