National Income

Increase in absolute and per capita real GNP do not connote a higher level of economic development, if

  1. industrial output fails to keep pace with agricultural output.
  2. agricultural output fails to keep pace with industrial output.
  3. poverty and unemployment increase.
  4. imports grow faster than exports.


Per capita GNP is the total value of all the goods and services produced by a country in a year including income from foreign investments, divided by the number of people living there.

For countries which have a lot of foreign investments, GNP per capita is a more accurate economic indicator.

GNP = GDP + Net income inflow from abroad – Net income outflow to foreign countries.

Therefore, if gains of increase in per capita income are grabbed by a small section of society, then economic growth will not lead to economic development.

The correct option is C.