If the top five percent receives a very large share of national income, what is the problem with relying only on per capita GDP?
Answer and explanation
Correct answer: It may hide the low income of the majority behind an average
Per capita GDP is calculated by dividing total GDP by population, so it gives only an average income or output figure. It does not show how income is distributed among households. If the richest five percent receive a very large share, their high incomes can raise the average while most people remain poor. Therefore, option B is correct; the other options confuse distribution with output, population counting, or prices.
Frequently asked questions
What is the correct answer to this question?
It may hide the low income of the majority behind an average
Why is this the correct answer?
Per capita GDP is calculated by dividing total GDP by population, so it gives only an average income or output figure. It does not show how income is distributed among households. If the richest five percent receive a very large share, their high incomes can raise the average while most people remain poor. Therefore, option B is correct; the other options confuse distribution with output, population counting, or prices.
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.
