Which statement correctly 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 indicates the scale of market production and the income generated by that production. However, it is incomplete as a welfare indicator because it does not fully capture distribution, unpaid work, leisure, health, social security, or environmental damage. Thus option C gives the balanced relationship. Option A ignores GDP’s informational value, whereas B and D make unjustified absolute claims about welfare.
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 indicates the scale of market production and the income generated by that production. However, it is incomplete as a welfare indicator because it does not fully capture distribution, unpaid work, leisure, health, social security, or environmental damage. Thus option C gives the balanced relationship. Option A ignores GDP’s informational value, whereas B and D make unjustified absolute claims about welfare.
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.
