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Chapter 13. Indian Economy & Demographics (UPSC IAS CSE Civil Services CSAT Prelims Paper-1 Topicwise Previous Year Papers)

Chapter 13. Indian Economy & Demographics (UPSC IAS CSE Civil Services CSAT Prelims Paper-1 Topicwise Previous Year Papers)

1. According to the 1991 Census, the highest percentage of population in India is to be found in the age group of :(1995)
(a) 60 years and above
(b) 35 to 55 years
(c) 25 to 34 years
(d) 5 to 14 years
2. Which of the following pairs are correctly matched?(1995)
1. Increase in—Monetary expansion
2. Low import growth rate in India-Recession in Indian industry
3. Euro-issues—Shares held by Indian companies in European countries
4. Portfolio investment—Foreign institutional investors.
Codes:
(a) 1, 2 and 4
(b) 3 and 4
(c) 1, 2 and 3
(d) 1, 2, 3 and 4
3. Which one of the following is true regarding the Jawahar Rozgar Yojana (JRY) ?(1995)
(a) It was launched during the Prime Ministership of Indira Gandhi
(b) It aims at creating one million jobs annually
(c) The target group of JRY are the urban poor living below the poverty line
(d) Under the scheme 30% of the employment generated is reserved for women
4. The Narasimham Committee for financial sector Reforms has suggested reduction in(1995)
(a) SLR and CRR
(b) SLR, CRR and Priority Sector Financing
(c) SLR and Financing to capital goods sector
(d) CRR, Priority Sector Financing and Financing to capital goods sector
5. Corporation tax:(1995)
(a) is levied and appropriated by the States
(b) is levied by the Union and collected and appropriated by the States
(c) is levied by the Union and shared by the Union and the States
(d) is levied by the Union and belongs to it exclusively
6. One of the reasons for India’s occupational structure remaining more or less the same over the years has been that:(1995)
(a) investment pattern has been directed towards capital intensive industries
(b) productivity in agriculture has been high enough to induce people to stay with agricultural
(c) ceiling on land holdings have enabled more people to own land and hence their preference to stay with agriculture
(d) people are largely unaware of the significance of transition from agriculture to industry for economic development
7. The main reason for low growth rate in India, inspite of high rate of savings and capital formation is :(1995)
(a) high birth rate
(b) low level of foreign and
(c) low capital output ratio
(d) high capital output ratio
8. Which one of the following is correct regarding stabilization and structural adjustment as two components of the new economic policy adopted in India?(1996)
(a) Stabilization is a gradual, multi-step process while structural adjustment is a quick adaptation process
(b) Structural adjustment is a gradual multi-step process, while stabilization is a quick adaptation process
(c) Stabilization and structural adjustment are very similar and complimentary policies. It is difficult to separate one from the other
(d) Stabilization mainly deals with a set of policies which are to be implemented by the Central government while structural adjacent is to be set it motion by the State governments
9. One of the important goals of the economic liberalisation policy is to achieve full convertibility of the Indian rupee.
This is being advocated because:(1996)
(a) convertibility of the rupee will stabilize its exchange value against major currencies of the world
(b) it will attract more foreign capital inflow in India
(c) it will help to promote exports
(d) it will help India secure loans from the world financial markets at attractive terms
10. Given below are two statements, one labelled as Assertion (A) and the other labelled as Reason (R) :(1996)
Assertion (A) : Though India’s national income has gone up several fold since 1947, there has been no marked improvement in the per capita income level.
Reason (R) : Sizeable proportion of the population of India is still living below the poverty line.
In the context of the above two statements which one of the following is correct?
(a) Both A and R are true and R is the correct explanation of A
(b) Both A and R are true but R is not a correct explanation of A
(c) A is true but R is false
(d) A is false but R is true
11. A redistribution of income in a country can be best brought about through:(1996)
(a) progressive taxation combined with progressive expenditure
(b) progressive taxation combined with regressive expenditure
(c) regressive taxation combined with regressive, expenditure
(d) regressive taxation combined with progressive expenditure
12. As per the 1991 Census, the average size of households in terms of number of persons per household in respect of the given states follows the sequence (highest first, lowest last) (1996)
