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If GDP rises but income becomes concentrated among only a few people, which limitation of GDP is illustrated?

Answer and explanation

Correct answer: GDP ignores income distribution

GDP is an aggregate measure of the value of production or income generated in an economy. It does not show how that income is distributed among households or groups. Therefore, GDP can increase while most people receive little or no benefit if gains are concentrated among a small group. Measures such as inequality indicators, poverty rates, and per-capita distribution are needed to assess welfare more fully. Option A is correct.

Related tags

Gdp LimitationIncome DistributionInequalityWelfareAggregate IncomeGdp And WelfareNational Income And Related AggregatesEconomics

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