Q. Which of the following statements is/are correct about Incremental Capital Output Ratio (ICOR)?

Select the correct code from the options given below:

1 only

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2 only

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Both 1 and 2

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None of the above

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Solution

The correct option is B 2 only
Explanation:

Statement 1 is incorrect. It is the relationship between the level of investment made in the economy and the consequent increase in GDP.

Statement 2 is correct. Countries prefer lower ICOR. ICOR indicates the additional unit of capital or investment needed to produce an additional unit of output. A lower ICOR is preferred as it indicates a country's production is more efficient.

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Q. Which of the following statements is/are correct about Incremental Capital Output Ratio (ICOR)? Select the correct code from the options given below:

Q. Which of the following statements is/are correct about Incremental Capital Output Ratio (ICOR)?

Select the correct code from the options given below: