Why may average living standards fall even when NDP rises?
Answer and explanation
Correct answer: Population may grow faster than NDP
The governing welfare measure is per-capita NDP, calculated as total NDP divided by population. Total NDP can rise while population grows at a faster rate; in that case, NDP per person falls and average material availability may decline. Therefore option A is correct. The other choices are not necessary conditions: depreciation need not be zero, exports need not stop, and taxes ending does not logically explain a lower per-capita output.
Frequently asked questions
What is the correct answer to this question?
Population may grow faster than NDP
Why is this the correct answer?
The governing welfare measure is per-capita NDP, calculated as total NDP divided by population. Total NDP can rise while population grows at a faster rate; in that case, NDP per person falls and average material availability may decline. Therefore option A is correct. The other choices are not necessary conditions: depreciation need not be zero, exports need not stop, and taxes ending does not logically explain a lower per-capita output.
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.
