Multiple choice

To calculate the GDP growth across the globe, individual countries' growth rates are weighted in terms of their share of global output. Using Purchasing Power Parity, as the IMF does, the global economy has grown by an average of 5% over the past five years, its strongest pace since the early 1970s. This is primarily due to the emerging economies growing by 7.5% a year (as against only 2.3% witnessed in the developed economies), and they account for around 45% of global GDP.

Given the above information, which of the following would be definitely false?

  1. The percentage share of emerging economies in global GDP was less than that of developed ones till 1970s.

  2. If the developed economies and the emerging economies grow at the same pace each year, the global GDP growth rate would be much more than it is at present.

  3. The growth rate of emerging economies is bound to further increase in future too.

  4. There has been no significant change in terms of living standards of people in developing economies.

  5. There has been no significant change in terms of disposable income of people in developing economies.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Definitely incorrect. If purchasing power is used as a benchmark for growth rates, it stands to reason that disposable incomes and hence, living standards have gone up.

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