If per capita GDP rises but housing costs rise even faster what may happen to urban households?
Answer and explanation
Correct answer: Their housing-related welfare may fall
The governing concept is that real welfare depends on purchasing power and living costs, not income alone. If per capita GDP rises more slowly than housing costs, households may have to devote a larger share of income to rent or mortgages, leaving fewer resources for food, education, health and leisure. Their housing-related welfare may therefore fall. Option A ignores inflation in housing, while C and D are unsupported extremes.
Frequently asked questions
What is the correct answer to this question?
Their housing-related welfare may fall
Why is this the correct answer?
The governing concept is that real welfare depends on purchasing power and living costs, not income alone. If per capita GDP rises more slowly than housing costs, households may have to devote a larger share of income to rent or mortgages, leaving fewer resources for food, education, health and leisure. Their housing-related welfare may therefore fall. Option A ignores inflation in housing, while C and D are unsupported extremes.
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.
