Correct Option
The correct option is 2 and 3 only.
Explanation
Economic Growth refers to the increase in the inflation-adjusted market value of the goods and services produced by an economy over time. It is a quantitative measure that indicates an expansion in an economy's productive capacity.
Statement-wise Analysis
- Statement 1 is Incorrect: Economic growth refers to an increase, not a decrease, in a country's capacity to produce output. It signifies a rise in the production of goods and services within an economy compared to a previous period.
- Statement 2 is Correct: The Gross Domestic Product (GDP) is the standard measure of the value added created through the production of goods and services in a country during a certain period. A steady increase in GDP is the most widely accepted indicator of economic growth.
- Statement 3 is Correct: Economic growth implies an expansion of the economy's production possibility frontier. This requires a larger stock of productive capital (such as machinery, factories, and technology) and an increase in supporting services (such as transport, banking, and communication infrastructure) to facilitate higher output.
Key Takeaway
Economic Growth is a quantitative concept measured primarily by the steady rise in GDP or GNP, driven by capital formation and the expansion of supporting infrastructure.