Why can two countries with the same real per capita GDP have different welfare levels?
Answer and explanation
Correct answer: Differences in income distribution and public services
Real per-capita GDP compares average purchasing power after removing the effect of price changes, but it does not describe the whole quality of life. Two countries may have different income distributions, access to health and education, public safety, environmental quality, leisure, or unpaid household support. These factors can produce different welfare even when average real output is identical. Hence A is correct; B and C are irrelevant, and D treats one average as a complete welfare measure.
Frequently asked questions
What is the correct answer to this question?
Differences in income distribution and public services
Why is this the correct answer?
Real per-capita GDP compares average purchasing power after removing the effect of price changes, but it does not describe the whole quality of life. Two countries may have different income distributions, access to health and education, public safety, environmental quality, leisure, or unpaid household support. These factors can produce different welfare even when average real output is identical. Hence A is correct; B and C are irrelevant, and D treats one average as a complete welfare measure.
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.
