In a country, a large share of income goes to the top 1% while average GDP per capita rises. Which measure would provide additional welfare information?
Answer and explanation
Correct answer: A distribution measure such as the Gini coefficient
Average GDP per capita can rise even when most households receive little of the additional income. The Gini coefficient and similar distribution measures add information about how unequally income is shared, making welfare analysis more meaningful. Therefore option B is correct. Gross investment and exports describe particular economic activities, while a price index describes price movements; none directly reveals the distribution of income. GDP averages alone can conceal inequality.
Frequently asked questions
What is the correct answer to this question?
A distribution measure such as the Gini coefficient
Why is this the correct answer?
Average GDP per capita can rise even when most households receive little of the additional income. The Gini coefficient and similar distribution measures add information about how unequally income is shared, making welfare analysis more meaningful. Therefore option B is correct. Gross investment and exports describe particular economic activities, while a price index describes price movements; none directly reveals the distribution of income. GDP averages alone can conceal inequality.
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.
