Question

Which one of the following is an incorrect statement in the context of Gross Domestic Product (GDP)?

• A. GDP does not measure the sustainability of growth.
• B. GDP helps to understand whether economy is growing or contracting.
• C. GDP reflects annual trends of inflation and prices of commodities.
• D. GDP helps to understand shift in the annual changes in the country's economy.

Answer 1

The Correct Option is C

GDP does not directly reflect annual trends of inflation and prices of commodities. GDP measures the total value of goods and services produced in a country, but inflation and prices are measured separately using indices like the Consumer Price Index (CPI) or the Wholesale Price Index (WPI).