If a large part of GDP accrues as profits to a few companies while wages remain stagnant, what does it indicate?
Answer and explanation
Correct answer: Distribution of output gains may be unequal
GDP includes the value of production and the incomes generated from it, including profits and wages. It does not show that every income group receives the gains equally. If profits rise for a few companies while wages remain stagnant, the functional and personal distribution of income may have become more unequal, limiting broad welfare gains. B is correct; A is too broad, C is not necessary, and D is false.
Frequently asked questions
What is the correct answer to this question?
Distribution of output gains may be unequal
Why is this the correct answer?
GDP includes the value of production and the incomes generated from it, including profits and wages. It does not show that every income group receives the gains equally. If profits rise for a few companies while wages remain stagnant, the functional and personal distribution of income may have become more unequal, limiting broad welfare gains. B is correct; A is too broad, C is not necessary, and D is false.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates. Topic: GDP and Welfare.