(a) Haryana, Uttar Pradesh, Kerala, Tamil Nadu
(b) Uttar Pradesh, West Bengal, Gujarat, Kerala
(c) Gujarat, Haryana, Uttar Pradesh, West Bengal
(d) Uttar Pradesh, West Bengal, Tamil Nadu, Kerala
13. Human Development Index comprises literacy rates, life expectancy at birth and(1997)
(a) Gross National Product per head in the US dollars
(b) Gross Domestic Product per head at real purchasing power
(c) Gross National Product in US dollars
(d) National Income per head in US dollars
14. In India, inflation is measured by the:(1997)
(a) Wholesale Price Index number
(b) Consumers Price Index for urban non-manual workers
(c) Consumers Price Index for agricultural workers
(d) National Income Deflation
15. Given below are two statements, one labelled as Assertion (A) and the other labelled as Reason (R) .
Assertion (A) : The emergence of economic globalism does not imply the decline of socialist ideology.
Reason (R) : The ideology of socialism believes in Universalism and globalism. (1997)
In the context of the above two statements which one of the following is correct?
(a) Both A and R are true and R is the correct explanation of A
(b) Both A and R are true but R is not the correct explanation of A
(c) A is true but R is false
(d) A is false but R is true
16. National Income is:(1997)
(a) Net National Product at market price
(b) Net National Product at factor cost
(c) Net Domestic Product at market price
(d) Net Domestic Product at factor cost
17. The Minimum Alternative Tax (MAT) was introduced in the Budget of the Government of India for the year:(1997)
(a) 1991-92
(b) 1992-93
(c) 1995-96
(d) 1996-97
18. Match List-I with List-II and select the correct answer. (1997)
List-I (Committee) List-II (Chaired by)
A. Disinvestment 1. Rajah Chelliah
of shares in Public
Sector Enterprises
B. Industrial Sickness2. Omkar Goswami
C. Tax Reforms3. R. N. Malhotra
D. Reforms in Insurance 4. C. Rangarajan
Sector
Codes:
(a) A- 1, B- 4, C-2, D -3 (b) A- 4, B- 2, C-1, D -3
(c) A- 4, B- 1, C-2, D -3(d) A- 1, B- 3, C-4, D -2
19. What is the correct sequence of the descending order of the following States in respect of female literacy rates as per the 2001 census?(1997)
1. Mizoram
2. Kerala
3. Goa
4. Nagaland
Choose the correct answer using the codes given below:
Codes:
(a) 2, 1, 3, 4
(b) 2, 3, 4, 1
(c) 2, 4, 1, 3
(d) 1, 2, 4, 3
20. The Capital Account Convertibility of the Indian Rupee implies:(1998)
(a) that the Indian Rupee can be exchanged by the authorised dealers for travel
(b) that the Indian Rupee can be exchanged for any major currency for the purpose of trade in goods and services
(c) that the Indian Rupee can be exchanged for any major currency for the purpose of trading financial assets
(d) None of the above
21. A consumer is said to be in equilibrium, if:(1998)
(a) he is able to fulfil his need with a given level of income
(b) he is able to live in full comforts with a given level of income
(c) he can fulfil his needs without consumption of certain items
(d) he is able to locate new sources of income
22. The supply-side economics lays greater emphasis on the point of view of :(1998)
(a) producer
(b) global economy
(c) consumer
(d) middle-man
23. Human Poverty Index was introduced in the Human Development Report of the year:(1998)
(a) 1994
(b) 1995
(c) 1996
(d) 1997
24. The current Price Index (base 1960) is nearly 330. This means that the price of:(1998)
(a) all items cost 3. 3 times more than what they did in 1960
(b) the price of certain selected items have gone upto 3. 3 times
(c) weighted mean of price of certain items has increased 3. 3 times
(d) gold price has gone up 3. 3 times
25. Assertion (A) : Devaluation of a currency may promote export. (1999)
Reason (R) : Price of the country’s products in the international market may fall due to devaluation.
