Question 10 - CBSE Class 12 Sample Paper for 2022 Boards [Term 2] - Economics - Solutions to CBSE Sample Paper - Economics Class 12

Last updated at April 16, 2024 by

Explain how ‘Non-Monetary Exchanges’ impact the use of Gross Domestic Product as an index of economic welfare.

(3 Marks)

Answer

Non-Monetary Exchanges refer to those activities which cannot be evaluated in monetary terms, hence are not included in the valuation of GDP.

However, these activities still influence the economic welfare.

So, there exclusion can lead to underestimation of Gross Domestic Product.

For example: Kitchen gardening, Services of homemaker etc.

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CA Maninder Singh is a Chartered Accountant for the past 14 years and a teacher from the past 18 years. He teaches Science, Economics, Accounting and English at Teachoo