If part of income shifts from poor households to rich households while total GDP remains unchanged, what may happen to social welfare?

Correct answer: Social welfare may fall

Total GDP can remain unchanged even when its distribution changes. Under the usual diminishing marginal utility of income, one additional unit of income tends to provide greater welfare to a poor household than to a rich household. Transferring income from poor to rich may therefore reduce aggregate social welfare, though the word “may” recognises that welfare judgments require assumptions. B is correct; GDP does not double and households are affected.