If both GDP and per capita GDP are analysed, what additional benefit is obtained?
Answer and explanation
Correct answer: Understanding total output along with the average output or income level per person
Total GDP indicates the size of an economy’s production, whereas per capita GDP is calculated by dividing GDP by population and indicates the average output or income level per person. Considering both measures gives a broader picture: total GDP shows economic scale, while per capita GDP helps compare average material availability across countries or across time. However, it still does not fully capture inequality or welfare.
Frequently asked questions
What is the correct answer to this question?
Understanding total output along with the average output or income level per person
Why is this the correct answer?
Total GDP indicates the size of an economy’s production, whereas per capita GDP is calculated by dividing GDP by population and indicates the average output or income level per person. Considering both measures gives a broader picture: total GDP shows economic scale, while per capita GDP helps compare average material availability across countries or across time. However, it still does not fully capture inequality or welfare.
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.
