Why is unpaid household work of a homemaker generally excluded from GNP calculation?
Answer and explanation
Correct answer: Because it has no clear market transaction and objective market valuation
GNP records the value of market-oriented current production and services for which reliable monetary estimates are generally available. Unpaid household activities such as cooking, cleaning and childcare provide real usefulness, but they usually have no observable market transaction or recorded payment when performed within the household. For consistency and measurement reasons, they are generally excluded. If the same service is purchased from a paid worker, the wage is included.
Frequently asked questions
What is the correct answer to this question?
Because it has no clear market transaction and objective market valuation
Why is this the correct answer?
GNP records the value of market-oriented current production and services for which reliable monetary estimates are generally available. Unpaid household activities such as cooking, cleaning and childcare provide real usefulness, but they usually have no observable market transaction or recorded payment when performed within the household. For consistency and measurement reasons, they are generally excluded. If the same service is purchased from a paid worker, the wage is included.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates.
