Which statement is the most careful regarding GDP and welfare?
Answer and explanation
Correct answer: GDP growth may increase welfare but not always
GDP measures the market value of final goods and services produced, so higher GDP can indicate greater availability of goods, services and income. However, it does not fully measure welfare because it may ignore income distribution, unpaid household work, leisure, pollution, resource depletion and the quality of life. Therefore, GDP growth may improve welfare, but it cannot guarantee it.
Frequently asked questions
What is the correct answer to this question?
GDP growth may increase welfare but not always
Why is this the correct answer?
GDP measures the market value of final goods and services produced, so higher GDP can indicate greater availability of goods, services and income. However, it does not fully measure welfare because it may ignore income distribution, unpaid household work, leisure, pollution, resource depletion and the quality of life. Therefore, GDP growth may improve welfare, but it cannot guarantee 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.
