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Per capita GDP rises in a country but median income remains unchanged. What is the most likely reason?

Answer and explanation

Correct answer: Income growth was concentrated among high-income groups

Per-capita GDP is an arithmetic mean: total GDP is divided by population. A mean can rise when a relatively small group receives very large income gains, even if the income of the middle person does not change. The median identifies the middle position in the distribution and is less affected by extreme high incomes. Therefore, concentrated gains among rich households explain the result, making B correct. A would normally raise the median, while C and D do not explain it.

Related tags

Per Capita GdpMedian IncomeIncome DistributionInequalityGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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