Which statement best describes the relationship between GDP and social welfare?
Answer and explanation
Correct answer: GDP is a useful but incomplete indicator of welfare
GDP, especially real GDP per person, can provide useful information about the availability of goods, services, and average material living standards. However, social welfare also depends on income distribution, health, education, leisure, environmental quality, security, and unpaid household work. These factors may change without a matching movement in GDP. Therefore, GDP is relevant but incomplete rather than perfectly proportional to welfare or completely unrelated to it.
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, especially real GDP per person, can provide useful information about the availability of goods, services, and average material living standards. However, social welfare also depends on income distribution, health, education, leisure, environmental quality, security, and unpaid household work. These factors may change without a matching movement in GDP. Therefore, GDP is relevant but incomplete rather than perfectly proportional to welfare or completely unrelated to it.
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.
