Which of the following is an indicator of economic growth?

A. High tax rate
B. Technology development
C. High gross domestic product
D. High-interest rate

Correct Answer:

Option C – High gross domestic product

Explanation

Economic growth is the process by which the productive capacity of an economy increases over a given period, leading to a rise in the level of the national income.
Gross domestic product is the total market value of all goods and services produced by a country in a specific time period typically a year. This includes earnings from foreign investments.

GDP = Consumption +Government +investment +Export − Imports

GDP is considered the broadest indicator of economic growth because GDP represents the market value of all goods and services produced by the economy during the given period including personal consumption, government purchase, private inventories, paid-in construction cost, and the foreign trade balance (export added, import are subtracted).

There are other indicators of economic growth such as; Consumer Price Index (CPI), Producer Price Index (PPI), Consumer Confidence Index (CCI), Money supply, Employment, and others. However, High tax rate, Technology Development and High-interest rate are not a part of the list.