Which of the following statements about non-monetary exchanges are correct?
(A) The domestic services women perform at home are not paid for.
(B) In barter exchanges, goods or services are directly exchanged against each other.
(C) Barter exchanges are generally not counted in the GDP of developing countries.
(D) Leaving out non-monetary exchanges leads to overestimation of GDP.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (A), (B) and (C) only
Many activities are not valued in money, so GDP leaves them out. This makes GDP smaller than the real activity: an underestimate.
(A) The domestic services women perform at home are not paid for. — True. Women’s domestic services at home are not paid for.
(B) In barter exchanges, goods or services are directly exchanged against each other. — True. In barter, goods or services are exchanged directly for each other.
(C) Barter exchanges are generally not counted in the GDP of developing countries. — True. Barter exchanges are generally not counted in the GDP of developing countries.
(D) Leaving out non-monetary exchanges leads to overestimation of GDP. — False. Leaving them out leads to underestimation of GDP, not overestimation.
NCERT (2026-27): “2.5 GDP and Welfare … 2. Non-monetary exchanges: Many activities in an economy are not evaluated in monetary terms. For example, the domestic services women perform at home are not paid for. The exchanges which take place in the informal sector without the help of money are called barter exchanges. In barter exchanges, goods (or services) are directly exchanged against each other. But since money is not being used here, these exchanges are not registered as part of economic activity. In developing countries, where many remote regions are underdeveloped, these kinds of exchanges do take place, but they are generally not counted in the GDPs of these countries. This is a case of underestimation of GDP. …” |