What is a limitation of per capita GDP?
Answer and explanation
Correct answer: It does not show income distribution
Per capita GDP is calculated as total GDP divided by population, so it provides an average amount of output or income per person. However, an average does not reveal how that total is distributed. A small wealthy group may receive most income while many people remain poor, even when per capita GDP is high. Therefore option B is correct. Options A and C deny its averaging and population basis, while D is plainly false.
Frequently asked questions
What is the correct answer to this question?
It does not show income distribution
Why is this the correct answer?
Per capita GDP is calculated as total GDP divided by population, so it provides an average amount of output or income per person. However, an average does not reveal how that total is distributed. A small wealthy group may receive most income while many people remain poor, even when per capita GDP is high. Therefore option B is correct. Options A and C deny its averaging and population basis, while D is plainly false.
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.
