Which statement best describes the relationship between GDP and economic welfare?
Answer and explanation
Correct answer: GDP is a useful but incomplete indicator of welfare
GDP is useful because it summarizes the market value of final goods and services produced, providing information about income and material consumption possibilities. It is incomplete because welfare also depends on distribution, unpaid work, environmental quality, leisure, health, education, security, and the quality of goods. Therefore option B gives the balanced conclusion. A is too absolute, while C and D wrongly deny other relevant information.
Frequently asked questions
What is the correct answer to this question?
GDP is a useful but incomplete indicator of welfare
Why is this the correct answer?
GDP is useful because it summarizes the market value of final goods and services produced, providing information about income and material consumption possibilities. It is incomplete because welfare also depends on distribution, unpaid work, environmental quality, leisure, health, education, security, and the quality of goods. Therefore option B gives the balanced conclusion. A is too absolute, while C and D wrongly deny other relevant information.
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.
