What may happen to welfare if unemployment rises despite GDP growth?
Answer and explanation
Correct answer: Improvement in welfare may be limited
GDP growth measures increased production, but welfare also depends on employment and whether people receive income from economic activity. If unemployment rises, many households may not benefit from the additional output and may face insecurity or lower income. Therefore option B is correct: welfare improvement may be limited. The other choices make absolute claims that GDP growth cannot justify.
Frequently asked questions
What is the correct answer to this question?
Improvement in welfare may be limited
Why is this the correct answer?
GDP growth measures increased production, but welfare also depends on employment and whether people receive income from economic activity. If unemployment rises, many households may not benefit from the additional output and may face insecurity or lower income. Therefore option B is correct: welfare improvement may be limited. The other choices make absolute claims that GDP growth cannot justify.
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.
