Indian Basic Economy

1

Which of the following is/are included in the invisible items of balance of payments?

  1. Insurance and Banking
  2. Tourism
  3. Government subsidy and interest
  4. Gifts from abroad
  5. Government Subsidy

Choose the right answer using the codes given below:

A
1 and 5
B
1, 3, 4
C
2, 3, 4, 5
D
1, 2, 3, 4, 5
2

Consider the following statements regarding the Balance of Payment (BoP):

  1. It is the record of all economic transactions between the residents of the country and the rest of world in a particular period of time
  2. Balance of Payment has two accounts: 1. Current Account, 2. Capital Account
  3. The Current Account contains the details of the import and export of goods

Which of the above statements is/are true?

A
Only 1
B
1 and 2
C
1 and 3
D
All of the above
3

Why was SDR introduced by IMF?

A
To augument voting rights of the member countries.
B
To address concerns about the limitations of gold and dollars as the sole means of settling international accounts.
C
To augment international liquidity by supplementing the standard reserve currencies.
D
To provide an alternative to then prevailing fixed exchange rate system.
4

Which of the following policies can help reduce a current account deficit?

  1. Currency Devaluation
  2. Monetary & Fiscal Policy
  3. Supply side policies
  4. Protectionism

Choose the correct option:

A
1 and 2
B
2 and 4
C
1, 3 and 4
D
All of the Above
5

What do you understand by balance of payments of a country?

A
It is a record of all economic transactions between the residents of the reporting country and residents of foreign countries during a given period of time.
B
It comprises of two broad accounts - Capital Account and Financial Account.
C
It is a systematic record of all economic transactions between the government of one country and government of other countries during a given period of time.
D
It is the difference between a country's imports and its exports.
6

What are the factors that affect Balance of Trade?

  1. Exchange rate movements.
  2. Adequacy of foreign exchange.
  3. Environmental, health or safety standards.
  4. Multilateral, bilateral and unilateral taxes.

Choose the correct statement/s:

A
1 and 3
B
2 and 4
C
1, 3 and 4
D
All of the above
7

What are the expected benefits and features of Capital Account Convertibility in India?

  1. Improved access to international financial markets and reduction in cost of capital.
  2. Indians would be allowed to buy foreign goods and services but restrictions remain on the purchase of assets abroad.

Choose the correct option:

A
only 1
B
only 2
C
Both
D
None
8

Which of the following is/are true for the export- imports for current fiscal year?

  1. The rupee value of exports is projected to decline on account of the sluggish global demand.
  2. The rupee value of imports is projected to increase on account of steep decline in international crude oil prices.

Code:

A
1 only
B
2 only
C
Both
D
None
9

Balance of payment is measured as:

A
Difference between visible and invisible item of Export and import
B
Difference between invisible and invisible item of Export and import
C
Difference between all foreign exchange receipts and foreign exchange payment
D
None of the above
10

Due to imbalance in balance of payment:

A
Government account of the RBI increases
B
Government account of the RBI decreases
C
Both (a) and (b)
D
None
11
What is an Effective Exchange Rate?
A
The measure of average relative strength of a given currency.
B
An exchange rate based upon constant prices.
C
An equilibrium rate to make the current account in balance.
D
A rate at which a particular country's currency operates.
12

What are the advantages of flexible exchange rate?

  1. It eliminates the need for central banks to hold international reserves.
  2. It is helpful to do away with barrier to trade and capital movements.
  3. It enhances the efficiency in the economy by achieving optimum resources allocation.
A
1 & 2 only
B
2 only
C
1 & 3 only
D
All of above
13

Which of the following represents a better picture of a country's economic transactions with the rest of the world?

A
Balance of Payment
B
Balance of Trade
C
Balance of Capital Account
D
Balance of Current Account
14

Which factors can cause disequilibrium in the Balance of Payment?

  1. Cyclical fluctuations in general business activity such as recession or depression.
  2. Political instability.
  3. Changes in tastes, preferences and fashions.
A
1 only
B
1 & 2
C
All of the above
D
None of the above
15

Real effective exchange rate indicates

A
Manufacturing competitiveness
B
Investments competitiveness
C
Export competitiveness
D
Policy rate competitiveness
16

Consider the following statements regarding remittance flow to India:

  1. In terms of remittance, India is the largest recipient.
  2. India has witnessed consistent increase in remittance flow in the past decade.

Which of the above statements is/are correct?

A
1 only
B
2 only
C
Both 1 and 2
D
Neither 1 nor 2
17

Choose the correct statement regarding convertibility of Rupee in the present scenario:

A
Full convertibility on current account as well as capital account.
B
Full convertiblilty on current account but partial convertiblity on capital account.
C
Partial convertibility on current account as well as capital account.
D
Partial convertibility on current account and full convertibility on capital account.
18

Which of the following are not included in 'invisibles’ in international trade?

A
Remittance of Indians working abroad.
B
Profits from the ownership of overseas assets by Indian companies.
C
Software exports.
D
Foreign direct investment.
19

Which of the following measures will help in dealing with a Balance of Payment crisis ?

  1. Devaluation of the currency.
  2. Raising of interest rates.
  3. Increasing FDI limits or opening up more sectors to FDI.

Choose the correct option:

A
1 and 2 Only
B
1 and 3 Only
C
2 and 3 Only
D
All of the above
20

Which of the following is least likely to be found on the Current Account of the Balance of payments?

A
Services
B
Trade balance
C
Income
D
FDI
21

Consider the following statements about India's Current Account Deficit (CAD):

  1. The Current Account Deficit (CAD) of India continues to be high mainly because of excessive dependence on oil imports, the high volume of coal imports, our passion for gold, and the slowdown in exports.
  2. CAD occurs when a country's total import of goods, services and transfers is greater than the country's total export of goods, services and transfers.
  3. This situation makes a country a net debtor to the rest of the world.
  4. Developing countries may run a current account deficit in the short term to increase local productivity and exports in the future.

Select the correct code :

A
1 and 2 only
B
1, 2 and 4
C
1, 3 and 4
D
All of the above
22

The Current Account Deficit (CAD) of India is widening and is about to reach 2.5% of GDP. Consider the following statements with respect to CAD:

  1. The cause of CAD is increase in price of oil import and increase in Service Export of India.
  2. High CAD will lead to inflation in the Economy.

Choose the correct statement/s from the code given below:

A
1 Only
B
2 Only
C
Both 1 and 2
D
Neither 1 nor 2
23

Recently, Twin Balance Sheet (TBS) issue has again cropped up in the Parliamentary Standing Committee report on NPAs. What does this TBS mean?

A
Widening of Current Account Deficit and Fiscal Deficit.
B
Widening of Revenue Deficit and Fiscal Deficit.
C
Stressed Balance Sheet of Commercial Banks and RBI.
D
Stressed Balance Sheet of Corporate and Banks.
24

India’s Current Account Deficit (CAD) is going to be around 3% of the GDP which is alarming. Analysing the recent Economic Data released, consider the following statements vis-à-vis CAD:

  1. Depreciated currency usually helps the country in reducing its CAD.
  2. Demonetisation had more favorable impact on Exports which led to widening of CAD.
  3. GST had more impact on Imports that led to widening of CAD.

Choose the correct statement/s from the code given below:

A
1 and 2 only
B
2 and 3 only
C
1, 2 and 3
D
1 only
25

Recently, Government is trying to control the “Current Account Deficit (CAD)”. Which action can lead to reduction in CAD?

  1. Revaluing the domestic currency
  2. Making policy to attract FDI/FII
  3. Incentivizing Exports

Choose the correct code

A
3 only
B
2 and 3 Only
C
1, 2 and 3
D
1 and 3 Only
26

Recently, India and Japan has entered into “Currency Swap” agreement worth $75 Billion. What will be the benefits of this Currency Swap?

  1. RBI’s $393 billion chest of FOREX will get one shot $75 billion boost.
  2. Short term liquidity mismatches can be met quickly.
  3. It will improve the market sentiment and will curb the speculative pressure on the Rupee.

Choose the correct code

A
1 and 2 Only
B
3 Only
C
1, 2 and 3
D
2 and 3 Only
27

Which among the following are the main reasons for very high Current Account Deficit (CAD) in India in recent years?

  1. Excessive dependence on oil imports.
  2. The high volume of coal imports.
  3. Slowdown in exports.
  4. Passion for gold in our country.

Which of the above reasons are correct?

A
I, II only
B
I, II, III only
C
I, III only
D
all
28

Which one of the following items is not included in the current account of balance of payments?

A
Foreign Tourism
B
Export of services
C
Trade credit
D
Foreign remittances
29

Which of these accounts of the balance of payments were in surplus in the recent years?

  1. Trade balance
  2. Invisible account balance
  3. Current account balance
  4. Capital account balance

Which of the above statements are correct?

A
2 and 4
B
1 and 3
C
2, 3 and 4
D
1, 2, 3 and 4
30

Which one of the following was the prime cause of the Great Depression (1929-33)?

