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If the top five percent receives a very large share of national income, what is the problem with relying only on per capita GDP?

Answer and explanation

Correct answer: It may hide the low income of the majority behind an average

Per capita GDP is calculated by dividing total GDP by population, so it gives only an average income or output figure. It does not show how income is distributed among households. If the richest five percent receive a very large share, their high incomes can raise the average while most people remain poor. Therefore, option B is correct; the other options confuse distribution with output, population counting, or prices.

Related tags

Per Capita GdpIncome InequalityGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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