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Question 1 of 10
1. Question
2 points
The idea of ‘non-interference’ as proposed by Adam Smith is essentially the philosophy of;
Correct
Solution: B
Option A: Liberalism is a political philosophy or worldview founded on ideas such as freedom of speech, freedom of the press, freedom of religion, free markets, civil rights, democratic societies, secular governments, gender equality, and international cooperation.
Option B: This involves free market economies where each individual tries to maximize his or her own interest.
Option C: This is usually understood to be against the system of capitalism
Option D: This is essentially Marxism as applied by Lenin. It stands for the achievement of a dictatorship of the proletariat (workforce), as a political prelude to the establishment of socialism (a system that is more or less opposite of capitalism).
Incorrect
Question 2 of 10
2. Question
2 points
The term ‘State-market mix’ can be applied to which of the following hypothetical economic situations?
1) The government sub-contracting the construction of a national highway to a private developer
2) An economy where all goods and services are produced by state-owned firms but bought by private parties
3) Opening bids for the management of a state-owned railway station to private companies
Select the correct answer using the codes below.
Correct
Solution: b)
The question essentially refers to a mixed economy where both state and the market undertake economic activities.
Statement 1: In this case, the act of the state sub-letting an activity under its economic domain shows a state- market mix approach.
Statement 2 and 3: if all factors of production are owned and used by the state, it is a socialist or communist economy.
Incorrect
Question 3 of 10
3. Question
2 points
Fiscal consolidation can be achieved by
1. Reducing inefficient subsidies
2. Borrowing from domestic market rather than relying on foreign grants
3. Improve tax base
4. Enhancing the resource base of state governments to reduce their financial dependency on the Centre
Select the correct answer using the codes below.
Correct
Solution: b)
Statement 1: It reduces wasteful government expenditure and size of fiscal deficit.
Statement 2: Borrowing, if replaced with grants, will further inflate fiscal deficit because it comes with an interest payment obligation.
Statement 3: A better tax base yields more revenue and thus less revenue deficit.
Statement 4: A major part of the Union receipts go to states to fulfil their plan expenditure. Market borrowing will reduce such transfers and make states self-reliant
Incorrect
Question 4 of 10
4. Question
2 points
Economically optimal or efficient allocation of goods and services is always reached in an economy when
1) Every resource in the economy is employed.
2) Resources go to those who need them the most.
Which of the above is/are correct?
Correct
Solution: d)
Optimal allocation happens when goods and services are distributed according to consumer preferences and needs of corporations.
Statement 1: It is possible that by employing all resources, we may reach a stage of disguised unemployment, for e.g. as common in rural areas.
Statement 2: This is distribution based on equity and welfare concerns, which may not be efficient from an economic point of view.
Incorrect
Question 5 of 10
5. Question
2 points
A Communist economy advocates
1. State ownership of all properties including labour in the economy
2. Absolute power to state in running and managing the economy
Which of the above is/are correct?
Correct
Solution: c)
Communism is an economic system where the collective owns the factors of production. The four factors of production are labor, entrepreneurship, capital goods and natural resources.
The following form major features of the communist economies:
Abolition of property in land and application of all rents of land to public purposes.
A heavy progressive or graduated income tax.
Abolition of all right of inheritance.
Incorrect
Question 6 of 10
6. Question
2 points
The national income estimates of GDP are released quarterly by the
Correct
Solution: c)
The Central Statistics Office coordinates the statistical activities in the country and evolves statistical standards. It is headed by a Director General assisted by 5 Additional Director Generals.
CSO has five Divisions of which the NAD (National Accounts Division) is responsible for the preparation of national accounts, which includes Gross Domestic Product, Government and Private Final Consumption Expenditure, Fixed Capital Formation and other macro-economic aggregates.
Incorrect
Question 7 of 10
7. Question
2 points
Why is Gross National Product (GNP) a better measure of national income than Gross Domestic Product (GDP)?
1. GNP reflects an economy’s interconnection and interdependence on world economy, which is not captured by GDP.
2. GNP includes the idea of depreciation of national capital that is not accounted by GDP.
3. GNP accounts for the population headcount in the nation that GDP does not include.
Select the correct answer using the codes below.
Correct
Solution: b)
The normal formula is GNP = GDP Income from Abroad. But it becomes GNP = GDP (—Income from Abroad) = GDP — Income from Abroad, in the case of India.
IFA usually includes remittances, trade balance and interest on external loans.
This is because usually the IFA component of India is negative. So, India’s GNP is generally lower than its GDP.
The different uses of the concept GNP are as given below:
This is the ‘national income’ according to which the IMF ranks the nations of the world in terms of the volumes—at Purchasing Power Parity (at PPP).
India is ranked as the 4th largest economy of the world (after the USA, China and Japan), while as per the nominal/ prevailing exchange rate of rupee, India is the 11th largest economy.
It is the more exhaustive concept of national income than the GDP as it indicates towards the ‘quantitative ‘as well as the ‘qualitative ‘aspects of the economy, i.e., the ‘internal’ as well as the ‘external’ strength of the economy.
It enables us to learn several facts about the production behaviour and pattern of an economy, such as, how much the outside world is dependent on its product and how much it depends on the world for the same (numerically shown by the size and net flow of its ‘balance of trade’) etc.
Statement 2: It is the Net National Income (NNI) or NNP or NDP that includes depreciation.
Incorrect
Question 8 of 10
8. Question
2 points
If the Gross Domestic Product (GDP) of a country is growing, it implies that
1. The nation must be experiencing an expansion of the share of manufacturing vis-à-vis other sectors in the GDP.
2. The nation must be experiencing a general rise in the prices of goods and services on an annual basis.
Which of the above is/are correct?
Correct
Solution:D
GDP calculates total value of goods and services produced within a year at market prices. It considers production by all three sectors – primary, secondary and tertiary.
Statement 1: Manufacturing activity is considered a part of the secondary sector. Even if the GDP is expanding, it does not mean that manufacturing must expand. The increase can come from services or agricultural sectors as well.
Statement 2: If the demand is not growing more than the production of goods and services (owing to an increased GDP), inflation will be under control.
Incorrect
Question 9 of 10
9. Question
2 points
As per the presently followed system, Gross National Income (GDP) at Constant and Current Prices in India will be
equal in which of the following financial years?
Correct
Solution: d)
Constant prices are calculated at 2011-12 prices as per the latest series, and Current prices can only be equal to constant prices in the year series which it starts from, i.e. 2011-12.
Incorrect
Question 10 of 10
10. Question
2 points
Gross Domestic Product (GDP) per capita of a country will necessarily increase if
Gross capital formation has increased
Export goods have increased
Index of Industrial production has increased
Higher remittances have been received in the previous year
Select the correct answer using the codes below.
Correct
Solution: d)
All these factors will be neutralized if population growth rate has surpassed economic growth rate.
Statement 1: If capital is formed, there can be more production and thus growth. Per capita income may or may not increase. Overall income may increase.
Statement 2: Exports boost domestic production.
Statement 3: IIP increase signals rise in manufacturing and allied sectors.
Statement 4: Higher remittances lead to higher domestic spending and thus higher demand for goods and services.