(a) Both A and R are true and R is the correct explanation of A
(b) Both A and R are true but R is not a correct explanation of A
(c) A is true but R is false
(d) A is false but R is true
26. Assertion (A) : Fiscal deficit is greater than budgetary deficit.
Reason (R) : Fiscal deficit is the borrowing from the Reserve Bank of India plus other liabilities of the Government to meet its expenditure. (1999)
(a) Both A and R are true and R is the correct explanation of A
(b) Both A and R are true but R is not a correct explanation of A
(c) A is true but R is false
(d) A is false but R is true
27. Persons below the poverty line in India are classified as such based whether:(1999)
(a) they are entitled to a minimum prescribed food basket
(b) they get work for a prescribed minimum number of days in a year
(c) they belong to agricultural labourer household and the scheduled caste/tribe social group
(d) their daily wages fall below the prescribed minimum wages
28. Which one of the following statements regarding the levying, collecting and distribution of Income Tax is correct? (1999)
(a) The Union levies, collects and distributes the proceeds of income tax between itself and the states
(b) The Union levies, collects and keeps all the proceeds of income tax to itself
(c) The Union levies and collects the tax but all the proceeds are distributed among the states
(d) Only the surcharge levied on income tax is shared between the Union and the states
29. Among which one of the following sets of social/religious groups is the extent of poverty the highest, as per Government statistics for the nineties? (1999)
(a) Muslims in Kerala, Gujarat and A. P.
(b) Tribals in Bihar, Orissa, M. P. and Maharashtra
(c) Scheduled Caste in Punjab, Western UP, Northern Rajasthan and Tamil Nadu
(d) Christians in Gujarat, Maharashtra and Assam
30. The first Indian State to have its Human Development Report prepared and released by Amartya Kumar Sen in Delhi is :(1999)
(a) West Bengal
(b) Kerala
(c) Madhya Pradesh
(d) Andhra Pradesh
31. In an open economy, the national income (Y) of the economy is: (C, I, G, X, M stand for Consumption, Investment, Govt. Expenditure, total exports and total imports respectively. ) (2000)
(a) Y = C + I + G + X
(b) Y = I + G –X + M
(c) Y = C + I + G + (X – M)
(d) Y = C – G + I + (X – M)
32. Match List I with List II and select the correct answer using the codes given below the lists:(2000)
List – I List-II
A. Boom1. Business activity at high level with increasing income, output and employment at macro level
B. Recession 2. Gradual fall of income, output and employment with business activity in a low gear
C. Depression3. Unprecedented level of under employment, and unemployment, drastic fall in income output and employment.
D. Recovery4. Steady rise in the general level of prices, income, output and employment.
Codes:
(a) A-1; B-2; C-3; D-4
(b) A-1; B-2; C- 4; D-3
(c) A-2; B-1; C- 4; D-3
(d) A-2; B-1; C-3; D-4
33. Indian Human Development Report does not give for each sample village:(2000)
(a) Infrastructure and Amenities Index
(b) Education Related Index
(c) Health Related Index
(d) Unemployment Related Index
34. Consider the following statements about the megacities of India:(2000)
1. Population of each megacity is more than 5 million
2. All the megacities are important sea ports
3. Megacities are either national or state capitals
Which of these statements are correct ?
(a) 1, 2 and 3
(b) 1 and 2
(c) 2 and 3(d) 1 and 3
35. Which one of the following ports of India handles the highest tonnage of import cargo?(2000)
(a) Calcutta
(b) Kandla
(c) Mumbai
(d) Vishakhapatnam
Directions : The next question is based on the following table. Study the same carefully and attempt the question that follow:

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36. Which one of the following statements is false?(2000)
(a) All countries other than India have over 80% literacy
(b) Malaysia and Korea have life expectancy higher than all other countries
(c) Higher the adult literacy lower is the infant mortality
(d) The life expectancy at birth in India is almost the same as that of Indonesia
37. The most appropriate measure of economic growth is its:(2001)
(a) Gross Domestic Product of a country’s
(b) Net Domestic Product
(c) Net National Product
(d) Per Capita Real Income
38. Match List I with List II and select the correct answer using the codes given below the lists: (2001)

List-I (Term)List-II (Explanation)
A.Fiscal deficit1.Excess of Total Expenditure
over Total Receipts
B.Budget deficit2.Excess of Revenue Expenditure
over revenue receipts
C.Revenue deficit3.Excess of Total Expenditure over
Total Receipts less borrowings
D.Primary deficit4.Excess of Total Expenditure over
Total Receipts
less borrowings and Interest Payments

Codes:
(a) A-3; B-1; C-2; D-4
(b) A-4; B-3; C-2; D-1
(c) A-1; B-3; C-2; D-4
(d) A-3; B-1; C-4; D-2
39. Consider the following taxes:(2001)
1. Corporation tax2. Customs duty
3. Wealth tax4. Excise duty
Which of these is/are indirect taxes?
