Why can poverty exist even when GDP is high?
Answer and explanation
Correct answer: Because GDP does not show income distribution
GDP measures the total market value of final goods and services produced in an economy, but it does not show who receives the resulting income. A high GDP may coexist with severe inequality if most income is concentrated among a small group. Therefore, poverty and welfare must also be assessed using distributional and social indicators.
Frequently asked questions
What is the correct answer to this question?
Because GDP does not show income distribution
Why is this the correct answer?
GDP measures the total market value of final goods and services produced in an economy, but it does not show who receives the resulting income. A high GDP may coexist with severe inequality if most income is concentrated among a small group. Therefore, poverty and welfare must also be assessed using distributional and social indicators.
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.
