ECONOMICS
ECONOMIC GROWTH
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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An increase in national income at constant prices during a year
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A sustained increase in real per capita income
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An increase in national income at current prices over time
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An increase in national income along with a corresponding increase in population
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Detailed explanation-1: -A sustained increase in real per capita income is the true index of economic growth. It talks about quantitative increase but not qualitative increase.
Detailed explanation-2: -Gross Domestic Product (GDP), a widely used indicator, refers to the total gross value added by all resident producers in the economy. Growth in the economy is measured by the change in GDP at constant price.
Detailed explanation-3: -By sustained increase in per capita income we mean the upward or rising trend in per capita income over a long period of time. A mere short-period rise in per capita income, such as that occurs over a business cycle, cannot be validly called economic growth.
Detailed explanation-4: -Per capita income refers to money or income earned per person in a region or state. However, per capita income can sometimes be misleading because wealth is unequally distributed. Thus, per capita income may not reflect the actual living conditions of the people.
Detailed explanation-5: -Sustained economic growth increases average incomes and is strongly linked to poverty reduction. GDP per capita provides a basic measure of the value of output per person, which is an indirect indicator of per capita income. Growth in GDP and GDP per capita are considered broad measures of economic growth.