Question
UPSC Prelims 2018 Question:
Increase in absolute and per capita real GNP do not connote a higher level of economic development, if
Answer (Detailed Solution Below)
Option 3: poverty and unemployment increase.
Detailed Solution
Explanation:
- Gross National Product (GNP) is the value of all finished goods and services owned by a country's citizens, whether or not those goods are produced in that country. It includes the net overseas economic activities performed by its nationals.
- Absolute GNP or Real GNP is known as inflation-adjusted Gross National Product measured at constant base-year prices, while Per Capita real GNP is the total value of all the goods and services produced by a country in a year, including income from foreign investments, divided by the number of people living there.
- Rise in absolute GNP and per capita real GNP in an economy does not connote a higher level of economic development, if there is high poverty and unemployment, and the same is on an increasing trend.
Therefore, option (3) is the answer.
Subject: Economics | National Income Accounting
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