Multiple choice

Directions: A brief passage or a statement is given and a question is asked, based on the information provided in the passage/statement. Critically examine the five alternative answer options marked (1) to (5) and choose the best answer. So as 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 (vis a vis only 2.3% 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. <font size="2" face="Arial">There has been no significant change in terms of living standards of people in developing economies.</font>

  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

There is nothing given about the share of developing economies in global GDP till 1970s. It could correct or incorrect; we have simply no way of judging its accuracy. So option (1) is wrong. Options (2) and (3) are suppositions, about which it is not possible to say anything, given the information in hand. Option (5) is not necessarily false, as it talks of disposable income, which means the part of income left after meeting one’s expenses. It is not a definitive indicator of the truth or otherwise of the statements given. Option (4), which represents the best possible answer, highlights that there has been no change in the living standards of people in developing economies, which seems to be improbable given that they are growing by a much faster pace as compared to developed economies.

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