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If a country’s GDP rises but income distribution becomes highly unequal, which statement about welfare is correct?

Answer and explanation

Correct answer: Welfare cannot be concluded from GDP alone

An increase in GDP indicates that the total value of measured production has risen, but it does not show how income and consumption opportunities are distributed among people. If the gains go mainly to a small group, many citizens may experience little improvement. Welfare assessment therefore also requires information about inequality, poverty, health, education, leisure, and environmental quality.

Related tags

GdpWelfareInequalityGdp LimitationsStandard Of LivingGdp And WelfareNational Income And Related AggregatesEconomics

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