Which factor should be considered while understanding the difference between GDP and welfare?
Answer and explanation
Correct answer: Income distribution
Income distribution is essential when comparing GDP with welfare. GDP is an aggregate total and can rise even when most of the additional income goes to a small section of society. If inequality increases, average output may rise without a proportional improvement in the living standards of ordinary households. Therefore, distribution must be considered along with GDP.
Frequently asked questions
What is the correct answer to this question?
Income distribution
Why is this the correct answer?
Income distribution is essential when comparing GDP with welfare. GDP is an aggregate total and can rise even when most of the additional income goes to a small section of society. If inequality increases, average output may rise without a proportional improvement in the living standards of ordinary households. Therefore, distribution must be considered along with 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.
