What can be said if a country's real GDP rises but income distribution is highly unequal?
Answer and explanation
Correct answer: Living standards need not rise equally for everyone
Real GDP measures the total volume of production, not how income or output is distributed among households. If most gains go to a small group, average or total GDP can rise while many people experience little improvement in income or living conditions. Option A is correct. The other choices claim facts that cannot be inferred from aggregate real GDP alone.
Frequently asked questions
What is the correct answer to this question?
Living standards need not rise equally for everyone
Why is this the correct answer?
Real GDP measures the total volume of production, not how income or output is distributed among households. If most gains go to a small group, average or total GDP can rise while many people experience little improvement in income or living conditions. Option A is correct. The other choices claim facts that cannot be inferred from aggregate real GDP alone.
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.
