When is the positive relationship between GDP and economic welfare likely to be stronger?
Answer and explanation
Correct answer: When output consists of useful goods and benefits are broadly distributed
GDP is more likely to reflect higher economic welfare when the additional output consists of goods and services that genuinely satisfy human needs and when the resulting benefits reach a broad share of the population. A is therefore correct. Rising pollution, greater inequality, defensive expenditure, and declining leisure or health can weaken or reverse the welfare effect even if measured output increases.
Frequently asked questions
What is the correct answer to this question?
When output consists of useful goods and benefits are broadly distributed
Why is this the correct answer?
GDP is more likely to reflect higher economic welfare when the additional output consists of goods and services that genuinely satisfy human needs and when the resulting benefits reach a broad share of the population. A is therefore correct. Rising pollution, greater inequality, defensive expenditure, and declining leisure or health can weaken or reverse the welfare effect even if measured output increases.
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.
