Question
Economic growth in a country will necessarily have to occur if:
Answer: Option A
Answer: (a)
Investment in the economy means production of capital goods. When the economy produces all consumption goods and no capital goods (investment) then its GDP shall remain constant i.e. it will not grow.
But till the time there is a net production of capital goods i.e. investment in the economy, the production of goods and services (GDP) will keep on increasing.
Capital formation means production of capital goods. So, if there is capital formation, it will necessarily lead to increasing in GDP i.e. economic growth.
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Answer: (a)
Investment in the economy means production of capital goods. When the economy produces all consumption goods and no capital goods (investment) then its GDP shall remain constant i.e. it will not grow.
But till the time there is a net production of capital goods i.e. investment in the economy, the production of goods and services (GDP) will keep on increasing.
Capital formation means production of capital goods. So, if there is capital formation, it will necessarily lead to increasing in GDP i.e. economic growth.
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