Q. Consider the following statements:
1.GDP (Gross Domestic Product) is the value added by the production of goods and services.
2.According to Keynesian, investment plays an active role in driving economic growth, while consumption is more passive.
Which of the statement(s) given above is/are correct?
Answer: C
Notes:
Explanation –
Statements 1 and 2 are correct. GDP represents the total monetary value of all final goods and services produced within a country’s borders in a specific time period. It is calculated as the sum of value added at every stage of production, which includes the output of producers minus the value of intermediate goods consumed in production. In Keynesian economics, investment is considered a volatile and active driver of economic growth because it depends on factors like interest rates and business expectations. On the other hand, consumption is viewed as a stable and passive function, primarily determined by current income levels.
Source: The Hindu
