Why are household services performed outside the market generally not shown in real GDP?
Answer and explanation
Correct answer: They lack a directly observed market value
GDP records production that can generally be identified and valued through market transactions or reliable imputed prices. Unpaid cooking, cleaning or caregiving within a household may create real services, but they usually have no observed market price and are difficult to measure consistently. Consequently they are normally excluded from official real GDP, which can understate non-market production. A is correct; the services are not necessarily illegal, imported or non-final.
Frequently asked questions
What is the correct answer to this question?
They lack a directly observed market value
Why is this the correct answer?
GDP records production that can generally be identified and valued through market transactions or reliable imputed prices. Unpaid cooking, cleaning or caregiving within a household may create real services, but they usually have no observed market price and are difficult to measure consistently. Consequently they are normally excluded from official real GDP, which can understate non-market production. A is correct; the services are not necessarily illegal, imported or non-final.
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.
