The software and related services sector has a multiplier effect on the Indian economy with every one-rupee input spent by the" information technology sector" producing an increase in real GDP by two rupees.
Www)ft.com, 2/28/2008
According to the story, if ________ in the software and related services sector increases by $15 billion, real GDP will increase by ________.

Question

Quizplus · Accepted Answer

The multiplier effect mentioned in the article indicates that every one-rupee input spent by the information technology sector produces an increase in real GDP by two rupees. Therefore, if investment in the software and related services sector increases by $15 billion (which is an input), real GDP will increase by $30 billion (which is double the input as per the multiplier effect). Option A matches this scenario. Option B and C are incorrect as they mention consumption instead of investment, and the multiplier effect mentioned in the article only applies to investment. Option D is incorrect as the increase in real GDP should be $30 billion, not $2 billion as per the multiplier effect.

The Software and Related Services Sector Has a Multiplier Effect