Civil Services Prep

Prelims 2018 · Economy · Question 48

Increase in absolute and per capita real GNP do not connote a higher level of economic development, if

  1. industrial output fails to keep pace with agricultural output.
  2. agricultural output fails to keep pace with industrial output.
  3. poverty and unemployment increase.
  4. imports grow faster than exports.

Answer

poverty and unemployment increase.

  • (a) Industrial output lagging behind agriculture does not by itself negate economic development; sectoral imbalance alone is not the decisive test. Verdict: Incorrect.
  • (b) Agricultural output lagging behind industry may create imbalance, but rise in real GNP/per capita GNP can still coexist with development. Verdict: Incorrect.
  • (c) If poverty and unemployment increase, growth is not translating into welfare; this is a classic case where higher real GNP does not mean higher economic development. Verdict: Correct.
  • (d) Imports growing faster than exports indicates external sector stress, but it does not by itself prove absence of economic development. Verdict: Incorrect.
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