(a) 1 only(b) 2 and 4
(c) 1 and 3(d) 2 and 3
40. The term National Income represents:(2001)
(a) gross national product at market prices minus depreciation
(b) gross national product at market prices minus depreciation plus net factor income from abroad
(c) gross national product at market prices minus depreciation and indirect taxes plus subsidies
(d) gross national product at market prices minus net factor income from abroad
41. Assertion (A) : Ceiling on foreign exchange for a host of current account transaction heads was lowered in the year 2000.
Reason (R) : There was a fall in foreign currency assets also. (2001)
(a) Both A and R are individually true and R is the correct explanation of A
(b) Both A and R are individually true but R is not the correct explanation of A
(c) A is true but R is false
(d) A is false but R is true
42. The prices at which the government purchases food grains for maintaining the public distribution system and for building up buffer-stock is known as:(2001)
(a) minimum support prices
(b) procurement prices
(c) issue prices
(d) ceiling prices
43. With reference to Power Sector in India, consider the following statements:(2002)
1. Rural electrification has been treated as a Basic Minimum Service under the Prime Minister’s Gramodaya Yojana
2. 100 percent Foreign Direct Investment in power is allowed without upper limit
3. The Union Ministry of Power has signed a Memoranda of Understanding with 14 States
Which of these statements is/are correct?
(a) 1 only
(b) 1 and 2
(c) 2 and 3
(d) 3 only
44. With reference to the Indian Public Finance, consider the following statements:(2002)
1. External liabilities reported in the Union Budget are based on historical exchange rates
2. The continued high borrowing has kept the real interest rates high in the economy
3. The upward trend in the ratio of Fiscal Deficit of GDP a recent years has an adverse effect on private investment
4. Interest payments is the single largest component of the non-plan revenue expenditure of the Union Government
Which of these statements are correct?
(a) 1, 2 and 3
(b) 1 and 4
(c) 2, 3 and 4
(d) 1, 2, 3 and 4
45. Consider the following statements:(2002)
Full convertibility of the rupee may mean:
1. Its free float with the international currencies
2. Its direct exchange with any other international currency at any prescribed place inside and outside the country
3. It acts just like any other international currency
Which of these statements are correct?
(a) 1 and 2
(b) 1 and 3
(c) 2 and 3
(d) 1, 2 and 3
46. Consider the following statements:(2003)
In India, stamp duties on financial transactions are:
1. levied and collected by the State Government
2. appropriated by the Union Government
Which of these statements is/are correct?
(a) Only 1
(b) Only 2
(c) Both 1 and 2
(d) Neither 1 nor 2
47. Which one among the following States has the highest female literacy rate as per the Census 2001?(2003)
(a) Chhattisgarh
(b) Madhya Pradesh
(c) Orissa
(d) Rajasthan
48. Which of the following is not a recommendation of the task force on direct taxes under the chairmanship of Dr. Vijay L. Kelkar in the year 2002?(2004)
(a) Abolition of Wealth Tax
(b) Increase in the exemption limit of personal income to Rs. 1. 20 lakh for widows
(c) Elimination of standard deduction
(d) Exemption from tax on dividends and capital gains from the listed equity
49. As per 1991 Census, which one of the following groups of Union Territories had the highest literacy rate?(2004)
(a) Chandigarh and Dadra & Nagar Haveli
(b) Delhi and Andaman & Nicobar Islands
(c) Andaman & Nicobar Islands and Pondichery
(d) Pondicherry and Delhi
50. Consider the following statements:
As per 2001 Census(2004)
1. the two States with the lowest sex ratio are Haryana and Punjab
2. the two States with the lowest population per sq. km. of area are Meghalaya and Mizoram
3. Kerala has both the highest literacy rate and sex ratio
Which of the statements given above is/are correct?
(a) 3 only
(b) 2 and 3
(c) 1 and 2
(d) 1 and 3
51. Consider the following statements: (2005)
1. Poverty Reduction and Growth Facility (PRGF) has been established by the International Development Association (IDA) to provide further assistance to low income countries facing high level of indebtedness.
