Why is leisure time not included in GDP even though it may increase welfare?
Answer and explanation
Correct answer: Because GDP measures marketed production valued through market transactions
Leisure can improve happiness, health, and overall welfare, but it normally does not involve the sale of a currently produced good or service in a market. GDP measures the market value of final goods and services produced during a period, so unpaid leisure is omitted. This illustrates that GDP is an output measure and not a complete measure of welfare.
Frequently asked questions
What is the correct answer to this question?
Because GDP measures marketed production valued through market transactions
Why is this the correct answer?
Leisure can improve happiness, health, and overall welfare, but it normally does not involve the sale of a currently produced good or service in a market. GDP measures the market value of final goods and services produced during a period, so unpaid leisure is omitted. This illustrates that GDP is an output measure and not a complete measure of welfare.
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.
