Why are national income and welfare not considered exactly the same in macroeconomics?
Answer and explanation
Correct answer: Because distribution and quality of life may differ even when income rises
National income measures the monetary value of economic activity, but welfare is broader. Welfare also depends on income distribution, health, education, leisure, security, environmental quality, and the composition of output. Therefore, higher national income does not automatically mean higher welfare for everyone.
Frequently asked questions
What is the correct answer to this question?
Because distribution and quality of life may differ even when income rises
Why is this the correct answer?
National income measures the monetary value of economic activity, but welfare is broader. Welfare also depends on income distribution, health, education, leisure, security, environmental quality, and the composition of output. Therefore, higher national income does not automatically mean higher welfare for everyone.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates.
