Question

Which of the following applies to economic growth?

      I.   Economic growth allows people to buy more goods and services.

      II. Economic growth is the expansion of the economy’s production possibilities.

      III. Economic growth is represented by a movement from a point inside the production possibilities curve to a point on the curve.

Answer 1

The economic growth increases the productive capacity of an economy. This means that the country can produce more goods and services from the available resources. This means that the GDP of the economy increases. If the rate of growth of GDP is greater than the growth in population, the per capita income of the economy increases. This means income per person will be higher. The more income means better living, greater access to basic amenities of life like food, education health care. This implies higher living standard for the entire population.

Therefore the correct option is: II