Per capita GDP rises in a country but median income remains unchanged. What is the most likely reason?
Answer and explanation
Correct answer: Income growth was concentrated among high-income groups
Per-capita GDP is an arithmetic mean: total GDP is divided by population. A mean can rise when a relatively small group receives very large income gains, even if the income of the middle person does not change. The median identifies the middle position in the distribution and is less affected by extreme high incomes. Therefore, concentrated gains among rich households explain the result, making B correct. A would normally raise the median, while C and D do not explain it.
Frequently asked questions
What is the correct answer to this question?
Income growth was concentrated among high-income groups
Why is this the correct answer?
Per-capita GDP is an arithmetic mean: total GDP is divided by population. A mean can rise when a relatively small group receives very large income gains, even if the income of the middle person does not change. The median identifies the middle position in the distribution and is less affected by extreme high incomes. Therefore, concentrated gains among rich households explain the result, making B correct. A would normally raise the median, while C and D do not explain it.
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.
