Question

The larger a given sector's contribution to a country's GDP is, the larger the impact of a shock to that sector on GDP is.


A.

False


B.

True

Answer 1

Answer: True

Explanation:

When a sector contributes a significant amount to GDP suffers a shock, the GDP of the nation will be shocked as well. Proportionally it goes that the greater the shock to the sector, the greater the shock to the GDP.

For instance, Agriculture contributes a significant amount to GDP. If a drought were to hit that reduced harvests by 50%, the GDP will suffer a huge shock as well because the contribution from Agriculture will be significantly less.