Why is it risky to treat national income and economic welfare as identical in macroeconomics?
Answer and explanation
Correct answer: National income does not fully show non-market activity and distribution
National income indicates the monetary value of recorded production and income, so it is related to welfare but not identical to it. It may omit unpaid household services, informal activity and environmental costs, and it does not show distribution. Welfare also depends on health, education, security, leisure and quality of life.
Frequently asked questions
What is the correct answer to this question?
National income does not fully show non-market activity and distribution
Why is this the correct answer?
National income indicates the monetary value of recorded production and income, so it is related to welfare but not identical to it. It may omit unpaid household services, informal activity and environmental costs, and it does not show distribution. Welfare also depends on health, education, security, leisure and quality of life.
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.
