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Two countries have equal real GDP per capita but the first has much greater income inequality. Which statement about welfare comparison is correct?

Answer and explanation

Correct answer: Welfare cannot be determined conclusively from GDP alone

Real GDP per capita is an average: it divides total real output by population but does not reveal how income or resources are distributed. Two countries with the same average can therefore have very different poverty, access to services, and living conditions. Greater inequality does not automatically prove either higher or lower welfare, so GDP alone cannot settle the comparison. Option B is correct.

Related tags

Gdp And WelfareIncome InequalityReal Per Capita GdpWelfare ComparisonNational Income And Related AggregatesEconomicsClass 11 Mcq

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