Which statement best describes the relationship between GDP and welfare?
Answer and explanation
Correct answer: GDP is a useful but incomplete indicator of welfare
GDP is useful because it measures the value of final goods and services produced and provides information about economic activity, income, and material availability. However, welfare also depends on income distribution, health, education, environmental quality, leisure, security, and unpaid services. GDP may therefore rise while some people’s living conditions worsen. Option A states the balanced conclusion. Option B is too absolute, whereas C and D wrongly deny important economic and social relationships.
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 measures the value of final goods and services produced and provides information about economic activity, income, and material availability. However, welfare also depends on income distribution, health, education, environmental quality, leisure, security, and unpaid services. GDP may therefore rise while some people’s living conditions worsen. Option A states the balanced conclusion. Option B is too absolute, whereas C and D wrongly deny important economic and social relationships.
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.