A
Excessive liquidity in the economy
B
Collapse of the financial sector
C
Deficiency of aggregate demand
D
High Budgetary Deficits of the government
31

The balance of payments is a systematic record of all economic transactions between the residents of the reporting country and residents of foreign countries during a given period of time. It is divided as capital and current account. Which of the following is/are not correctly matched?

  1. Foreign travel - Current Account
  2. Foreign currency with RBI - Current Account
  3. Remittances - Capital Account
  4. Portfolio investment - Capital Account

Codes:

A
Only I
B
I and II
C
II and III
D
I, II and IV
32

Consider the following statements about current account and select the correct answer:

  1. Components of current account include goods, services, income and current transfers.
  2. In current account calculation, income also includes a foreign company’s investment upon a domestic company or a local government.
  3. In current account calculation current transfers include donations, aids, or official assistance.

Codes:

A
1, 2 and 3
B
1 and 2
C
2 and 3
D
1 and 3
33

BOP (Balance of payment) refers to:

A
Transactions in the flow of capital.
B
Transactions relating to receipts and payment payment of invisibles.
C
Transactions relating only to exports and imports.
D
Systematic record of all its economic transaction with the rest of the world.
34

Consider the following statements relating to Current account:

  1. Current account is the sum of the balance of trade, factor income and cash transfers.
  2. The current account is a calculation of a country’s foreign transactions.

Which of the above statements is/are correct?

A
I only
B
II only
C
Both
D
None
35

Which of the following is/are component(s) of the Capital account of Balance of Payments (BoP)?

  1. Remittances
  2. Foreign Institutional Investors
  3. Debt Service Liability
  4. Aid from World Bank.

Choose the correct code(s)

A
II and IV
B
I, II and IV
C
II and III
D
I, II and III
36

On what criteria is the inclusion of renminbi in the SDR based on?

  1. The value of the exports of goods and services in the five years prior to the review is one of the biggest in the world
  2. It is widely used to make payments for international transactions.
  3. It is widely traded in the principal foreign exchange markets.
  4. Adequate holdings of foreign exchange reserves
  5. The size in the international bond markets
A
1 and 2 only
B
1, 2 and 3 only
C
2 and 4 only
D
All of the above
37

Consider the following statements about Full convertibility of the rupee:

  1. Under the full convertibility, rupee can freely float with other international currencies.
  2. Under the full convertibility, rupee can be directly exchanged with any other international currency at any prescribed place inside and outside the country.

Which of the above statements is/are correct?

A
I only
B
II only
C
Both
D
None
38

Consider the following statements about Special Drawing Rights (SDR):

  1. Special drawing rights (SDRs) are supplementary foreign exchange reserve assets defined and maintained by the world bank.
  2. SDR is backed by currency or precious metal.

Which of the above statements is/are correct?

A
I only
B
II only
C
Both
D
None
39

Consider the following statements:

  1. Current Account Deficit is a measurement of a country’s trade in which the value of goods and services it imports exceeds the value of goods and services it exports.
  2. The current account consists of the balance of trade, net factor income(earnings on foreign investments minus payments made to foreign investors) and net cash transfers.

Which of the above statements is/are correct?

A
I only
B
II only
C
Both
D
Neither
40

Which of the following statements regarding Balance of Payments is/are correct?

  1. Balance of payments accounts are an accounting record of all monetary transactions such as exports and imports of goods, services, financial capital and financial transfers between a country and the rest of the world.
  2. The balance of payments represents a summation of country’s current demand and supply of the claims on foreign currencies and of foreign claims on its currency.

Codes:

A
Only I
B
Only II
C
Both I and II
D
Neither I nor II.
41

Which of the following statements(s) about foreign exchange reserves of India is/are not true?

  1. Forex reserves indicates the balance of payments situation of the country.
  2. It is maintained by the Ministry of Finance, Government of India.
  3. Foreign exchange reserves are gradually increasing in India since economic reforms.
  4. India is among top ten forex reserves holding nations of world.

Select the answer from the codes given below:

A
Only I
B
Only II
C
III and IV
D
Only IV
42

Which of the following committee recommended full capital account convertibility?

A
Narasimham Committee
B
P J Nayak Committee
C
Tarapore Committee
D
Shanta Kumar Committee
43

In which of the following cases, Current Account Deficits will get reduced immediately?

  1. Reduction in export of services.
  2. Increase in import of Capital Goods.
  3. Promoting Foreign Direct Investment friendly policies.
  4. Increase in remittances from abroad.

Select the correct answer using the code(s) given below:

A
III and IV
B
I, II and IV only
C
IV only
D
III only
44

Consider the following statements:

  1. Per capita income in India did not register a growth during the period if 1950s-1980s
  2. Economic growth in India since 1980s had been the highest in the world

Which of the above statements is/are true?

A
Only 1
B
Only 2
C
Both 1 and 2
D
Neither 1 nor 2
45

Consider the following statements:

  1. During the colonial rule, more than half of India's trade was restricted to Britain
  2. During the colonial rule, exports from India was lower than imports

Which of the above statements is/are true?

A
Only 1
B
Only 2
C
Both 1 and 2
D
Neither 1 nor 2
46

Consider the following statements:

  1. Contribution of agriculture to GDP declines with the economic growth of the country
  2. In India, from Independence to till date, contribution of agriculture to GDP and people dependent on agriculture have declined significantly

Which of the above statements is/are true?

A
Only 1
B
Only 2
C
Both 1 and 2
D
Neither 1 nor 2
47

Consider the following statements:

  1. Fourth Five Year Plan was based on the Mahalanobis Model
  2. P.C. Mahalanobis established Indian Statistical Institution in Kolkata

Which of the above statements is/are true?

A
Only 1
B
Only 2
C
Both 1 and 2
D
Neither 1 nor 2
48

Which of the following is not true?

A
Between 1970 and the current decade, there has been a long-term decline in state-level poverty. But, its rate is different in each state.
B
In India, the National Poverty Ratio is 22% as per the 2011-12 figures
C
Bihar and Uttar Pradesh are two most poor states
D
Combined poverty ratio of Uttar Pradesh, Madhya Pradesh, Bihar and Odisha is higher than the national level
49

With respect to the items adopted in the form of means of exchange since the earliest period in India, which of the following options is/are correct?

A
Animal
B
Cereals
C
Jewelry
D
All of the above
50

Consider the following facts regarding the Indian economy in British colonial era:

  1. Due to the British policies, the world famous (Indian handicraft) collapsed and in its place, no modern industrial base was created.
  2. The agricultural sector remained sedentary and continued to decline.
  3. High Poverty.
  4. High Mortality Rate.

Which of the above statements is/are true?

A
Only 1
B
1, 2
C
2, 3, 4
D
All of the above
51

Consider the following statements:

  1. After the independence, India's policy makers adopted such economic system which had the best characteristics of socialism but remained free of its shortcomings.
  2. After the independence, public sector was made a strong force which had democracy and under certain circumstances even the private property were brought under its purview.

Which of the above statements is/are true?

A
Only 1
B
Only 2
C
Both 1 and 2 are true
D
Neither 1 nor 2 is true
52

Which of the following statements is/are not true regarding the Five Year Plans?

A
In the year 1950, the Planning Commission was set up under the chairmanship of the Prime Minister, and the era of Five Year Plans began.
B
The concept of the Five Year Plan was influenced by the socialist economy.
C
The concept of the five year plan was helpful in the objectives of the Directive Principles of the Indian Constitution.
D
The main goals of the five-year plan were growth, modernization, self-reliance and equality. Each Five Year Plan gave equal importance to all these goals.
53

Consider the following statements regarding the Economic Liberalization:

  1. Liberalization means eliminating restrictions and liberating different sectors of the economy so that private sector can play a competitive role in the trade.
  2. The process of liberalization in import-export, foreign investment, licensing system etc. had started in India since the 1980s, but the economic reforms of 1991 were far more broader.

Which of the above statement/s is/are true?

A
Only 1
B
Only 2
C
1 and 2
D
None of the above
54

What were the major consequences of the Liberalization, Privatization and Globalization (LPG) of 1991?

  1. FDI inflows and foreign exchange reserves increased rapidly.
  2. India established itself as a leader in the global market of engineering vehicles, information technology etc.
  3. It was not resulted in solving India's problems related to infrastructure, agriculture, job creation, fiscal management, etc.
  4. The agricultural production system became export oriented, but due to this the emphasis is being given on cash crops causing the sharp increase in foodgrain prices.

Choose the correct answer using the codes given below:

A
2 and 4
B
1 and 3
C
1, 2, 3
D
All of the above
55

Which of the following statement/s is/are true?

A
Dadabhai Naoroji was the first to consider the concept of poverty line in India.
B
For the first time in the 1970s, the absolute number of poor people came down.
C
Most of the poor live in rural areas, and are engaged in casual and unskilled work.
D
None of the above.
56

Which of the following is/are included in the formal rural credit system?

  1. NABARD
  2. Land Mortgage Bank
  3. Regional Rural Bank
  4. Cooperative Bank
  5. Self Help Group

Choose the correct answer using the codes given below:

A
1, 2, 3
B
1 and 3
C
1, 2, 3, 4
D
All of the above
57

Had Structural unemployment prevailed in India, what would have been the prime reason for it?

A
High Inflation
B
Mismatch of Skill sets
C
Impact of Globalization
D
Dearth of adequate productivity.
58

Which of the following is/are step(s) towards adoption of ‘decentralized planning’ in the policy making?

  1. Disbanding of Planning Commission
  2. Increasing Grant-in-Aids to States

Choose the correct code(s)

A
I Only
B
II Only
C
Both I and II
D
None
59

The ‘gold rush’ in the context of contemporary Indian economy has been caused by a number of factors. From the options mentioned below, choose the one(s) which is/are NOT factors(s) of this phenomenon.

  1. Volatile share market
  2. Higher returns on invest in the share market
  3. Lack of awareness regarding mutual funds, pension-provident funds, etc.
  4. Inflation is high so the returns offered on bank savings, fixed deposits, pension insurance funds are not attractive

Select the answer using the codes given below:

A
I, II and IV
B
II, III and IV
C
I, III and IV
D
I, II and III
60

What are the problems in calculating accurate National Income and GDP estimates in India?

  1. Non-Monetization
  2. Growing Service Sector
  3. Black Money
  4. Non-adoption of IFRS accounting international standards

Choose the correct option:

A
1 and 3
B
3 only
C
1, 2 and 3
D
All of the above
61

What are Masala bonds?

  1. They are launched by MIGA.
  2. They are mainly used as an alternative tool for external commercial borrowings (ECBs).
  3. They donot face currency fluctuation risks.

Choose the correct statements:

A
1 and 2
B
2 and 3
C
3 only
D
1, 2 and 3
62

What are the vision areas and pillars of Digital India?

  1. Infrastructure as Utility to Every Citizen
  2. Governance and Services on Demand
  3. Electronic Delivery of Services
  4. Digital Empowerment of Citizens
  5. Reforming Government through Technology

Codes:

A
1, 2 and 4
B
2, 3 and 4
C
1, 2, 3 and 4
D
All
63

Consider the following four policy measures:

  1. Disinvestment
  2. Policy of Navratnas
  3. Memorandum of Understanding
  4. National Investment Fund

The correct chronological order in which they appeared on the scene is:

A
I, III, IV and II
B
III, I, IV and II
C
III, I, II and IV
D
I, III, II and IV
64

Consider the following statements:

  1. Wholesale Price Index excludes both goods and services.
  2. Consumer Price Index includes both goods and services.

Which of the above statements regarding the indicators of price rise is/are correct? Select the answer using the codes given below:

A
Both
B
II only
C
I only
D
None
65

Which of the following are the main causes of the slow rate of growth of per capita income in India?

  1. India has witnessed a high rate of capital formation after 1991 economic liberalization allowing large scale foreign investment into the country thus providing many jobs.
  2. Non development of industrial sector is cited by many to be one major cause of lower per capita income of people in the country.
  3. High level of fiscal deficits.
  4. High rate of growth of population.

Select from the given Codes:

A
1 and 2
B
2 only
C
3 and 4
D
4 only
66

Which of the following is not recommended by 14th finance Commission?

A
Setting of Consolidated sinking fund.
B
Empowering local bodies to impose advertisement.
C
States be taken away from operation of National small saving fund (NSSF).
D
States share in net process of tax revenues unchanged at 32%.
67

Consider the following statements-

  1. Recommendation of the seventh pay commission will be applicable only on Central government employees.
  2. State governments are not bounded to implement the recommendations of Central pay commission.

Which of the above statement is/are incorrect?

A
I Only
B
II Only
C
Both
D
None
68

Which of the following institution releases the data of GDP growth rate.

A
Central Statistics office
B
National sample survey
C
Ministry of Finance
D
Department of Economic affairs
69

Which of the following statements regarding Indian Public Finance is/are correct?

  1. Interest payment is the single largest component of the non-plan revenue expenditure of the Union Government.
  2. The increase in the ratio of fiscal deficit to GDP in recent years has adversely effected the private investment.

Codes:

A
I Only
B
II Only
C
Both I and II
D
Neither I nor II
70

Consider the following statements regarding the Financial Sector Legislative Reforms Commission (FSLRC):

  1. Four existing agencies, the Securities and Exchange Board of India, the Forward Markets Commission, the Insurance Regulatory and Development Authority and the Pension Fund Regulatory and Development Authority will be merged into one.
  2. Public debt management Agency will do investment banking for the government, taking over the role that is at present performed by the RBI.

Select the correct statement from the codes given below: Codes:

A
Only I
B
Only II
C
Both
D
Neither
71

Which of the following introduced in economic reform program of 1991.

  1. Industrial sector reform
  2. Public sector reform
  3. Banking sector reform
  4. External sector reform

Which of the above are correct?

A
1 and 2
B
2 and 3
C
1, 2 and 3
D
All of the above
72

In India, Mergers and Acquisitions of firms are regulated by-

A
SEBI
B
Competition commission of India
C
Department of Industrial Policy and Promotion
D
National Manufacturing Competitive Council
73

The Indian capital market is broadly divided into the gilt-edged market and the industrial securities market. Which of the following statements regarding the gilt-edged market are true?

  1. The gilt-edged market refers to the market for Government and semi-government securities, backed by the Reserve Bank of India.
  2. Government securities are non tradable debt instruments issued by the Government for meeting its financial requirements.
  3. Gilt-edged securities do not suffer from risk of default as they lack liquidity.
  4. The open market operations of the RBI are also conducted in such securities.

Codes:

A
1 and 4
B
1, 2 and 3
C
1, 3 and 4
D
1, 2 and 4
74

Which of the following statements regarding WPI is/are correct?

  1. Services are not included in the basket.
  2. t follows fixed weighing scheme even if the economy is undergoing major structural changes.
A
Only I
B
Only II
C
Both
D
None
75

Place the below statements related to history of planning in India in a chronological order:

  1. Bombay Plan
  2. Gandhian Plan by Shriman Narayan Agarwal
  3. Sarvodaya Plan by Mr. J.P Narayan
  4. Setting up of NDC

Codes:

A
I-II-III-IV
B
II-I-III-IV
C
II-I-IV-III
D
III-II-I-IV
76

Which of the following have been part of the government’s policy on PSUs after liberalization?

  1. Reduction in the number of industries reserved for public sector.
  2. Disinvestment of shares of a select set of public enterprises in order to raise resources.
  3. Retrenchment of labourers.
  4. An improvement of performance through MoU (memorandum of understanding) system by which managements are to be granted greater autonomy but held accountable for specified results.

Codes:

A
1, 2 and 3
B
2, 3 and 4
C
1, 2 and 4
D
All of the above
77

What does the globalization of Indian economy means?

A
Stepping up external borrowings.
B
Establishing Indian business units abroad.
C
Having minimum possible restriction on economic relations with other countries.
D
Giving up programmes of import substitution.
78

Which of the following most effectively reflects National Income?

A
Gross Domestic Product at factor cost
B
Net Domestic Product at factor cost
C
Net National Product at factor cost
D
Net National Product at factor cost
79

Net National Product (NNP) is:

A
Gross National Product-Depreciation
B
Net Domestic Product-Depreciation
C
Gross Domestic Product-Depreciation
D
Gross Domestic Product-Income from abroad
80

Which of the following is the key determinant of any person's income in the market?

A
Education
B
Skill
C
Economic Opportunity
D
Both (a) and (b)
81

Consider the incorrect statement regarding the per capita income:

A
Globally, to compare the development level of all countries, per capita income is calculated in dollar
B
Per capita income clearly shows how the income of the residents of the country is distributed
C
Even per capita income does not capture inequalities
D
None of the above statements is incorrect
82

What is called the national income?

A
Net Domestic Product
B
Net Domestic Product at market cost
C
Net Domestic Product at factor cost
D
All of the above
83

Which of the following factors is/are included in the individual income?

  1. Transfer payments made to families by the government and farms
  2. Corporation tax paid by the families
  3. Net interest paid by the families
  4. Undistributed profit

Choose the correct answer using the codes given below:

A
Only 1
B
1, 2, 3
C
1, 3
D
All of the above
84

Which of the following is Incorrect about the Real Gross National Product?

A
It is calculated by adjusting inflation to the Nominal GNP.
B
It takes into account the depreciation in the particular year.
C
It measures output produced by the “Nationals” of a country – both within the geographical boundaries and outside.
D
It does not include the services performed by a woman at home
85

Consider the given statements for the gap between bank lending (base) rates and nominal GVA growth during tight monetary conditions:

  1. If the difference is negative, then nominal GVA growth and for the average firm, revenue growth is increasing faster than interest is accruing on its debts.
  2. If interest rates are higher than nominal GDP growth, firms’ cash flows are being squeezed.

Code:

A
1 only
B
2 only
C
Both
D
None
86

What is national income?

