Discussion
The model was extended to establish a relationship between financial development and economic growth. Co-integration results show that capital–output ratio and rate of growth of human capital have positive effects on real rate of growth of GDP, irrespective of the indicator of stock market development. An increase in the market capitalization dampens economic growth, whereas turnover has no significant effect, and an increase in the money market rate of interest has a positive effect on economic growth in India.
The passage best supports the statement that:
Answer: B
Correct answer: The impact of the developments in the financial sector on economic growth in India.
The passage reports a model extended to relate financial development to economic growth, and then gives its findings one by one - market capitalisation dampening growth, turnover having no significant effect, the money market rate having a positive one. Each is a financial-sector variable measured against growth in India, so this option names what the passage as a whole is about. The other options seize on a single finding or on an unrelated topic.
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