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CSS Micro Macro Economics P-I QUESTION #1698
Question 1
The World Bank's classification of countries into four income groups (low income, lower-middle income, upper-middle income, and high income) is based primarily on:
  • Annual economic growth rate
  • Labour force participation rate
  • Unemployment rate
  • Gross National Income (GNI) per capita✔️
Correct Answer Explanation
The World Bank classifies all countries into four income categories using Gross National Income (GNI) per capita, calculated using the Atlas method (to smooth out exchange rate fluctuations). The thresholds are updated annually. For example, low-income countries have GNI per capita below approximately \$1,135. This classification determines eligibility for World Bank lending facilities (e.g., IDA for low-income countries, IBRD for middle-income countries).