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Why does GDP growth not guarantee an increase in welfare?

Answer and explanation

Correct answer: Because income distribution and environmental effects may differ

The governing concept is that GDP measures marketed production, whereas welfare depends on many wider conditions. GDP can rise while the gains go mainly to a small group, while pollution, congestion, or resource depletion impose costs on society. Option B is correct because distribution and environmental effects can move differently from total output. A is false, and C and D are factually impossible.

Related tags

Gdp GrowthWelfareIncome DistributionEnvironmentGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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