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Which change can increase welfare without affecting GDP?

Answer and explanation

Correct answer: A more equitable distribution of the same output

GDP measures the market value of current final goods and services, not the fairness of how income is distributed. If total production remains unchanged but income is shared more equitably, poorer households may gain greater access to necessities and experience higher utility. Therefore, welfare can rise while GDP stays constant. Machine production, government purchases, and new house construction are current production activities that can directly increase measured GDP.

Related tags

Equitable DistributionSocial WelfareGdp LimitationsGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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