Why may welfare fall even when per capita GDP rises?
Answer and explanation
Correct answer: Because pollution and inequality may increase
Per capita GDP is only an average of output or income; it does not show distribution or the social costs of production. A rise in the average can occur alongside greater inequality, while pollution, congestion, stress, or health damage may reduce people’s quality of life. Hence option C is correct. The other choices either contradict the meaning of GDP or assert conditions that do not follow from a rise in per capita GDP.
Frequently asked questions
What is the correct answer to this question?
Because pollution and inequality may increase
Why is this the correct answer?
Per capita GDP is only an average of output or income; it does not show distribution or the social costs of production. A rise in the average can occur alongside greater inequality, while pollution, congestion, stress, or health damage may reduce people’s quality of life. Hence option C is correct. The other choices either contradict the meaning of GDP or assert conditions that do not follow from a rise in per capita GDP.
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.
