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Consider the following statements regarding Incremental Capital-Output Ratio (ICOR).
1. The Incremental Capital Output Ratio (ICOR) refers to the relationship between the degree of economic expenditure and the corresponding rise in gross domestic product (GDP).
2. The higher the ICOR, the higher the productivity of capital.
3. In the last ten years, the ICOR has seen substantial decline in India.
1. The Incremental Capital Output Ratio (ICOR) refers to the relationship between the degree of economic expenditure and the corresponding rise in gross domestic product (GDP).
2. The higher the ICOR, the higher the productivity of capital.
3. In the last ten years, the ICOR has seen substantial decline in India.
Which of the above statements is/are correct?
- a)1 and 2 only
- b)1 and 3 only
- c)1 only
- d)2 and 3 only
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
Consider the following statements regarding Incremental Capital-Output...
- The Incremental Capital-Output Ratio (ICOR) is the ratio of investment to growth which is equal to the reciprocal of the marginal product of capital. The higher the ICOR, the lower the productivity of capital or the marginal efficiency of capital. The ICOR can be thought of as a measure of the inefficiency with which capital is used.
- In FY19 (2018-19), the implicit incremental capital-output ratio (ICOR) was 4.6. This is relatively high because of deficient capacity utilisation.
- Historically, India's average ICOR during the three-year period from FY17 to FY19 has averaged 4.23.
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Consider the following statements regarding Incremental Capital-Output...
Incremental Capital-Output Ratio (ICOR)
ICOR or Incremental Capital-Output Ratio is the ratio of the amount of investment needed to produce a unit increase in output. It is a measure of the productivity of capital and indicates the efficiency of investment in an economy.
Statement 1: The Incremental Capital Output Ratio (ICOR) refers to the relationship between the degree of economic expenditure and the corresponding rise in gross domestic product (GDP).
This statement is correct. ICOR represents the relationship between investment and output in an economy. It indicates the amount of investment required to produce a unit increase in GDP. A lower ICOR indicates that the economy is more efficient in using capital to produce output.
Statement 2: The higher the ICOR, the higher the productivity of capital.
This statement is incorrect. The higher the ICOR, the lower the productivity of capital. A higher ICOR indicates that the economy is less efficient in using capital to produce output.
Statement 3: In the last ten years, the ICOR has seen substantial decline in India.
This statement is incorrect. In the last ten years, the ICOR in India has seen an increase. According to the Economic Survey 2020-21, the ICOR in India increased from 4.0 in 2011-12 to 4.2 in 2018-19. This indicates that the efficiency of investment in India has decreased over the years.
Conclusion
Hence, the correct option is (c) 1 only. The ICOR is an important indicator of the efficiency of investment in an economy. A lower ICOR indicates that the economy is more efficient in using capital to produce output, while a higher ICOR indicates the opposite. In the case of India, the ICOR has seen an increase in the last ten years, indicating a decrease in the efficiency of investment.
ICOR or Incremental Capital-Output Ratio is the ratio of the amount of investment needed to produce a unit increase in output. It is a measure of the productivity of capital and indicates the efficiency of investment in an economy.
Statement 1: The Incremental Capital Output Ratio (ICOR) refers to the relationship between the degree of economic expenditure and the corresponding rise in gross domestic product (GDP).
This statement is correct. ICOR represents the relationship between investment and output in an economy. It indicates the amount of investment required to produce a unit increase in GDP. A lower ICOR indicates that the economy is more efficient in using capital to produce output.
Statement 2: The higher the ICOR, the higher the productivity of capital.
This statement is incorrect. The higher the ICOR, the lower the productivity of capital. A higher ICOR indicates that the economy is less efficient in using capital to produce output.
Statement 3: In the last ten years, the ICOR has seen substantial decline in India.
This statement is incorrect. In the last ten years, the ICOR in India has seen an increase. According to the Economic Survey 2020-21, the ICOR in India increased from 4.0 in 2011-12 to 4.2 in 2018-19. This indicates that the efficiency of investment in India has decreased over the years.
Conclusion
Hence, the correct option is (c) 1 only. The ICOR is an important indicator of the efficiency of investment in an economy. A lower ICOR indicates that the economy is more efficient in using capital to produce output, while a higher ICOR indicates the opposite. In the case of India, the ICOR has seen an increase in the last ten years, indicating a decrease in the efficiency of investment.
