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In which situation can per capita welfare fall despite an increase in real GDP?

Answer and explanation

Correct answer: Population grows faster than output

Per capita real output is calculated as real GDP divided by population. If real GDP rises by 3% but population rises by 5%, output available per person falls approximately by 2%, other factors being unchanged. Lower per-person availability can weaken material welfare. Thus D is correct; A would raise per capita output, while B and C describe welfare-improving conditions rather than the stated problem.

Related tags

Real GdpPopulationPer Capita WelfareGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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