Why can looking only at national income be incomplete for macroeconomic policy evaluation?
Answer and explanation
Correct answer: Employment, prices, distribution, and real income are also important.
National income is a useful indicator of economic activity, but policy evaluation needs a wider dashboard. Employment reveals access to work, prices show purchasing-power changes, distribution shows who benefits, and real income removes inflation effects. Looking at all these indicators gives a more reliable judgement of policy success.
Frequently asked questions
What is the correct answer to this question?
Employment, prices, distribution, and real income are also important.
Why is this the correct answer?
National income is a useful indicator of economic activity, but policy evaluation needs a wider dashboard. Employment reveals access to work, prices show purchasing-power changes, distribution shows who benefits, and real income removes inflation effects. Looking at all these indicators gives a more reliable judgement of policy success.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates.
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