Why is welfare more likely to rise if real per capita GDP increases and income distribution becomes more equal?
Answer and explanation
Correct answer: Because average output rises and benefits spread more broadly
The governing concepts are real per capita income and distribution. Real per capita GDP adjusts aggregate output for price changes and population, so an increase indicates greater average command over goods and services in real terms. If distribution also becomes more equal, the gains are more widely shared. Therefore option B is correct, although other welfare factors such as health and pollution must still be considered.
Frequently asked questions
What is the correct answer to this question?
Because average output rises and benefits spread more broadly
Why is this the correct answer?
The governing concepts are real per capita income and distribution. Real per capita GDP adjusts aggregate output for price changes and population, so an increase indicates greater average command over goods and services in real terms. If distribution also becomes more equal, the gains are more widely shared. Therefore option B is correct, although other welfare factors such as health and pollution must still be considered.
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.
