Why may measured GDP rise if many household services shift from unpaid work to paid market services?
Answer and explanation
Correct answer: The value of previously non-market services begins to be recorded in the market
The governing concept is the coverage of national income accounting. Unpaid household work may provide real services, but its imputed value is generally excluded from measured GDP. When the same activity is purchased in the market, a recorded payment and market value enter GDP, even if the physical service has not increased. Therefore D is correct; the other choices claim effects that are not necessary.
Frequently asked questions
What is the correct answer to this question?
The value of previously non-market services begins to be recorded in the market
Why is this the correct answer?
The governing concept is the coverage of national income accounting. Unpaid household work may provide real services, but its imputed value is generally excluded from measured GDP. When the same activity is purchased in the market, a recorded payment and market value enter GDP, even if the physical service has not increased. Therefore D is correct; the other choices claim effects that are not necessary.
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.
