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Why can income inequality be hidden in GDP?

Answer and explanation

Correct answer: Because GDP shows total output, not individual distribution

GDP is an aggregate measure of the value of final goods and services produced in an economy. It indicates the total size or income-generating capacity of the economy, but it does not reveal who receives that income or how evenly it is distributed. Two countries can have the same GDP or GDP per capita while having very different inequality levels. Distributional measures, such as income shares or the Gini coefficient, are needed to study inequality.

Related tags

Gdp LimitationsIncome InequalityDistributionEconomic WelfareGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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