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Why may broad welfare gains be limited if output growth mainly comes from luxury goods for high-income groups?

Answer and explanation

Correct answer: Because the benefits of output may be concentrated among a limited group of consumers

GDP includes the value of legally produced and sold luxury goods, but GDP growth alone does not show who benefits from that production. If the gains mainly reach high-income consumers, welfare improvements may not be broad. Therefore, B is correct.

Related tags

Gdp And WelfareIncome DistributionNational Income And Related AggregatesEconomicsClass 11 Mcq

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