Increase in absolute and per capita real GNP do not connote a higher level of economic development, if
- A.industrial output fails to keep pace with agricultural output.
- B.agricultural output fails to keep pace with industrial output.
- C.poverty and unemployment increase.
- D.imports grow faster than exports.
Correct answer
Explanation
The correct answer is C, poverty and unemployment increase. Economic development means better lives for people, so rising income alone is not development if poverty and joblessness are growing.
Economic growth is a rise in real output, measured by GNP or GDP and per capita income. Economic development is wider: it also asks whether that growth reduces poverty, creates jobs, narrows inequality and improves health, education and living standards. If GNP rises while more people fall into poverty or lose work, the gains are reaching only a few, and the economy has grown without developing. This is why measures such as the Human Development Index, started by UNDP in 1990 on the work of Mahbub ul Haq and Amartya Sen, look beyond income.
A is wrong because the mix of industry and agriculture changes the structure of output, not the welfare test of development. B is wrong for the same reason. D is wrong because a trade deficit affects the balance of payments, but it does not by itself mean living standards have fallen.
Exam tip: Growth = more output; development = growth + less poverty, more jobs, better welfare.
Practice Questions
View allConsider the following statements : Human capital formation as a concept is better explained in terms of a process which enables
1. individuals of a country to accumulate more capital.
2. increasing the knowledge, skill levels and capacities of the people of the country.
3. accumulation of tangible wealth.
4. accumulation of intangible wealth.
Which of the statements given above is/are correct ?
- A.1 and 2
- B.2 only
- C.2 and 4
- D.1, 3 and 4
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Human capital formation means raising people's knowledge, skills and abilities, which is a form of intangible wealth. Human capital is the stock of education, skill, health and experience that makes people productive.
Read the full explanation →Consider the following statements :
1. In the case of all cereals, pulses and oil-seeds, the procurement at Minimum Support Price (MSP) is unlimited in any State/UT of India.
2. In the case of cereals and pulses, the MSP is fixed in any State/UT at a level to which the market price will never rise.
Which of the statements given above is/are correct?
- A.1 only
- B.2 only
- C.Both 1 and 2
- D.Neither 1 nor 2
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Procurement at MSP is limited, and MSP is a floor price that market prices often exceed. The Government announces MSPs for 22 mandated crops on the recommendation of the Commission for Agricultural Costs and Prices (CACP).
Read the full explanation →Consider the following statements :
1. Coal sector was nationalized by the Government of India under Indira Gandhi.
2. Now, coal blocks are allocated on lottery basis.
3. Till recently, India imported coal to meet the shortages of domestic supply, but now India is self-sufficient in coal production.
Which of the statements given above is/are correct?
- A.1 only
- B.2 and 3 only
- C.3 only
- D.1, 2 and 3
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The coal industry was nationalised under Indira Gandhi, but coal blocks are not given by lottery and India still imports coal.
Read the full explanation →Consider the following statements in respect of the International Bank for Reconstruction and Development (IBRD) :
I. It provides loans and guarantees to middle income countries.
II. It works single-handedly to help developing countries to reduce poverty.
III. It was established to help Europe rebuild after the World War II.
Which of the statements given above are correct?
- A.I and II only
- B.II and III only
- C.I and III only
- D.I, II and III
Show answer
Statement II is wrong because the IBRD works alongside other World Bank Group institutions and partners, not single-handedly. The IBRD was set up at the Bretton Woods Conference in 1944, together with the IMF.
Read the full explanation →If a commodity is provided free to the public by the Government, then
- A.the opportunity cost is zero.
- B.the opportunity cost is ignored.
- C.the opportunity cost is transferred from the consumers of the product to the tax-paying public.
- D.the opportunity cost is transferred from the consumers of the product to the Government.
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A free good still uses up resources, and taxpayers pay for them. Opportunity cost is the value of the next best alternative given up when resources are used for something.
Read the full explanation →