What may be a benefit of GDP growth when income is equally distributed?
Answer and explanation
Correct answer: The living standard of more people may improve
GDP growth increases the total economic output, but its welfare effect depends partly on how the resulting income is distributed. If income is distributed relatively equally, more households can gain purchasing power and access to goods and services, so living standards may improve for more people. Therefore option A is correct. Growth does not necessarily reduce production, eliminate currency or end pollution.
Frequently asked questions
What is the correct answer to this question?
The living standard of more people may improve
Why is this the correct answer?
GDP growth increases the total economic output, but its welfare effect depends partly on how the resulting income is distributed. If income is distributed relatively equally, more households can gain purchasing power and access to goods and services, so living standards may improve for more people. Therefore option A is correct. Growth does not necessarily reduce production, eliminate currency or end pollution.
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.
