Why is an unpaid meal service prepared at home generally not included in GDP?
Answer and explanation
Correct answer: Because it normally has no recorded market transaction
An unpaid meal prepared and served by household members is a useful service, but it is normally produced and consumed within the household without a market exchange or observable monetary price. National accounts mainly record market-valued production, so this activity is generally omitted from measured GDP. This limitation also shows why GDP is not a complete measure of welfare: valuable unpaid household work may be excluded.
Frequently asked questions
What is the correct answer to this question?
Because it normally has no recorded market transaction
Why is this the correct answer?
An unpaid meal prepared and served by household members is a useful service, but it is normally produced and consumed within the household without a market exchange or observable monetary price. National accounts mainly record market-valued production, so this activity is generally omitted from measured GDP. This limitation also shows why GDP is not a complete measure of welfare: valuable unpaid household work may be excluded.
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.