A
Net National Product (NNP) at Factor Cost
B
GDP at factor price - depreciation + Net Factor Income from Abroad (NFIA)
C
NDP at market price
D
Compensation of employees + Profit of incorporated and unincorporated NDP at factor cost.
87

Which of the following statement is/are correct?

  1. Increase in GDP at constant prices indicates growth in real final output of goods and services by the economy.
  2. Increase in GDP deflator indicates the fall in the general price level.
A
1 only
B
2 only
C
Both
D
None of the above
88

What is the idea behind calculating National Disposable Income?

A
It gives an idea of what is the maximum amount of goods and services the domestic economy has at its disposal
B
It suggests the part of aggregate income which belongs to the households
C
It helps in measuring the monetary value of the flow of output of goods and services produced in an economy over a period of time.
D
It gives an idea of amount of investment in the country that can be financed domestically.
89

What do you understand by GDP deflator?

  1. It gives an idea of how the prices have moved from the base year to the current year.
  2. It is measured by ratio of NDP to GDP.
A
1 only
B
2 only
C
Both
D
None
90

What is rate of capital formation?

  1. It is measured by the ratio of gross capital formation to the gross domestic product at market prices.
  2. It is the ratio of gross capital formation in a period to the related increase in the GDP.
A
1 only
B
2 only
C
Both
D
None
91

What are the components of Net Factor Income from abroad?

  1. Net compensation to employees.
  2. Net income from property and entrepreneurship that includes rent, interest, dividends etc.
  3. Net retained earnings of resident companies abroad.
A
1 & 2 only
B
2 only
C
2 & 3 only
D
All of the above
92

What are the uses of Real GNP?

  1. It is useful in finding out the effects of increased production of goods and services on the real development.
  2. It uses the quantities and prices in a given time period to track the total value produced in an economy in that same span of time.
  3. It enables one to make a year-to-year comparison of the changes in the growth of output of goods and services.
  4. It is also often used in making international comparisons of economic performance across the countries.
A
1 & 2 only
B
1, 2 & 3 only
C
1, 3 & 4 only
D
All of the above
93

What is Net Disposable Income?

A
Employee compensation + NFIA + Net Indirect taxes.
B
GNP (at MP) - Depreciation
C
NNP (at MP) + Other Current Transfers from the rest of the world.
D
Personal consumption expenditure + NFIA + Net Indirect taxes.
94

Consider the following statements:

  1. Different methods to calculate national output gives contrasting results.
  2. Higher level of GDPs always implies higher level of well being of citizens of a country.

Which of the above given statement(s) is/are correct?

A
1 only
B
2 only
C
Both (a) and (b)
D
Neither (a) nor (b)
95

National income is

A
Gross domestic product at factor cost.
B
Gross national product at factor cost.
C
Net domestic product at factor cost.
D
Net national product at factor cost.
96

Which of the following clearly distinguishes Consumer Price Index (CPI) from the GDP deflator?

  1. GDP deflator takes into account all the goods and services produced in the country.
  2. GDP deflator includes prices of imported goods.
  3. GDP deflator uses constant weights of goods and services produced in the country.

Select the correct code:

A
1 only
B
2 only
C
1 and 3 only
D
None of the above
97

Which of the following best describes the position of secondary sector as a percentage of GDP in a developing economy:

A
Fall in share of secondary sector
B
First fall and then rise in the share of secondary sector
C
Secondary sector share keeps on increasing
D
Secondary sector may witness either a fall or a rise in share.
98

Every few years, the government change the base year of various parameters used in examining the performance of the economy through the measurement of Gross Domestic Product (GDP), national income, consumption expenditure, capital formation etc. What are the three basis for selection of the base year?

  1. Stability of macroeconomic parameters in a year.
  2. Reliable data availability.
  3. Taking into account the structural changes which take place in the economy.
  4. Comparability amongst same parameters.
  5. Updating every five years to keep pace with the changes in the economy.

Choose the correct option:

A
1, 2 and 4 Only
B
1, 2 and 3 Only
C
1, 3 and 5 Only
D
All of the above
99

Consider the following statements with respect to GDP Deflator:

  1. GDP Deflator is better indicator to capture inflation compared to Consumer Price Index (CPI)
  2. GDP Deflator details are released annually with the GDP estimates

Select the correct code

A
1 Only
B
2 Only
C
Both 1 and 2
D
Neither 1 nor 2
100

Which of the following provides correct definition of GNP deflator?

A
Ratio of GNP at current prices to the GNP at constant prices.
B
GNP at current prices divided by Wholesale Price Index.
C
GNP of current Year divided by GNP of the previous year.
D
None of the above.
101

Which of the following is/are the component(s) of Gross Domestic Capital Formation (GDCF)?

  1. Gross Domestic Savings
  2. Net Capital Inflow
  3. Direct Foreign Investment
  4. Change in stock

Codes:

A
1 and 2
B
2 and 4
C
1 only
D
2, 3 and 4
102

National Income is:

A
NNP (at market price) + Depreciation
B
GNP( at factor cost) - Depreciation
C
GDP (at factor cost) - Income from abroad
D
NDP (at market price) + Indirect taxes- subsidy
103
Which of the following is NOT required while computing Gross National product (GNP)?
A
Net Foreign Investment.
B
Private Investment.
C
Per capita income of citizens.
D
Purchase of goods by government.
104

Which of the following statements regarding Gross Domestic Saving is/are correct?

  1. Gross Domestic Saving is the resultant of Gross Domestic Product minus final consumption.
  2. In India, Gross Domestic Savings come from three sources, viz. households, the private corporate sector, and the public sector and the maximum shareholding is of public sector.

Codes:

A
I Only
B
II Only
C
Both I and II
D
Neither I nor II
105

Which of the following is/are the most important limitation(s) of the per capita GNP as measure of Economic Development?

  1. The increase in the per capita GNP may not always raise the well being of the people.
  2. The measure does not take in to account the increase in the population.
  3. The measure does not take in to account the employment aspect.
  4. The measure does not take in to consideration the real national income.

Select the answer from the codes given below:

A
Only I
B
II and III
C
Only III
D
Only IV
106

Consider the following statements:

  1. GDP is a measure of ‘value added’ rather than sales.
  2. GDP is sum of all final uses of goods and services.
  3. GDP focuses on stocks, not flows.

Select the correct answer using the code given below:

A
1 and 2 only
B
2 and 3 only
C
1 and 3 only
D
All of the above
107

Which of the following statements is false?

A
GDP equals the total value of wages received by households.
B
Purchases of capital goods are called investment.
C
In a simple economy with just households and firms, the value of investment plus consumers’ expenditure equals GDP.
D
In a simple economy with just households and firms, the value of investment equals the value of saving.
108

Net National Product at Market Price is higher than Net National Product at Factor cost if:

A
Government Subsidies < Indirect Taxes
B
Government Subsidies > Indirect Taxes
C
Government Subsidies = Indirect Taxes
D
None
109

Choose the correct statement from the following choices:

A
Private consumption expenditure is an important component of GDP
B
Private consumption expenditure includes the value of services used for temporary use by the family in a set period of time
C
Private consumption expenditure does not include the value of goods and services purchased by non-profit institutions
D
(a) and (b)
110

Which of the following factors is/are included in the Gross National Capital?

  1. Gross Domestic Product
  2. Income earned by the domestic factors in outside of the country
  3. Income earned in the domestic economy by the foreign investors

Choose the correct statement/s from the following choices:

A
Only 1
B
Only 2
C
1 and 2
D
All of the above
111

Which of the following is called Net Domestic Product (NDP)?

A
Gross Domestic Product
B
Products obtained by subtracting depreciation from the Gross Domestic Product
C
Measurement of income by subtracting depreciation from the Gross Domestic Product
D
Measurement of income by subtracting income earned by the foreigners in the country from the Gross Domestic Product
112

Which of the following is true for changes in aggregate demand?

  1. With improving growth in private consumption, its contribution to GDP growth is getting aligned to its GDP share.
  2. Aided by the growth in capital goods, the growth of fixed capital formation has picked up.
  3. The substantial erosion of global demand for Indian products, manifested in loss of Indian Exports, acts as a drag on domestic growth.

Code:

A
1 and 2
B
2 and 3
C
1 and 3
D
All of the above
113

Which of the following statements is/are true regarding the market economy?

  1. Under this, every product and service carry a fixed price
  2. In this system, all important decisions are taken by the Government

Choose the correct answer using the codes given below:

A
Only 1
B
Only 2
C
Both 1 and 2
D
Neither 1 nor 2
114

Consider the following statements:

  1. Demand of any product goes in opposite direction of its price
  2. Price elasticity of demand is a negative number

Which of the above statements is/are true?

A
Only 1
B
Only 2
C
Both 1 and 2
D
Neither 1 nor 2
115

Which of the following statements is/are true regarding the ‘Great Leap Forward’ campaign?

