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Meera and Shahid are two… (Class 12 Economics 2026, Q11A)

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EconomicsCBSE Class 12 · Board exam 2026, set 58/1/1 · 3 marks · Short answer

CBSE Class 12 Economics 2026: question 11(A)

Set in the CBSE Class 12 board exam of 2026, paper 58/1/1, section A, question 11(A), for 3 marks. Try it first; the hints and our step-by-step solution are below.

Q11(A) · 3 marks · Short answerCompetency-basedNational Income Accounting

Meera and Shahid are two classmates, who were comparing India’s economic growth over the years.
Meera referred to the increase in Gross Domestic Product (GDP) at current prices prevailing in market, while Sahid insisted on considering GDP after adjusting for inflation. Their debate on which of the two measures gives a true picture of people’s well-being, remained inconclusive.
Considering the above mentioned situation, elaborate with valid reason, which of the two variables is considered a better indicator of welfare and why ?

Source: official question paper from cbse.gov.in (PDF). See it in the full 2026 board paper, set 58/1/1.

Hints

Open one hint at a time and try again before the next.

Hint 1

Which measure can rise even if no extra goods are produced?

Hint 2

Real GDP is valued at base-year prices.

Step-by-step solution

Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.

  1. Shahid's measure, GDP adjusted for inflation (real GDP), is the better indicator of welfare.

    1 mark

  2. Real GDP values output at constant (base-year) prices, so it changes only when the physical quantity of goods and services changes. It strips out the effect of price changes and shows the real growth of output available to people.

    1 mark

  3. Nominal GDP (at current prices) can rise only because prices rise, with no extra goods and services produced. Such a rise does not make people better off, so nominal GDP can overstate well-being.

    1 mark

Answer: Real GDP (Shahid's view) is the better welfare indicator because it moves only with physical output, while nominal GDP can rise merely due to inflation.

Where the marks are

  • Real GDP chosen as the better indicator (1)
  • Real GDP changes only with physical output (1)
  • Nominal GDP may change due to prices (1)

Revise the chapter

Practise this chapterBoard-style questions from National Income Accounting, one at a time, marked against the answer key and marking points.Back to the full paper2026 board paper, set 58/1/1: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.