Why may measured GDP rise if unpaid family eldercare is replaced by a paid institution?
Answer and explanation
Correct answer: Because the service is now recorded at a market price
GDP mainly records market-valued final goods and services. Unpaid care provided within a household may create real value but usually has no recorded market transaction. When an institution is paid to provide the same or a similar service, the payment and measured value of that service enter national output. Thus B is correct; the change does not prove that elderly numbers fell, unpaid care was harmful, or welfare necessarily improved.
Frequently asked questions
What is the correct answer to this question?
Because the service is now recorded at a market price
Why is this the correct answer?
GDP mainly records market-valued final goods and services. Unpaid care provided within a household may create real value but usually has no recorded market transaction. When an institution is paid to provide the same or a similar service, the payment and measured value of that service enter national output. Thus B is correct; the change does not prove that elderly numbers fell, unpaid care was harmful, or welfare necessarily improved.
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.
