Economic Awareness - Sectors of Indian Economy
Which of the following is a limitation of national income data in measuring economic welfare?
Which of the following is a limitation of national income data in measuring economic welfare?
easy Q2 of 15
Step-by-Step Solution
Step 1: Understand welfare limitations
National income measures total output but not how income is distributed among the population.Step 2: Apply the concept
Increased national income may not improve welfare if benefits accrue to a few (higher inequality). It ignores distribution changes, excludes unpaid household work, and does not deduct environmental costs.Final Answer:
It ignores changes in income distribution → Option BQuick Check:
It ignores changes in income distribution = correct ✅
Quick Trick: National income = total output, ignores distribution (use Gini coefficient).
Common Mistakes:
- Thinking higher GDP always means higher welfare for everyone.
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