In which situation can per capita welfare fall despite an increase in real GDP?
Answer and explanation
Correct answer: Population grows faster than output
Per capita real output is calculated as real GDP divided by population. If real GDP rises by 3% but population rises by 5%, output available per person falls approximately by 2%, other factors being unchanged. Lower per-person availability can weaken material welfare. Thus D is correct; A would raise per capita output, while B and C describe welfare-improving conditions rather than the stated problem.
Frequently asked questions
What is the correct answer to this question?
Population grows faster than output
Why is this the correct answer?
Per capita real output is calculated as real GDP divided by population. If real GDP rises by 3% but population rises by 5%, output available per person falls approximately by 2%, other factors being unchanged. Lower per-person availability can weaken material welfare. Thus D is correct; A would raise per capita output, while B and C describe welfare-improving conditions rather than the stated problem.
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.
