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Two economies have equal real GDP per capita but the first has more public parks and cleaner air. What is a likely conclusion?

Answer and explanation

Correct answer: The first economy may have higher welfare

Real GDP per capita measures the value of marketed final goods and services after removing price changes, but it is not a complete measure of welfare. Public parks, cleaner air, leisure, safety and other non-market amenities can improve people’s quality of life. Therefore, with equal real GDP per person, the first economy may have higher welfare. Option B is too absolute, while C contradicts the stated equality and D ignores environmental and social benefits.

Related tags

Gdp And WelfarePublic AmenitiesEnvironmental QualityNational Income And Related AggregatesEconomicsClass 11 Mcq

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