What may happen to measured GDP if food prepared at home is purchased from the market instead?
Answer and explanation
Correct answer: It may rise because a market transaction is recorded
GDP measures the market value of final goods and services produced during a period. Food prepared at home is usually an unpaid household activity and is not separately counted, whereas buying prepared food creates a recorded market transaction. Thus measured GDP may rise even if the physical meal is similar. Option B is correct; the change is not inevitable, GDP does not become zero, and the transaction is related to measured production.
Frequently asked questions
What is the correct answer to this question?
It may rise because a market transaction is recorded
Why is this the correct answer?
GDP measures the market value of final goods and services produced during a period. Food prepared at home is usually an unpaid household activity and is not separately counted, whereas buying prepared food creates a recorded market transaction. Thus measured GDP may rise even if the physical meal is similar. Option B is correct; the change is not inevitable, GDP does not become zero, and the transaction is related to measured production.
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.
