Which of the following best shows a dual limitation of GDP as a welfare measure?
Answer and explanation
Correct answer: It incompletely reflects both non-market services and environmental damage
The governing concept is that GDP records measured market production, not every element of human well-being. Unpaid household services and other non-market contributions may be omitted or undervalued, while pollution and environmental damage can reduce welfare without being fully deducted from GDP. Thus option C identifies two genuine limitations together. Option A makes a false claim of completeness, and B and D wrongly restrict GDP to agriculture or population.
Frequently asked questions
What is the correct answer to this question?
It incompletely reflects both non-market services and environmental damage
Why is this the correct answer?
The governing concept is that GDP records measured market production, not every element of human well-being. Unpaid household services and other non-market contributions may be omitted or undervalued, while pollution and environmental damage can reduce welfare without being fully deducted from GDP. Thus option C identifies two genuine limitations together. Option A makes a false claim of completeness, and B and D wrongly restrict GDP to agriculture or population.
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.
