What problem arises because GDP mainly values goods and services with market prices?
Answer and explanation
Correct answer: Useful unpaid work is ignored
GDP uses monetary market transactions to value final goods and services. Work performed without payment, such as household childcare, cooking, elder care or volunteering, may create real benefits but normally has no recorded market price. It is therefore omitted from measured GDP. Option A is correct. Double counting is a separate accounting error, while options C and D are unrelated to the valuation problem.
Frequently asked questions
What is the correct answer to this question?
Useful unpaid work is ignored
Why is this the correct answer?
GDP uses monetary market transactions to value final goods and services. Work performed without payment, such as household childcare, cooking, elder care or volunteering, may create real benefits but normally has no recorded market price. It is therefore omitted from measured GDP. Option A is correct. Double counting is a separate accounting error, while options C and D are unrelated to the valuation problem.
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.