  1. This campaign was launched by the Government of India in 1958
  2. Objective of this campaign was large scale industrialization

Choose the correct answer using the codes given below:

A
Only 1
B
Only 2
C
Both 1 and 2
D
Neither 1 nor 2
116

Consider the following statements:

Area
 Economic Activities
1. Primary Mining
2. Secondary Electricity, Gas and Water Supply
3. Tertiary Transport and Storage

Which of the above pairs is/are matched correctly?

A
Only 2
B
Only 3
C
1 and 3
D
1, 2, 3
117

Which of the following are the parts of macroeconomics?

  1. Government
  2. Family
  3. Farm
  4. External Sector

Choose the correct answer using the codes given below:

A
1, 2
B
1, 2, 3
C
2, 3, 4
D
1, 2, 3, 4
118

Consider the following statements regarding the physical capital:

  1. There are two types of physical capital: Fixed Capital, Working Capital
  2. Fixed Capital does not end with production, and it could be used for many years
  3. Working capital ends during the production process

Which of the above statements is/are false?

A
1
B
2
C
3
D
None of the above
119

Consider the following statements:

  1. Of the three factors of production, land, labour and capital, the largest amount of factor available is land
  2. The most rare factor is the Capital
  3. Labor is available in adequate form but less than land

Which of the above statements is/are true?

A
1, 2
B
1, 3
C
1, 2, 3
D
None of the above
120

Which of the following examples illustrates the superiority of human capital compared to physical capital?

A
Land Resource
B
Technical Knowhow and Information Technology
C
Raw Materials
D
Cash Capital
121

Consider the following pairs:

  1. Primary Sector – Fisheries
  2. Secondary Sector -- Mining and Quarrying
  3. Tertiary Sector – Transport

Which of the following pairs is/are matched correctly?

A
Only 3
B
2 and 3
C
1 and 3
D
All of the above
122

There are two types of economic activities: Market Activities and Non-market activities. Consider the following statements regarding this:

  1. Non-market activities are done for the purpose of wages or benefits, for which remuneration is paid
  2. Market activities are done for self-consumption
  3. Non-consumption and processing of primary production are examples of market activities
  4. Government job is an example of non-market activities

Which of the above statements is/are true?

A
1, 4
B
2, 3
C
1, 2, 3
D
None of the above
123

Which of the following is the main basis for determining the development of any country?

A
Health condition of people and life expectancy
B
Average Literacy Rate
C
Per Capita Income
D
All of the above
124

What is the main basis for the difference between public and private sectors?

A
Ownership of Industry
B
Nature of economic activities
C
Lowest level of prices
D
Conditions of employment
125

Select important points of difference between organized and unorganized sector:

A
Organized sector is in the control of the government, where compliance with rules and regulations is effective
B
Unorganized sector is practically out of government control
C
There are no rules and regulations in the unorganized sector
D
(a) and (b)
126

Which of these statements is not correct with respect to the unorganized sector?

  1. Unorganised sector generates low-paying jobs, but these jobs are not regular
  2. There is no provision for additional wages for overtime works
  3. There is no provision of paid leave and job security
  4. The appointment of workers depends on the choice of employers rather than the rules

Choose the answer using the codes given below:

A
4
B
2
C
None of these
D
1, 4
127

Which of the following statements is true with respect to currency?

A
Currency can be authorized by any government. Therefore, it is accepted as a means of exchange.
B
No one can legally reject the payment of rupees in India
C
Both of the above statements are true
D
None of the above statement is true
128

Which of the following options is/are included in investment categories in the economy?

  1. Private Investment
  2. Public Investment
  3. Commercial Non-Fixed Investment

Choose the correct answer using the codes given below:

A
Only 1
B
1 and 2
C
Only 3
D
All of the above
129

How is the development of two countries compared?

A
Total income of all the residents of that country
B
Total production of all three sectors of those countries
C
Average income of that country
D
None of the above
130

Private Sector income or private income includes:

  1. Factor income earned through domestic production by the private sector
  2. National debt interest
  3. Net factor income earned abroad
  4. Current transaction by the Government
  5. Net transaction from the rest of the world

Choose the correct answer using the codes given below:

A
1, 2
B
1, 3, 4
C
2, 4, 5
D
All of the above
131

Which of the following methods is used to measure the change in prices in the economy?

  1. GDP Deflator
  2. Consumer Price Index
  3. Wholesale Price Index

Choose the correct answer using the codes given below:

A
Only 1
B
Only 2
C
2, 3
D
All of the above
132

What is the meaning of the Open Economy?

A
The economy which is free of duties and taxes and gives equal opportunity to all
B
The economy in which goods and services and financial assets are traded with other nations
C
Both of the above
D
None of the above
133

Which of the following best defines the economic planning?

A
Keeping in mind the population of a country, the framework designed to ensure the best use of the economic resources of that country, so that everyone can benefit.
B
The way to increase the economic resources of a country.
C
Framework for providing the highest health facilities to residents of any country.
D
None of the above.
134

Consider the following statements regarding the capitalist economy:

  1. This is also called market economy.
  2. Capitalist economy produces only those goods which are in higher demand and which have the greater potential of generating profit.
  3. In this system, goods are distributed not according to need but according to the purchasing power of the consumers.

Which of the above statements is/are true?

A
Only 2
B
2 and 3
C
1, 2
D
All of the above
135

Consider the following statements regarding the socialist economy:

  1. In the socialist economy, personal desires/demands are not given any importance, but social needs are given importance.
  2. The government takes decision of what items to produce and how to distribute them.
  3. There is no place for personal property in the socialist economy because every property belongs to the state.
  4. The socialist nation provides free health services to all its citizens.

Which of the above statements is/are false?

A
Only 1
B
1, 4
C
2, 4
D
None of the above
136

What is mixed economy?



A
In this, the government and the market together decide production and distribution. It has the characteristics of both socialist and capitalist system. In this, the market produces on the basis of its capacity and the government produces the essential items in which the market fails.
B
In the mixed economy, the government works with capitalist intentions, while the market by socialist purpose.
C
Mixed economy refers to the economy where the secondary and tertiary sectors become united.
D
None of the above
137

What is the meaning of economic growth?

A
Increase in production capacity of goods and services and their fair distribution in the country.
B
Growth in the per capita income and the economic status of the population.
C
Increase in production capacity and efficiency of the country's economic resources and increase in the overall production of the country.
D
All of the above.
138

Which of the following factors is/are included in the economic modernization?

  1. Adopting innovative technologies in the production and distribution of services.
  2. Adopting innovative technologies in the production of goods.
  3. Use of new techniques to increase production capacity of primary sector.
  4. Adopting new economic principles and abandoning the old.
  5. Changing the social perspective towards work, and support of equal work for women and men.

Choose the answer using the codes given below:

A
1, 2, 3
B
1, 2, 4
C
1, 2, 3, 5
D
All of the above
139

Which of the following statements is/are true regarding the Globalization?

  1. Under this, the activities and networks of the countries of the world are encroached and interconnected by economic, social, geographical boundaries.
  2. It is an effort to construct a comprehensive and bounded world.
  3. Globalization process creates a global market.

Which of the above statement/s is/are false?

A
Only 1
B
Only 3
C
1, 3
D
None
140

Which of the following is called human capital?

A
The part of a country's population, which is engaged in education work skills, increases the process of economic productivity, is called human capital.
B
Human capital is an innate ability.All the population of a country is its human capital.
C
All the capital collected by the human population of a country.
D
(b) and (c)
141

Which of the following statements is/are true regarding Human Capital?

  1. Human capital is visible
  2. The flow of human capital is not uninterrupted to the physical capital of the world
  3. Human capital formation is an economic and social process
  4. Human capital cannot be sold in the market
  5. Only the owner benefits from human capital, whereas the whole society benefits from physical capital
  6. Value of human capital does not depreciate

Choose the correct answer using the codes given below:

A
1, 3, 5
B
1, 2, 4, 6
C
2, 3, 4
D
All of the above
142

Which of the following are the sources of human capital?

  1. Investment in education
  2. Investment in health
  3. Investment in entertainment
  4. Workplace training
  5. Migration
  6. Information

Choose the correct answer using the codes given below:

A
1, 2, 3, 4
B
1, 2, 4
C
1, 2, 4, 5, 6
D
All of the above
143
Which of the following statements is/are false?
A
Human capital and Human Development are different concepts
B
Only Human capital formation is human development
C
The goal of both human capital and human development is to increase productivity of labor
D
(a) and (c)
144

Consider the following statements:

  1. Increase in human capital intensifies growth and increases per capita real income.
  2. Human capital is the most important factor in the current global system.
  3. The knowledge-based economy refers to a more developed human capital economy, which ensures higher production.

Which of the above statements is/are true?

A
Only 1
B
Only 2
C
1 and 2
D
All of the above
145

Which of the following factors is/are considered to influence knowledge-based economy?

  1. Large group of workers (both skilled and unskilled)
  2. A well-functioning democracy or government system
  3. Diverse scientific knowledge
  4. Developed technology
  5. Infrastructure

Choose the correct answer using the codes given below:

A
1, 2, 3, 4
B
2, 3, 5
C
2, 3, 4, 5
D
All of the above
146

Which of the following variables is/are used to assess the educational achievements of a country?

