Which limitation is shown by not including unpaid household work in GDP?
Answer and explanation
Correct answer: GDP does not fully measure non-market productive services
Unpaid household activities such as cooking, cleaning, childcare and caring for elderly people create useful services, but they usually do not involve a recorded market transaction. Therefore, their value is generally excluded from measured GDP. This shows that GDP may underestimate actual productive activity and does not completely represent welfare or living standards.
Frequently asked questions
What is the correct answer to this question?
GDP does not fully measure non-market productive services
Why is this the correct answer?
Unpaid household activities such as cooking, cleaning, childcare and caring for elderly people create useful services, but they usually do not involve a recorded market transaction. Therefore, their value is generally excluded from measured GDP. This shows that GDP may underestimate actual productive activity and does not completely represent welfare or living standards.
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.
