If GDP growth mainly comes from luxury goods while basic public services deteriorate what is the appropriate welfare conclusion?
Answer and explanation
Correct answer: Output has increased but the change in social welfare may be uncertain and uneven
GDP measures the value of market production, but welfare also depends on the composition and distribution of that production and on access to public services. Luxury output may benefit high-income consumers while deteriorating basic services harms broader groups. Hence output has risen, but the total welfare change can be uncertain and unequal; option B is correct. The other statements are absolute or factually false.
Frequently asked questions
What is the correct answer to this question?
Output has increased but the change in social welfare may be uncertain and uneven
Why is this the correct answer?
GDP measures the value of market production, but welfare also depends on the composition and distribution of that production and on access to public services. Luxury output may benefit high-income consumers while deteriorating basic services harms broader groups. Hence output has risen, but the total welfare change can be uncertain and unequal; option B is correct. The other statements are absolute or factually 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.
