Q. A central message of modern development economics is the importance of income growth, by which is meant growth in Gross Domestic Product (GDP).
In theory, rising GDP creates employment and investment opportunities. As incomes grow in a country where the level of GDP was once low, households, communities, and governments are increasingly able to set aside some funds for the production of things that make for a good life. Today GDP has assumed such a significant place in the development lexicon, that if someone mentions “economic growth”, we know they mean growth in GDP.
Q 1. With reference to the above passage, the following assumptions have been made:
1. Rising GDP is essential for a country to be a developed country.
2. Rising GDP guarantees a reasonable distribution of income to all households.
Which of the above assumptions is/are valid?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Question from UPSC Prelims 2021 CSAT Paper
Explanation :
Q1: Correct Answer – (d) Neither 1 nor 2
Explanation – The correct answer is (d) Neither 1 nor 2. The passage states that rising GDP creates employment and investment opportunities and allows households, communities, and governments to set aside funds for the production of things that make for a good life. However, it does not state that rising GDP is essential for a country to be a developed country or that it guarantees a reasonable distribution of income to all households. These are assumptions that are not supported by the information given in the passage.
