If real GDP per capita rises while the real income of the poorest group falls which conclusion is correct?
Answer and explanation
Correct answer: Average output has risen but distributive welfare may have worsened
Real GDP per capita is an average: it divides total real output by population and does not show how income is distributed. If the poorest group loses real income while the average rises, aggregate production has improved but distributive welfare may have deteriorated. Option A is correct. The other choices wrongly assume that an average increase benefits everyone or automatically removes poverty.
Frequently asked questions
What is the correct answer to this question?
Average output has risen but distributive welfare may have worsened
Why is this the correct answer?
Real GDP per capita is an average: it divides total real output by population and does not show how income is distributed. If the poorest group loses real income while the average rises, aggregate production has improved but distributive welfare may have deteriorated. Option A is correct. The other choices wrongly assume that an average increase benefits everyone or automatically removes poverty.
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.
