Economics • Economic BasicsMedium
How does the computation of per capita Gross State Domestic Product in Chhattisgarh at constant prices help economists evaluate the true standard of living compared to current prices?
A. It eliminates the distorting effect of inflation, reflecting actual physical output growth per person✓ Correct Answer
B. It automatically adjusts for income inequality across the Bastar and Korba districts
C. It includes unorganized subsistence gathering and forest produce value accurately
D. It measures the nominal purchasing power parity relative to neighbouring Madhya Pradesh
💡 Solution & Explanation
Calculating per capita Gross State Domestic Product at constant prices removes inflationary biases by utilizing a chosen base year price level, thereby revealing true changes in the volume of goods and services produced per resident. Current price evaluations mix up real output expansion with mere price increases. Constant price metrics are essential for historical comparisons of economic welfare across successive state plans.
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