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What is an important limitation of per capita GDP?

Answer and explanation

Correct answer: It does not show how income is distributed

Per capita GDP is total GDP divided by the population, so it gives an average per person. An average does not show how income is distributed: a country can have high per capita GDP while income is concentrated among a small group. Income inequality therefore needs to be considered separately.

Related tags

EconomicsPer Capita GdpIncome DistributionInequalityGdp And WelfareNational Income And Related AggregatesClass 11 Mcq

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