  1. Adult literacy level
  2. Primary education completion rate
  3. Youth literacy rate
  4. Number of intellectual property patents issued by that country

Choose the correct answer using the codes given below:

A
1 and 2
B
1, 3, 4
C
2, 4
D
1, 2, 3
147

What is the need of measuring economic growth?

  1. It helps improve the investment climate in the country.
  2. It is an indicator of quality of life
  3. It helps in measuring economic inequality
  4. It determines how the growth takes place.

Choose the correct option:

A
1 and 2
B
2 and 3
C
All of the Above
D
None of the Above
148

A market economy requires unrestricted entry of new firms, new ideas, and new technologies but it also requires exit so that resources are forced or enticed away from inefficient and unsustainable uses. But this 'exit' is hindered & impeded by several factors. What are the costs of this impeded exit?

  1. Increasing taxes and interests for sustaining government support.
  2. Misallocation of resources.
  3. Prevalent impression that governments favour large corporates.
  4. Trade liberalisation.

Code:

A
1 only
B
1, 2 and 4
C
1, 2 and 3
D
All of the above
149

Why is contract labour emerging as a popular strategy?

  1. Hiring workers through a contractor is cheaper.
  2. Contract workers are the employees of the contractor and are not considered workmen in the firm, the firm stays small enough to be exempt from some labour laws.
  3. The firm essentially subcontracts the work of following regulations and managing inspectors to the contract labour firm.
  4. There is evidence that hiring contract workers increases a firm’s productivity.

Code:

A
1, 2 and 4
B
2 and 3
C
1, 3 and 4
D
All of the above
150

What is a Bill of Exchange?

A
It is a document acknowledging an amount of money owed in consideration for goods received.
B
It is a document that transfers ownership of goods from one person to another.
C
It is a document issued by a carrier which details a shipment of merchandise and gives title of that shipment to a specified party.
D
It is a document which includes the necessary details of the transaction and typically is signed by the shipper and the carrier.
151

The aim of production is to produce the goods and services that we want. What are the requirements for production of goods and services?

  1. Land and other natural resources
  2. Labour
  3. Physical Capital
  4. Human Capital

Options:

A
3 & 4 only
B
1, 2 & 3 only
C
1, 2 & 4 only
D
All of the above
152

What are the inadequacies of the market mechanism?

  1. The forces of market demand and supply do not represent the economic needs of all the people equally.
  2. The market forces only represent the consumer's self-interest through their demands.

Options:

A
1 only
B
2 only
C
Both
D
None
153

Which of the following can be used in measuring economic development?

  1. Total market value of all goods and services produced by a country in a specific time period.
  2. Consumption of energy
  3. GNP per capita
  4. Life expectancy

Options:

A
1 only
B
1 & 2 only
C
2 & 3 only
D
All of the above
154

Consider the given statements for human capital.

  1. Human capital represents enhanced labour productivity, which is an acquired ability and an outcome of deliberate investment decisions.
  2. It encompasses improvement of physical infrastructure.

What is/are true for human capital?

A
1 only
B
2 only
C
Both
D
None
155

Which of the following statements is not true?

A
All activities that contribute to the gross national product are called economic activities
B
All persons engaged in economic activities are called labor
C
Self-employed individuals who are not paid by any other employer, don’t fall under the category of labor
D
The proportion of rural labor force in India is more than the urban labor force and the ratio of male labor is also high in India’s labor force
156

What is the best definition of “Population” among the following?

A
The total number of residents of a country
B
Total number of people living in or had lived in a particular area
C
Total number of persons living in a particular area in a particular timeTotal number of persons living in a particular area in a particular time
D
None of the above
157

Which of the following conditions are necessary for ‘sustainable development’?

A
Technological advancement must be input oriented not input consumption
B
The rate of extraction of renewable resources does not exceed the rate of reproduction
C
Human population is limited to the level of environmental sustainability
D
All of the above
158

Activities of the Primary Sector include

  1. Agriculture
  2. Forest
  3. Fisheries
  4. Mining and quarrying

Codes:

A
1 and 2
B
1, 2 and 3
C
1, 2 and 4
D
All of the above
159

Who is the author of celebrated book "The General Theory of Employment, Interest and Money"?

A
Adam Smith
B
John Maynard Keynes
C
Amartya Sen
D
Angus Deaton
160

Consider the given statements:

  1. Capital consumption allowance is the value assigned to the existing capital stock that has been consumed or used up in the process of producing output.
  2. In national accounts the decline in aggregate capital stock arising from the use of fixed assets in production is referred to as consumption of fixed capital (CFC).
A
1 only
B
2 only
C
Both
D
None
161

What do you mean by monetizing the government debt?

  1. The Central government can borrow money from Central Bank by selling local currency securities.
  2. The Central government stimulates the economy by lowering the interest rates nearing zero.
A
1 only
B
2 only
C
Both
D
None
162

In the background of Great Depression of the 1930s, what is the concept of Keynesian Concept of Aggregate Supply?

A
The aggregate supply is perfectly inelastic with respect to the price level.
B
The firms are willing to produce any amount of output at the prevailing price level.The firms are willing to produce any amount of output at the prevailing price level.
C
Output cannot be expanded at full employment level without any change in price level.
D
There is adequate utilization of resources with respect to effective demand for the output.
163

What do you understand by opportunity cost?

  1. The value of next best activity.
  2. The amount sacrificed of the other good per unit and corresponding per unit increase in the production of the good in question.
A
1 only
B
2 only
C
Both
D
None
164

What is Law of Diminishing Marginal Utility?

  1. After consuming a certain amount of a good or service to an extent, the marginal utility diminishes as more and more is consumed.
  2. Other things remaining unchanged, as the price of a commodity increases, the quantity demanded of it by a consumer falls.
A
1 only
B
2 only
C
Both
D
None
165

What are the characteristics of competitive market?

  1. There are a large number of buyers and sellers
  2. Firms sell a very homogenous product or service
  3. There is free entry and exit
  4. Perfect knowledge
  5. Uniform price
A
1 & 3 only
B
2, 3 & 5 only
C
1, 2, 3 & 5 only
D
All of the above
166

Why organized sector is called so?

  1. It has some formal processes and procedures.
  2. When there is less work, such as during some seasons, some people may be asked to leave.
  3. They are registered by the government
  4. This sector includes a large number of people who are employed on their own doing small jobs such as selling on the street or doing repair work.
A
1 & 3 only
B
1, 2 & 3 only
C
2 & 3 only
D
All of the above
167

Which of the following constitutes the core sectors of concern for macro-economic policy decision makers?

  1. External sector (economy)
  2. Firms
  3. Government
  4. Households

Select the correct code:

A
1 and 2 only
B
3 and 4 only
C
1, 3 and 4 only
D
All of the above
168

Consider the following statement(s) with respect to the Giffen goods:

  1. A Giffen good is a goods for which demand increases as the price increases, and falls when the price decreases.
  2. A Giffen good has an upward-sloping demand curve, which is contrary to the fundamental law of demand.
  3. A Giffen good is typically an inferior product that does not have easily available substitutes.
  4. Giffen goods are quite rare. The term is named after the economist Robert Giffen

Which of the given statement(s) is/are correct?

A
1 and 2 only
B
2 and 3 only
C
1, 2 and 3
D
All of the above
169

What are Inferior goods?

A
Goods for which the demand decreases with increase in the income of the consumer.
B
Goods for which the demand increases with increase in the income of the consumer.
C
Goods for which demand is independent of the income of consumer.
D
None of the above.
170

Consider the given statements about ranges of elasticity:

  1. For Inelastic demand quantity demanded does not respond strongly to price changes.
  2. If the price elasticity of demand is equal to 0, demand is perfectly inelastic.
  3. When the value of elasticity is greater than 1, it suggests that the demand for the good or service is affected by the price.
  4. A value that is less than 1 suggests that the demand is insensitive to price.

Which of the given statement(s) is are correct?

A
1 and 2 only
B
2 and 3 only
C
1, 2 and 3
D
All of the above
171

Which of the following is /are determinants of price elasticity of demand:

  1. Necessities v/s luxury
  2. Availability of close substitutes
  3. The market
  4. Time period

Select the correct code:

A
1 and 2 only
B
2 and 3 only
C
1, 2 and 3
D
All of the above
172

A rise in general level of prices may be caused by:

  1. An increase in the money supply.
  2. A decrease in the aggregate level of output.
  3. An increase in the effective demand.

Select the correct answer using the codes given below:

A
1 only
B
1 and 2 only
C
2 and 3 only
D
1, 2 and 3
173

Consider the following:

  1. Petrol
  2. Diamonds
  3. iphone and ipads
  4. Cigarettes

Which of the above given are examples of price inelastic goods?

A
1 and 2 only
B
2 and 3 only
C
1, 3 and 4
D
All of the above
174

Which of the given pairs are incorrectly matched?

