If factory machines produce more output but employment falls sharply, what may happen to social welfare?
Answer and explanation
Correct answer: Output may rise but welfare of the unemployed may fall
Automation can raise productivity and total output, which may increase GDP, but it can also displace workers in the short run. If displaced workers do not quickly find jobs or receive support, their income, security and well-being may decline. Therefore option C is correct. The other options ignore distributional effects or make irrelevant claims about GDP and goods.
Frequently asked questions
What is the correct answer to this question?
Output may rise but welfare of the unemployed may fall
Why is this the correct answer?
Automation can raise productivity and total output, which may increase GDP, but it can also displace workers in the short run. If displaced workers do not quickly find jobs or receive support, their income, security and well-being may decline. Therefore option C is correct. The other options ignore distributional effects or make irrelevant claims about GDP and goods.
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.
