What must be known to interpret welfare correctly when the value of medical services rises in GDP?
Answer and explanation
Correct answer: Whether the rise came from better healthcare or more illness
The governing idea is that an increase in medical expenditure has an ambiguous welfare meaning. It may reflect improved and more accessible healthcare, which can raise well-being, or greater illness and suffering, which can lower it. We must identify the cause before judging welfare. Therefore option B is correct; the other choices have no direct economic relevance.
Frequently asked questions
What is the correct answer to this question?
Whether the rise came from better healthcare or more illness
Why is this the correct answer?
The governing idea is that an increase in medical expenditure has an ambiguous welfare meaning. It may reflect improved and more accessible healthcare, which can raise well-being, or greater illness and suffering, which can lower it. We must identify the cause before judging welfare. Therefore option B is correct; the other choices have no direct economic relevance.
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.
