What is a good indicator of economic growth?
Show answer & explanation
Correct answer: A
Explanation
The correct answer is option 1 i.e. Gross Domestic Product.
- The most widely accepted and comprehensive indicator of economic growth is Gross Domestic Product (GDP).
- This is the best indicator as it measures the total monetary value of all the finished goods and services produced within a country's borders in a specific time period. A sustained increase in GDP signifies economic growth.
Other Options:
- Foreign Investment (FI): This is a driver of economic growth, as it provides capital and technology, but it does not represent the total output of the entire economy.
- National Consumption: This refers to total spending by households and is a component of GDP, not the overall measure of growth itself.
- National Income (NI): While highly correlated, NI is the total income earned by a nation's people and businesses. It is a subset of national accounting and tends to move in tandem with GDP, but GDP is the primary measure for production-based growth.