What is a major limitation of per capita GDP?
Answer and explanation
Correct answer: It does not show actual income distribution
Per capita GDP is calculated by dividing total GDP by population, so it represents only an average output or income measure. A high average can exist even when income is concentrated among a few households. Therefore, it does not reveal actual income distribution or inequality. Option A is incorrect because total GDP is separately measured, while C and D contradict the definition and behaviour of the indicator.
Frequently asked questions
What is the correct answer to this question?
It does not show actual income distribution
Why is this the correct answer?
Per capita GDP is calculated by dividing total GDP by population, so it represents only an average output or income measure. A high average can exist even when income is concentrated among a few households. Therefore, it does not reveal actual income distribution or inequality. Option A is incorrect because total GDP is separately measured, while C and D contradict the definition and behaviour of the indicator.
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.
