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If real GDP rises and income distribution becomes more equal what can generally be expected?

Answer and explanation

Correct answer: An increase in welfare

Real GDP measures the increase in output after removing the effect of price changes, so it indicates a greater quantity of goods and services. If income distribution simultaneously becomes more equal, the additional output is more likely to reach a larger share of the population. Consequently, average living conditions and welfare will generally improve, making A correct. This is a likely conclusion, not an absolute guarantee, because other social and environmental factors may matter.

Related tags

Real GdpEqual DistributionWelfareGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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