UPSC Prelims 2013 · Question 42 of 99

UPSC Prelims 2013 question on Economic Growth Capital Formation

Economic growth in country X will necessarily have to occur if:

  1. There is technical progress in the world economy
  2. There is population growth in X
  3. There is capital formation in X
  4. The volume of trade grows in the world economy
Show answer

Answer: C. There is capital formation in X

Economic growth necessarily requires an increase in productive capacity within the country. Capital formation increases investment in infrastructure, machinery, and productive assets, which directly raises production capacity and economic output. Technical progress or global trade growth may not automatically benefit a particular country, and population growth alone does not ensure economic growth. Therefore, capital formation is the most certain factor leading to economic growth. Extra Point: Capital formation is considered a key driver of long-term economic development.

More questions on Economic Growth

All 17 questions on Economic Growth →

← Full 2013 question paper · All Indian Economy questions