  1. Perfectly Inelastic- Quantity demanded does not respond to price changes.
  2. Perfectly Elastic- Quantity demanded changes infinitely with any change in price.
  3. Unit Elastic Quantity-Quantity demanded changes by the same percentage as the price.

Select the correct code:

A
1 and 2 only
B
2 only
C
1 and 3 only
D
All are correct
175

Which of the following statement(s) are true with respect to the concept of 'EFFICIENCY' as used in mainstream economics?

  1. Efficiency occurs when no possible reorganisation of production can make anyone better off without making someone else worse off.
  2. An economy is clearly inefficient if it is inside the Production Possibility Frontier (PPF).
  3. At a minimum, an efficient economy is on its Production Possibility Frontier (PPF).
  4. The terms such as 'Pareto Efficiency', 'Pareto Optimality' and 'Allocative Efficiency' are all essentially one and the same which denote 'efficiency in resource allocation'.

Select the correct answer using the code given below:

A
I and 4 only
B
1 and 3 only
C
2 and 3 only
D
1, 2, 3 and 4
176

Which of the following is/are feature(s) of monopoly?

  1. One seller-large buyer.
  2. Restriction in entry for new firms.
  3. No close substitutes.
  4. Full control over price.
  5. Price Discrimination.

Select the correct code:

A
1, 2 and 3.
B
2, 3 and 4.
C
1, 3 and 5
D
All of the above.
177

Which of the following are the characteristics of perfect competition?

  1. All firms sell an identical product.
  2. All firms are price takers - they cannot control the market price of their product.
  3. All firms have a relatively small market share.
  4. Buyers have complete information about the product being sold and the prices charged by each firm.

Select the correct code:

A
1 and 2 only
B
2 and 3 only
C
1, 2 and 3
D
All of the above
178

For a perfectly competitive firm, the demand curve is:

A
Perfectly elastic
B
Perfectly inelastic
C
Unitary
D
None of the above
179

Consider the following statement(s) with respect to the concept of Veblen Goods:

  1. A good for which demand increases as the price increases, because of its exclusive nature and appeal as a status symbol.
  2. A Veblen good, has an upward-sloping demand curve, which runs counter to the typical downward-sloping curve.
  3. A Veblen good is generally a high-quality, coveted product.

Which of the given statements is/are true?

A
1 only
B
2 only
C
2 and 3 only
D
All of the above
180

Consider the given statements about Price Control:

  1. Price Ceiling are minimum prices set by the government for certain commodities and services that it believes are being sold in an unfair market with too low of a price and thus their producers deserve some assistance.
  2. Price Floor are maximum prices set by the government for particular goods and services that they believe are being sold at too high of a price and thus consumers need some help purchasing them.

Which of the given statement(s) is/are incorrect?

A
Only 1
B
Only 2
C
Both 1 and 2
D
Neither 1 nor 2
181

Which of the given postulates determines consumer's demand for a commodity?

  1. Prices of related Competitive goods
  2. Income
  3. Preference of consumer
  4. Population

Select the correct code:

A
1 and 2 only
B
2 and 3 only
C
1, 2 and 3
D
All of the above
182
The terms “crowd in” and “crowd out” are often heard in relation to
A
Public and private investments
B
Outsourcing business
C
Research and development activities
D
Start Ups
183

Which of the following best explains “Public provision”?



A
They are financed from direct donations collected from public and made available free of any direct payment.
B
They are financed through the budget and made available free of any direct payment.
C
They are financed through international agencies and their guidance sought in implementation.
D
None of the above satisfactorily explains.
184

Which of the following functions operates through the expenditure and receipts of the government?

  1. Allocation
  2. Distribution
  3. Assessment
  4. Stabilization

Select the correct code:

A
1 only
B
1 and 2 only
C
1, 2 and 3 only
D
1, 2 and 4 only
185

Consider following statements:

  1. Gini Coefficient is an internationally accepted measure of income inequality.
  2. World Bank publishes Gini Coefficient.
  3. Higher the Gini Coefficient, lower the inequality.

Which of the above statements are correct?

A
1 and 2
B
1 and 3
C
2 and 3
D
1, 2 and 3
186

Which of the following statements is/are correct

  1. Street- lighting is an example of public goods.
  2. Merit goods have positive externalities.
  3. For a Giffen Good, demand increases as the price increases.

Select the correct code:

A
1 and 2
B
1 and 3
C
2 and 3
D
1, 2 and 3
187

What is meant by ‘peer-to-peer’ lending?

A
Financial institutions exchanging capital among themselves.
B
Debt financing between individuals without the use of an official financial intermediary
C
Central bank lending money to scheduled commercial banks.
D
A way of transferring profits from one region to another by lending to subsidiary companies.
188

In an economy, the classification of the sectors into public and private are characterized by:

  1. Ownership of Enterprises
  2. Nature of economic activities undertaken
  3. Investment priorities.

Choose the correct code

A
1 Only
B
1 and 2 Only
C
1 and 3 Only
D
1, 2 and 3
189

Which among the following is/are development expenditure

  1. Irrigation Projects
  2. Defense Procurements
  3. Debt Service Liabilities
  4. Grant-in-Aid.

Choose the correct code

A
2 and 4 Only
B
1 and 4 Only
C
1, 2 and 4 Only
D
1, 3 and 4 Only
190

Consider the following statements for purchasing power parity:

  1. It is defined as the number of units of a country’s currency required to buy the same amount of goods and services in the domestic market as one dollar would buy in the US.
  2. Market exchange rate reflects the purchasing power of a currency.
  3. The trend is that India’s GDP in terms of PPP is much larger than the GDP obtained when measured with official exchange rate.

Choose the correct statement/s:

A
1 and 3 Only
B
1 and 2 Only
C
2 and 3 Only
D
All of the above
191

What is the objective of ‘open access’ system in economic parlance?

A
A system of free trade granted to countries.
B
A system to treat national and foreign products at par.
C
A system in which both buyers and sellers can have choice.
D
A system of allowing foreign goods by reducing tariff barriers.
192

Which of the following can be classified as consumer goods?

  1. A housewife purchasing sewing machine to open a boutique.
  2. A housewife purchasing vegetables for preparing food for her family
  3. A student purchasing cell phone for learning mobile repairing.
  4. A student purchasing a school uniform.

Select the correct code:

A
1 and 2 only
B
3 and 4 only
C
1, 3 and 4 only
D
All of the above
193

Which of the following is/are characteristics of monopolistic competition?

  1. Absence of Interdependence.
  2. Two dimensional competition.
  3. Falling Demand curve.
  4. Freedom of entry and exit.

Select the correct code:

A
1, 2 and 3 Only
B
2, 3 and 4 Only
C
1, 3 and 4 Only
D
All of the above
194

What does Purchasing Power Parity indicates?

A
Number of units of a country's currency required to purchase the same basket of goods and services in the domestic market as the other country currency would purchase in that country.
B
Equivalent value of number of units of a country's basket of goods and services with other comparable country in economic terms.
C
It shows level of purchasing power of the people of two nations reflecting their socio-economic development, thus calling for policy makers attention.
D
None of the above is the correct description.
195

‘Economic Development’ is a:

  1. Multi-dimensional concept
  2. Quantitative concept
  3. Long-term process.

Of these statements:

A
1 alone is correct
B
2 and 3 are correct
C
1 and 3 are correct
D
1, 2 and 3 are correct
196
A market situation in which there are large number of firms selling a differentiated product:
A
Perfect Competition
B
Monopoly
C
Monopolistic Competition
D
Oligopoly
197

Which of the following is/are NOT correct about Purchasing Power Parity (PPP)?

  1. It is an exchange rate system.
  2. Under PPP, exchange rates of various currencies are based on their demand and supply.
  3. It is used for international comparison of GDP, per capita income, etc.
  4. It is not used for actual foreign exchange transactions.

Select the answer using the codes given below:

A
Only I
B
Only II
C
III and IV
D
Only IV
198

Dualism in development economics refers to

A
Coexistence of market oriented and government controlled pricing policies.
B
Coexistence of modern and traditional sectors.
C
Coexistence of private and public sectors.
D
Coexistence of institutional and non-institutional agencies.
199
Game theory mainly used in economics, political science, and psychology, as well as logic may be described as…
A
A study of strategic decision making.
B
A zero-sum game, such that one person’s gains exactly equal net losses of the other participant(s).
C
A win-win game that is a game which is designed in a way that all participants can profit from it in one way or the other.
D
All the above
200

Match the following:

A. Laffer curve (i) effect of devaluation on BOP
B. Engel curve (ii) inequality
C. Lorenz curve (iii) lower rates enhance tax compliance
D. J-curve (iv) demand for inferior goods falls as income increases

Codes:

A
A-(iii), B-(iv), C-(ii), D- (i)
B
A-(iv), B-(iii), C-(ii), D- (i)
C
A-(iii), B-(iv), C-(i), D- (ii)
D
A-(iv), B-(iii), C-(i), D- (ii)
201

Which one of the following is not a measure to check generation of black money?