2. Singapore regional Training Institute (STI) is one of the institutes that provides training in macroeconomic analysis and policy and related subject as a part of programme of the IMF institute.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
52. Which one of the following statements is correct? Fiscal Responsibility and Budget Management Act (FRBMA) concerns: (2006)
(a) Fiscal Deficit only
(b) Revenue deficit only
(c) Both fiscal deficit and revenue deficit
(d) Neither fiscal deficit nor revenue deficit
53. Which one of the following is the correct sequence in the decreasing order of contribution of different sectors to the Gross Domestic Product of India? (2007)
(a) Services – Industry – Agriculture
(b) Services – Agriculture – Industry
(c) Industry – Services – Agriculture
(d) Industry – Agriculture – Services
54. Participatory Notes (PNs) are associated with which one of the following?(2007)
(a) Consolidated Fund of India
(b) Foreign Institutional Investors
(c) United Nations Development Programme
(d) Kyoto Protocol
55. Which of the following pairs about India’s economic indicator and agricultural production (all in rounded figures) are correctly matched? (2008)
1. GDP per capita (current prices) : Rs 37,000
2. Rice : 180 million tons
3. Wheat : 75 million tons
Select the correct answer using the code given below:
Codes:
(a) 1, 2 and 3
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1 and 3 only
56. Consider the following statements with reference to Indira Gandhi National Old Age Pension Scheme (IGNOAPS) :(2008)
1. All persons of 60 years or above belonging to the households below poverty line in rural areas are eligible.
2. The Central Assistance under this Scheme is at the rate of Rs 300 per month per beneficiary. Under the Scheme, States have been urged to give matching amounts.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
57. Consider the following:(2009)
1. Fringe Benefit Tax
2. Interest Tax
3. Securities Transaction Tax
Which of the above is/are Direct Tax/Taxes?
(a) 1 only(b) 1 and 3 only
(c) 2 and 3 only(d) 1, 2 and 3
58. Which one of the following statements is an appropriate description of deflation?(2010)
(a) It is a sudden fall in the value of a currency against other currencies
(b) It is a persistent recession in both the financial and real sectors of economy
(c) It is a persistent fall in the general price level of goods and services
(d) It is a fall in the rate of inflation over a period of time
59. Which of the following is/are treated as artificial currency?(2010)
(a) ADR
(b) GDR
(c) SDR
(d) Both ADR and SDR
60. When the Reserve Bank of India announces an increase of the Cash Reserve Rate, what does it mean? (2010)
(a) The commercial banks will have less money to lend
(b) The Reserve Bank of India will have less money to lend
(c) The Union Government will have less money to lend
(d) The commercial banks will have more money to lend
61. With reference to India, consider the following statements:(2010)
1. The Wholesale Price Index (WPI) in India is available on a monthly basis only.
2. As compared to Consumer Price Index for Industrial Workers (CPIIW) , the WPI gives less weight to food articles.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
62. In the context of Indian economy, consider the following pairs:(2010)

TermMost Appropriate description
1.Melt downFall in stock prices
2.RecessionFall in growth rate
3.Slow downFall in GDP

Which of the pairs given above is/are correctly matched?
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
63. In the context of governance, consider the following:(2010)
1. Encouraging Foreign Direct Investment inflows
2. Privatization of higher educational Institutions
3. Down-sizing of bureaucracy
4. Selling/offloading the shares of Public Sector Undertakings
Which of the above can be used as measures to control the fiscal deficit in India?
(a) 1, 2 and 3 (b) 2, 3 and 4
(c) 1, 2 and 4
(d) 3 and 4 only
64. With reference to’ Indian economy, consider the following statements:(2010)
1. The Gross Domestic Product (GDP) has increased by four times in the last 10 years.
2. The percentage share of Public Sector in GDP has declined in the last 10 years.
Which of the statements, given above is/ are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
65. India is regarded as a country with “Demographic Dividend’’. This is due to (2011 – I)
(a) Its high population in the age group below 15 years.
(b) Its high population in the age group of 15–64 years.
(c) Its high population in the age group above 65 years.
(d) Its high total population.
66. Which one of the following is not a feature of “Value Added Tax” ?(2011 – I)
(a) It is multi-point destination-based system of taxation.
(b) It is a tax levied on value addition at each stage of transaction in the production distribution chain.
(c) It is a tax on the final consumption of goods or services and must ultimately be borne by the consumer.
(d) It is basically a subject of the central government and the state governments are only a facilitator for its successful implementation.
