ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -GDP is important because it gives information about the size of the economy and how an economy is performing. The growth rate of real GDP is often used as an indicator of the general health of the economy. In broad terms, an increase in real GDP is interpreted as a sign that the economy is doing well.

Detailed explanation-2: -While there are a number of different ways to measure economic growth, the best-known and most frequently tracked and reported measure is gross domestic product (GDP).

Detailed explanation-3: -GDP is an accurate indicator of the size of an economy and the GDP growth rate is probably the single best indicator of economic growth, while GDP per capita has a close correlation with the trend in living standards over time. As Nobel laureate Paul A.

Detailed explanation-4: -Consumption (C) It’s the largest component of GDP. Typically, professionals view a steadily increasing consumption as a sign of a healthy economy because it signifies consumer confidence in spending versus uncertainty in the future and lack of spending.

Detailed explanation-5: -Both measure the value of a country’s economic activity. The main difference is that GDP measures productivity within a country’s geographical boundaries and GNP records economic activity by that country’s citizens and businesses, regardless of location.