  1. Demonetization of currency
  2. Voluntary Disclosure Schemes
  3. Reforms in tax administration
  4. Non-resident investment scheme

Codes:

A
Only 1 and 2
B
Only 1, 2 and 3
C
Only 3 and 4
D
All of the above
202

Consider the following statements -

  1. Funds rose by the government via disinvestment go in to Capital receipt.
  2. Government receipts which either creates liabilities or by reducing the assets is called Revenue receipt.

Which of the statements given above is/are correct?

A
I Only
B
II Only
C
Both
D
None
203

Consider the following statements about economic “super-cycle”:

  1. A super-cycle is a period of historically high global growth.
  2. Under the super-cycle an economy remains in high growth for a very short period.
  3. Super-cycle is driven by opening up of new markets, rising trade, high rates of investment, urbanization and technological innovation.

Which of the above statements is/are correct?

A
I, II only
B
I, III only
C
II, III only
D
All of the above.
204
Join these terms with their most appropriate meaning:

       Term                     Meaning
I.  Lorenz curve        (x) Inequality (ratio)
II. Kuznets curve     (y) Inequality (stock evaluation)
III. Gini coefficient    (z) Inequality (flow evaluation)

Code:
A
x, y, z
B
y, x, z
C
y, z, x
D
z, y, x
205

Consider the following statements about the ‘Incremental Capital Output Ratio - ICOR’:

  1. It is a metric that assesses the marginal amount of investment capital necessary for an entity to generate the next unit of production.
  2. It is used predominantly in determining a country’s level of production efficiency.
  3. A higher ICOR value is preferred because it indicates that the entity’s production is efficient.

Which of the above statements are correct?
Codes:

A
I, II only
B
II, III only
C
I, III only
D
all
206

Generally an economy is classified into three sectors i.e., Primary, Secondary and Tertiary. Which of the following are covered under the Primary Sector?

  1. Manufacturing
  2. Fishing and dairying
  3. Transport and Storage
  4. Mining and quarrying

Codes:

A
I, IV only
B
II, IV only
C
I, III only
D
II, III only
207

Consider the following statements about the Engel curve:

  1. It describes how a country’s expenditure on particular goods or service vary with its income.
  2. It describes how household expenditure on particular goods or service vary with household income.
  3. For inferior goods also the Engel curve has a positive gradient.

Which of the above statements is/are correct?

A
I and III only
B
II and III only
C
II only
D
I only
208

The Impossible trinity is a trilemma in international economics which states that it is impossible to have three elements at the same time. Which of the following are among the three elements?

  1. A stable foreign exchange rate
  2. Free capital movement
  3. An independent monetary policy

Select the correct answer using the code given below:

A
1 and 2 only
B
2 and 3 only
C
1 and 3 only
D
All of the above
209

Which of the following are correctly matched?

Economic curve Relationship

  1. Kuznets curve - Inequality and Per Capita Income
  2. Laffer curve - Tax rate and Tax revenue
  3. Engel curve - Household expenditure on a particular goods or service and Household Income.
  4. Phillips curve - Rate of Unemployment and Rate of Inflation.

Select the correct answer using the code given below:

A
1, 2 and 3 only
B
2, 3 and 4 only
C
1 and 4 only
D
All of the above
210

Public goods are characterized by-

  1. Collective Consumption
  2. Divisibility
  3. Non-exclusion
  4. Rival-consumption

Select the correct answer using the codes given below:

A
1 and 2
B
1 and 4
C
2 and 4
D
1 and 3
211

Consider the following statements regarding Crowd funding:

  1. It is the process of soliciting money from general public for business purpose but outside the traditional mechanism of debt or equity.
  2. In this, Entrepreneur retains 100% ownership, patents and copyrights.
  3. Crowd always receive share in profit, dividend or interest.

Which of the statements given above is/are correct?

A
I and III
B
II and III
C
I and II
D
I, II and III
212

Consider the following:

  1. Primary articles
  2. Fuel, power light and lubricants
  3. Food products
  4. Chemicals and chemical products

Which of the above items is/are included in whole sale price index in India?

A
I, II and III only
B
II, III and IV only
C
I, III and IV only
D
All of the above
213

Which of the following are the factors of production?

  1. Land
  2. Labour
  3. Physical Capital
  4. Human Capital

Choose the correct answer using the codes given below:

A
All of the above
B
1, 2
C
1, 2, 3
D
2, 3, 4
214

Consider the following statements about the Fiscal Policy:

  1. Fiscal policy is the means by which government adjusts its spending levels and tax rates to monitor and influence a nation’s economy.
  2. The effects of any fiscal policy are the same for everyone irrespective of orientations and goals of the policymakers.
  3. Fiscal policy is based on the theories of British economist John Maynard Keynes.

Which of the above statements are correct?
Codes:

A
I, II only
B
II, III only
C
I, III only
D
all
215

Consider the following:

  1. High Productivity and efficiency.
  2. Social justice and equity.
  3. Macroeconomic stabilisation.

Which of these can be achieved by market mechanism?

A
Only I
B
I and II
C
II and III
D
All of these
216

Consider the following statements about the market mechanism:

  1. It establishes equilibrium in a market on the basis of demand and supply.
  2. It allocates the resources most efficiently.
  3. It ensures social justice and equity.

Which of the above statements are correct?

A
I and II
B
II and III
C
I and III
D
All of the above
217

Consider the following statements about the PPP:

  1. A PPP is simply outsourcing of functions where substantial financial, technical and operational risk is retained by the institution.
  2. PPP generates private jobs but curtail Public jobs as work is outsourced.
  3. A PPP is not the ‘commercialisation’ of a public function by the creation of a state-owned enterprise.

Which of the above statements is/are correct?

A
Only I
B
Only III
C
I and II
D
II and III
218

Which of the following statement(s) are true with respect to the concept of 'EFFICIENCY' as used in mainstream economics?

  1. Efficiency occurs when no possible reorganisation of production can make anyone better off without making someone else worse off.
  2. An economy is clearly inefficient if it is inside the Production Possibility Frontier (PPF).
  3. At a minimum, an efficient economy is on its Production Possibility Frontier (PPF).
  4. The terms such as 'Pareto Efficiency', 'Pareto Optimality' and 'Allocative Efficiency' are all essentially one and the same which denote 'efficiency in resource allocation'.

Select the correct answer using the code given below:

A
1 and 4 only
B
1 and 3 only
C
2 and 3 only
D
1, 2, 3 and 4
219

The terms “crowd in” and “crowd out” are often heard in relation to

A
Public and private investments
B
Outsourcing business
C
Research and development activities
D
Start Ups
220

Which of the following statements is/are correct?

  1. street- lighting is an example of public goods.
  2. merit goods have positive externalities.
  3. For a giffen good, demand increases as the price increases.

Select the correct code:

A
1 and 2
B
1 and 3
C
2 and 3
D
1, 2 and 3
221

Which among the following is/are development expenditure:

  1. Irrigation Projects
  2. Defense Procurements
  3. Debt Service Liabilities
  4. Grant-in-Aid.

Choose the correct code

A
2 and 4 Only
B
1 and 4 Only
C
1, 2 and 4 Only
D
1, 3 and 4 Only
222

Generally an economy is classified into three sectors i.e., Primary, Secondary and Tertiary. Which of the following are covered under the Primary Sector?

  1. Manufacturing
  2. Fishing and dairying
  3. Transport and Storage
  4. Mining and quarrying

Codes:

A
I, IV only
B
II, IV only
C
I, III only
D
II, III only.
223

India’s foreign exchange reserves comprises of

  1. Foreign currency assets
  2. Gold
  3. Special drawing rights
  4. FDI

Select the correct code:

A
1 and 4 only
B
1, 2 and 3 only
C
2, 3 and 4 only
D
4 only
224

Insolvency & Bankruptcy Board of India (IBBI) is in news. Consider the following statements with respect to IBBI:

  1. It is a Statutory Body under the Ministry of Finance.
  2. It acts as a regulator for insolvency professionals, information utilities, etc.
  3. It consists of 10 members - from RBI, Central Government and people nominated by the Central Government.

Choose the correct statement from the code given below:

A
1 and 2 only
B
2 and 3 only
C
1, 2 and 3
D
1 and 3 only
225

Consider the following statements:

  1. India’s foreign exchange reserves comprise of foreign currency assets (FCA), gold, special drawing rights (SDRs) and reserve tranche position (RTP) in the International Monetary Fund (IMF).
  2. Foreign currency assets are maintained in major currencies like the US dollar, euro, pound sterling, Canadian dollar, Australian dollar and Japanese yen, etc.
  3. The nominal effective exchange rate (NEER) and real effective exchange rate (REER) indices are used as indicators of external Competitiveness of the country.

Select the correct statements from the codes given below:

A
I and II
B
II and III
C
I and III
D
All.
226

What are the prerequisites for full rupee convertibility?

  1. Fiscal consolidation
  2. Strengthening the banking sector
  3. A mandated inflation target

A
1, 2 and 3
B
1 only
C
1 and 2 only
D
None of the above

Indian Economy