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?

Passage

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.

QUESTION

CSAT

Easy

Comprehension

Prelims 2021

With reference to the above passage, the following assumptions have been made:

Rising GDP is essential for a country to be a developed country.
Rising GDP guarantees a reasonable distribution of income to all households.

Which of the above assumptions is/are valid?

Select an option to attempt

Explanation

Statement 1 is incorrect because while rising GDP is important, the passage does not state it as the sole criterion for a country to be developed.

Statement 2 is incorrect because the passage does not suggest that rising GDP guarantees an equitable distribution of income.

Thus, neither assumption is valid.

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