Why may broad welfare gains be limited if output growth mainly comes from luxury goods for high-income groups?
Answer and explanation
Correct answer: Because the benefits of output may be concentrated among a limited consumer group
GDP measures the value of final goods and services, so luxury goods are included when they are legally produced and sold. However, GDP growth alone does not show who receives the resulting income or access to the goods. If gains are concentrated among high-income households, basic needs of most people may remain unmet. Thus B is correct; A is false, and C and D are unsupported claims.
Frequently asked questions
What is the correct answer to this question?
Because the benefits of output may be concentrated among a limited consumer group
Why is this the correct answer?
GDP measures the value of final goods and services, so luxury goods are included when they are legally produced and sold. However, GDP growth alone does not show who receives the resulting income or access to the goods. If gains are concentrated among high-income households, basic needs of most people may remain unmet. Thus B is correct; A is false, and C and D are unsupported claims.
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.
