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For the purpose of calculating GDP, GNP, GVA, etc, the concept of “Economic Territory” is generally used. What does the concept of Economic Territory include?

  1. Political and the geographical boundaries of the nation excluding the territorial waters and airspace
  2. Territorial enclaves such as embassies, consulates, etc which are located abroad
  3. Oil and natural gas rigs operated by the residents of the nation in areas over which the country enjoys the exclusive rights.
  1. i, ii and iii
  2. ii and iii only
  3. i and ii only
  4. i and iii only


The correct answer for the previous question is C  i.e. 1 only

The explanation is as follows:

In simple words Gross Capital Formation is Investment. When people save, they tend to invest. The percentage of the investment made each year out of the total GDP is called Gross Capital Formation.
To achieve the Optimum rate of economic growth, the suggested rate of capital formation is above 40%. But in India, the GCF has been around 35% for last few years. The share of the household sector has been significantly larger than the private corporate sector


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