In which situation may the condition of most people not improve even when per capita GDP rises?
Answer and explanation
Correct answer: When additional income goes to very few people
The governing concept is that per capita GDP is an average and does not show how income is distributed. It can rise when a small group receives most of the additional income, while the earnings and consumption possibilities of the majority remain unchanged. Therefore, option D is correct. Better education, lower pollution and higher employment generally support welfare rather than explain this failure.
Frequently asked questions
What is the correct answer to this question?
When additional income goes to very few people
Why is this the correct answer?
The governing concept is that per capita GDP is an average and does not show how income is distributed. It can rise when a small group receives most of the additional income, while the earnings and consumption possibilities of the majority remain unchanged. Therefore, option D is correct. Better education, lower pollution and higher employment generally support welfare rather than explain this failure.
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.
