Why may social welfare fall if real GDP remains constant but income shifts from low-income to high-income groups?

Correct answer: Because marginal utility of income may be higher for low-income groups

Real GDP measures the volume of aggregate production, not how that production income is distributed. Under the diminishing marginal utility of income, an additional rupee generally gives greater satisfaction to a low-income household than to a rich household. If income shifts toward the rich while total output stays fixed, the loss of utility among poorer people may exceed the gain among richer people. Thus B is correct; A, C and D contradict the situation.