Why can welfare be low even if GDP is high?
Answer and explanation
Correct answer: Income inequality may be high
GDP measures the total value of final goods and services produced, but it does not show how that income or output is distributed. A high GDP may coexist with severe inequality, poor access to health and education, unemployment, or environmental damage. Thus, high GDP alone cannot guarantee high welfare, making option A correct.
Frequently asked questions
What is the correct answer to this question?
Income inequality may be high
Why is this the correct answer?
GDP measures the total value of final goods and services produced, but it does not show how that income or output is distributed. A high GDP may coexist with severe inequality, poor access to health and education, unemployment, or environmental damage. Thus, high GDP alone cannot guarantee high welfare, making option A correct.
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.
