Increase in Real GDP always indicates that welfare of people is rising
True or False with Reasons:-
Increase in Real GDP always indicates that welfare of people is rising.
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False,
With increase in real GDP, welfare of people may not rise if there is inequality in the distribution of GDP or due to negative externalities.
Explanation:-
Negative externalities such as air and sound pollution results in health hazards.
If there is an inequality in the distribution of GDP, the overall increase in Real GDP will not indicate overall welfare of the whole society.
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