If both real GDP and per capita GDP rise but the poverty rate remains unchanged, what does this indicate?
Answer and explanation
Correct answer: Growth was not distributed sufficiently in favour of poorer groups
Real GDP shows growth after removing the effect of price changes, while per capita GDP gives an average per person. Neither measure proves that poorer households received enough additional income to cross the poverty line. If both averages rise but the poverty rate does not change, the gains may have been concentrated elsewhere or insufficient for the poor. Thus option B is correct; the other options contradict the information or dismiss a necessary welfare indicator.
Frequently asked questions
What is the correct answer to this question?
Growth was not distributed sufficiently in favour of poorer groups
Why is this the correct answer?
Real GDP shows growth after removing the effect of price changes, while per capita GDP gives an average per person. Neither measure proves that poorer households received enough additional income to cross the poverty line. If both averages rise but the poverty rate does not change, the gains may have been concentrated elsewhere or insufficient for the poor. Thus option B is correct; the other options contradict the information or dismiss a necessary welfare indicator.
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.
