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Why can two countries with the same real per capita GDP have different welfare levels?

Answer and explanation

Correct answer: Differences in income distribution and public services

Real per-capita GDP compares average purchasing power after removing the effect of price changes, but it does not describe the whole quality of life. Two countries may have different income distributions, access to health and education, public safety, environmental quality, leisure, or unpaid household support. These factors can produce different welfare even when average real output is identical. Hence A is correct; B and C are irrelevant, and D treats one average as a complete welfare measure.

Related tags

Real Per Capita GdpWelfare ComparisonPublic ServicesIncome DistributionGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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