Which indicator helps reveal whether increased national income reached the typical person?
Answer and explanation
Correct answer: Median household income
The governing concept is distribution-sensitive measurement. Total GDP shows the size of economic activity but not who receives the gains. Median household income identifies the income of the middle household after arranging households by income, so it is less distorted by a small number of very rich households. Option B is therefore the best indicator. Total GDP, capital formation, and government consumption do not directly show the typical household’s income.
Frequently asked questions
What is the correct answer to this question?
Median household income
Why is this the correct answer?
The governing concept is distribution-sensitive measurement. Total GDP shows the size of economic activity but not who receives the gains. Median household income identifies the income of the middle household after arranging households by income, so it is less distorted by a small number of very rich households. Option B is therefore the best indicator. Total GDP, capital formation, and government consumption do not directly show the typical household’s income.
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.
