Distinguish between economic growth and economic development.

• A. Growth is an increase in government spending; development is foreign aid.
• B. Growth is an increase in output (GDP), while development includes improvements in health, education, living standards, and inequality reduction.
• C. Growth includes improvements in health and education; development does not.
• D. Growth and development are identical concepts.

Answer: (B)

Economic growth and economic development describe different things. Growth focuses on the size of the economy, usually measured by an increase in output or GDP (often per capita). Development, however, is broader and includes improvements in how people live—health, education, living standards, and reductions in poverty and inequality—along with sustainable progress over time. This makes the statement that growth is a rise in GDP while development covers health, education, living standards, and inequality reduction the best description. A country can experience GDP growth without real development if gains don’t reach health, education, or fair living conditions, or improve inequality. Conversely, development can advance even with slower GDP growth if health, education, and living standards improve for more people. The other options misstate either what growth or development mean or claim they are the same.