Why does GDP growth from higher health spending during a pandemic not prove welfare growth?
Answer and explanation
Correct answer: Because higher spending may result from greater illness
Paid healthcare services and medicines are generally included in GDP, so pandemic-related medical expenditure can raise measured output. But the spending may have increased because more people became ill, not because they became healthier or better off. GDP records the value of the response, while it does not automatically show the underlying loss of health or the suffering caused by disease. Therefore B is correct; A and D are false, and C is unsupported.
Frequently asked questions
What is the correct answer to this question?
Because higher spending may result from greater illness
Why is this the correct answer?
Paid healthcare services and medicines are generally included in GDP, so pandemic-related medical expenditure can raise measured output. But the spending may have increased because more people became ill, not because they became healthier or better off. GDP records the value of the response, while it does not automatically show the underlying loss of health or the suffering caused by disease. Therefore B is correct; A and D are false, and C is unsupported.
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.
