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Q42 (IAS/2010) Economy › Basic Concepts & National Income › Economic growth indicators Answer Verified

In the context of Indian economy, consider the following pairs: Term Most appropriate description 1. Melt down Fall in stock prices 2. Recession Fall in growth rate 3. Slow down Fall in GDP

Result
Your answer: —  ·  Correct: A
Explanation

“Melt down” (stock-market crash) denotes a rapid, severe decline in stock prices, so Pair 1 is correct. A recession is a significant decline in total output/income/employment and implies negative GDP growth or falling output, not merely a reduction in the growth rate; thus equating recession with a simple “fall in growth rate” is imprecise [1]. An economic (growth) slowdown refers to a deceleration in the GDP growth rate and can occur while GDP still rises (i.e., positive but lower growth); it is not synonymous with an actual fall in GDP/output [1]. Therefore only Pair 1 is appropriately described; Pairs 2 and 3 are incorrect.

Sources

  1. [1] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 1: Fundamentals of Macro Economy > 1.14 Potential GDP > p. 22
  2. [2] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 1: Fundamentals of Macro Economy > 1.14 Potential GDP > p. 23
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