Question

State with valid reason, which of the following statement is true orfalse:

(a) GDP growth as anindex of welfare loses its importance if there is deep economic divide in the economy.

(b) Real GDP may increase without any increase in the quantity of output in theeconomy.​

Answer 1

Explanation:

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Answer 2

a) True b) False

Explanation:

a) True, the economy indicated the increasing gap between the rich and poor people. If the gap increases, Gdp growth loses significance. Similarly visa-versa.

b) False, an increase in real GDP is not necessary to have growth of the economy . When an economy is producing more than the potential output, it would have experienced an increase in real GDP, but that is not considered as economic growth.