Which change can increase welfare without affecting GDP?
Answer and explanation
Correct answer: A more equitable distribution of the same output
GDP measures the market value of current final goods and services, not the fairness of how income is distributed. If total production remains unchanged but income is shared more equitably, poorer households may gain greater access to necessities and experience higher utility. Therefore, welfare can rise while GDP stays constant. Machine production, government purchases, and new house construction are current production activities that can directly increase measured GDP.
Frequently asked questions
What is the correct answer to this question?
A more equitable distribution of the same output
Why is this the correct answer?
GDP measures the market value of current final goods and services, not the fairness of how income is distributed. If total production remains unchanged but income is shared more equitably, poorer households may gain greater access to necessities and experience higher utility. Therefore, welfare can rise while GDP stays constant. Machine production, government purchases, and new house construction are current production activities that can directly increase measured GDP.
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.
