Question

Which of the following is the most significant drawback of per capita income as an indicator of economic development?

• A. It does not consider the quality of goods and services produced.
• B. It only measures the income of the richest segment of the population.
• C. It fails to account for the distribution of income.
• D. It does not reflect the environmental impact of economic activities.

Answer 1

Answer:

C. It fails to account for the distribution of income.

• Per capita income is an average, so a high value can hide significant income inequality where a few people are wealthy while the majority are poor.