If real GDP rises but the unemployment rate also increases, which analysis is most appropriate?
Answer and explanation
Correct answer: Growth may be jobless and broad welfare may remain limited
Real GDP measures the inflation-adjusted value of output, not the number of jobs created or how income is distributed. Output can rise through automation, capital-intensive production, or sectors that employ relatively few workers. If unemployment increases, income security and participation may weaken despite higher real GDP. Therefore A is correct; B, C, and D incorrectly treat GDP as a complete welfare measure.
Frequently asked questions
What is the correct answer to this question?
Growth may be jobless and broad welfare may remain limited
Why is this the correct answer?
Real GDP measures the inflation-adjusted value of output, not the number of jobs created or how income is distributed. Output can rise through automation, capital-intensive production, or sectors that employ relatively few workers. If unemployment increases, income security and participation may weaken despite higher real GDP. Therefore A is correct; B, C, and D incorrectly treat GDP as a complete welfare measure.
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.
