Why does GDP growth not guarantee an increase in welfare?
Answer and explanation
Correct answer: Because income distribution and environmental effects may differ
The governing concept is that GDP measures marketed production, whereas welfare depends on many wider conditions. GDP can rise while the gains go mainly to a small group, while pollution, congestion, or resource depletion impose costs on society. Option B is correct because distribution and environmental effects can move differently from total output. A is false, and C and D are factually impossible.
Frequently asked questions
What is the correct answer to this question?
Because income distribution and environmental effects may differ
Why is this the correct answer?
The governing concept is that GDP measures marketed production, whereas welfare depends on many wider conditions. GDP can rise while the gains go mainly to a small group, while pollution, congestion, or resource depletion impose costs on society. Option B is correct because distribution and environmental effects can move differently from total output. A is false, and C and D are factually impossible.
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.
