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If real GDP per capita rises while the real income of the poorest group falls which conclusion is correct?

Answer and explanation

Correct answer: Average output has risen but distributive welfare may have worsened

Real GDP per capita is an average: it divides total real output by population and does not show how income is distributed. If the poorest group loses real income while the average rises, aggregate production has improved but distributive welfare may have deteriorated. Option A is correct. The other choices wrongly assume that an average increase benefits everyone or automatically removes poverty.

Related tags

PovertyAverage-IncomeIncome-DistributionWelfareGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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