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Question

Economic growth in country X will necessarily have to occur if

(a) there is technical progress in the world economy
(b) there is population growth in X
(c) there is capital formation in X
(d) the volume of trade grows in the world economy

Answer:

C

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Explanation:

Economic growth in country X will necessarily have to occur if (c) there is capital formation in X. Capital formation refers to the process of increasing the stock of physical and human capital in an economy, which includes investments in infrastructure, machinery, technology, education, and skills. It is an essential driver of economic growth as it enhances productivity, promotes innovation, and expands the productive capacity of the economy. While the other factors mentioned (technical progress, population growth, and volume of trade) can also contribute to economic growth, they are not necessarily guaranteed to lead to growth in country X. The presence of capital formation, however, is a fundamental requirement for sustained economic growth.

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