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Consider the following statements regarding Incremental Capital-Output Ratio (ICOR).1. The Incremental Capital Output Ratio (ICOR) refers to the relationship between the degree of economic expenditure and the corresponding rise in gross domestic product (GDP).2. The higher the ICOR, the higher the productivity of capital.3. In the last ten years, the ICOR has seen substantial decline in India.Which of the above statements is/are correct?a)1 and 2 onlyb)1 and 3 onlyc)1 onlyd)2 and 3 onlyCorrect answer is option 'C'. Can you explain this answer?
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Consider the following statements regarding Incremental Capital-Output Ratio (ICOR).1. The Incremental Capital Output Ratio (ICOR) refers to the relationship between the degree of economic expenditure and the corresponding rise in gross domestic product (GDP).2. The higher the ICOR, the higher the productivity of capital.3. In the last ten years, the ICOR has seen substantial decline in India.Which of the above statements is/are correct?a)1 and 2 onlyb)1 and 3 onlyc)1 onlyd)2 and 3 onlyCorrect answer is option 'C'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements regarding Incremental Capital-Output Ratio (ICOR).1. The Incremental Capital Output Ratio (ICOR) refers to the relationship between the degree of economic expenditure and the corresponding rise in gross domestic product (GDP).2. The higher the ICOR, the higher the productivity of capital.3. In the last ten years, the ICOR has seen substantial decline in India.Which of the above statements is/are correct?a)1 and 2 onlyb)1 and 3 onlyc)1 onlyd)2 and 3 onlyCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements regarding Incremental Capital-Output Ratio (ICOR).1. The Incremental Capital Output Ratio (ICOR) refers to the relationship between the degree of economic expenditure and the corresponding rise in gross domestic product (GDP).2. The higher the ICOR, the higher the productivity of capital.3. In the last ten years, the ICOR has seen substantial decline in India.Which of the above statements is/are correct?a)1 and 2 onlyb)1 and 3 onlyc)1 onlyd)2 and 3 onlyCorrect answer is option 'C'. Can you explain this answer?.
Consider the following statements regarding Incremental Capital-Output Ratio (ICOR).1. The Incremental Capital Output Ratio (ICOR) refers to the relationship between the degree of economic expenditure and the corresponding rise in gross domestic product (GDP).2. The higher the ICOR, the higher the productivity of capital.3. In the last ten years, the ICOR has seen substantial decline in India.Which of the above statements is/are correct?a)1 and 2 onlyb)1 and 3 onlyc)1 onlyd)2 and 3 onlyCorrect answer is option 'C'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements regarding Incremental Capital-Output Ratio (ICOR).1. The Incremental Capital Output Ratio (ICOR) refers to the relationship between the degree of economic expenditure and the corresponding rise in gross domestic product (GDP).2. The higher the ICOR, the higher the productivity of capital.3. In the last ten years, the ICOR has seen substantial decline in India.Which of the above statements is/are correct?a)1 and 2 onlyb)1 and 3 onlyc)1 onlyd)2 and 3 onlyCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements regarding Incremental Capital-Output Ratio (ICOR).1. The Incremental Capital Output Ratio (ICOR) refers to the relationship between the degree of economic expenditure and the corresponding rise in gross domestic product (GDP).2. The higher the ICOR, the higher the productivity of capital.3. In the last ten years, the ICOR has seen substantial decline in India.Which of the above statements is/are correct?a)1 and 2 onlyb)1 and 3 onlyc)1 onlyd)2 and 3 onlyCorrect answer is option 'C'. Can you explain this answer?.
Solutions for Consider the following statements regarding Incremental Capital-Output Ratio (ICOR).1. The Incremental Capital Output Ratio (ICOR) refers to the relationship between the degree of economic expenditure and the corresponding rise in gross domestic product (GDP).2. The higher the ICOR, the higher the productivity of capital.3. In the last ten years, the ICOR has seen substantial decline in India.Which of the above statements is/are correct?a)1 and 2 onlyb)1 and 3 onlyc)1 onlyd)2 and 3 onlyCorrect answer is option 'C'. Can you explain this answer? in English & in Hindi are available as part of our courses for UPSC.
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