67. Karl Marx explained the process of class struggle with the help of which one of the following theories? (2011 – I)
(a) Empirical liberalism
(b) Existentialism
(c) Darwin’s theory of evolution
(d) Dialectical materialism
68. All revenues received by the Union Government by way of taxes and other receipts for the conduct of Government business are credited to the ?(2011 – I)
(a) Contingency Fund of India
(b) Public Account
(c) Consolidated Fund of India
(d) Deposits and Advances Fund
69. A rapid increase in the rate of inflation is sometimes attributed to the “base effect”. What is “base effect”?(2011 – I)
(a) It is the impact of drastic deficiency in supply due to failure of crops
(b) It is the impact of the surge in demand due to rapid economic growth
(c) It is the impact of the price levels of previous year on the calculation of inflation rate
(d) None of the statements (a) , (b) and (c) given above is correct in this context
70. In the context of Indian economy, consider the following statements
1. The growth rate of GDP has steadily increased in the last five years.
2. The growth rate in per capita income has steadily increased in the last five years. (2011 – I)
Which of the statements given above is/are correct ?
(a) 1 only(b) 2 only
(c) Both 1 and 2(d) Neither 1 nor 2
71. In India, which of the following have the highest share in the disbursement of credit to agriculture and allied activities?(2011 – I)
(a) Commercial Banks
(b) Cooperative Banks
(c) Regional Rural Banks
(d) Microfinance Institutions
72. Which of the following are the methods of Parliamentary control over public finance in India?(2012 – I)
1. Placing Annual Financial Statement before the Parliament
2. Withdrawal of moneys from Consolidated Fund of India only after passing the Appropriation Bill
3. Provisions of supplementary grants and vote-on-account
4. A periodic or at least a mid-year review of programme of the Government against macroeconomic forecasts and expenditure by a Parliamentary Budget Office
5. Introducing Finance Bill in the Parliament
Select the correct answer using the codes given below:
(a) 1, 2, 3 and 5 only
(b) 1, 2 and 4 only
(c) 3, 4 and 5 only(d) 1, 2, 3, 4 and 5
73. The Reserve Bank of India (RBI) acts as a bankers’ bank. This would imply which of the following?(2012 – I)
1. Other banks retain their deposits with the RBI.
2. The RBI lends funds to the commercial banks in times of need.
3. The RBI advises the commercial banks on monetary matters.
Select the correct answer using the codes given below:
(a) 2 and 3 only
(b) 1 and 2 only
(c) 1 and 3 only
(d) 1, 2 and 3
74. In India, deficit financing is used for raising resources for(2013 – I)
(a) economic development
(b) redemption of public debt
(c) adjusting the balance of payments
(d) reducing the foreign debt
75. Priority Sector Lending by banks in India constitutes the lending to(2013 – I)
(a) agriculture
(b) micro and small enterprises
(c) weaker sections
(d) All of the above
76. Which one of the following groups of items is included in India’s foreign-exchange reserves?(2013 – I)
(a) Foreign-currency assets, Special Drawing Rights (SDRs) and loans from foreign countries
(b) Foreign-currency assets, gold holdings of the RBI and SDR’s
(c) Foreign-currency assets, loans from the World Bank and SDRs
(d) Foreign-currency assets, gold holdings of the RBI and loans from the World Bank
77. The national income of a country for a given period is equal to the(2013 – I)
(a) total value of goods and services produced by the nationals
(b) sum of total consumption and investment expenditure
(c) sum of personal income of all individuals
(d) money value of final goods and services produced
78. Which of the following constitute Capital Account?
(2013 – I)
1. Foreign Loans
2. Foreign Direct Investment
3. Private Remittances
4. Portfolio Investment
Select the correct answer using the codes given below.
(a) 1, 2 and 3
(b) 1, 2 and 4
(c) 2, 3 and 4
(d) 1, 3 and 4
79. In the context of Indian economy, ‘Open Market Operations’ refers to(2013 – I)
(a) borrowing by scheduled banks from the RBI
(b) lending by commercial banks to industry and trade
(c) purchase and sale of government securities by the RBI
(d) None of the above
80. The main objective of the 12th Five-Year Plan is
(2014 – I)
(a) inclusive growth and poverty reduction
(b) inclusive and sustainable growth
(c) sustainable and inclusive growth to reduce unemployment
(d) faster, sustainable and more inclusive growth
81. The terms ‘Marginal Standing Facility Rate’ and ‘Net Demand and Time Liabilities’, sometimes appearing in news, are used in relation to(2014 – I)
(a) banking operations
(b) communication networking
(c) military strategies
(d) supply and demand of agricul tural products
82. With reference to Indian economy, consider the following statements:(2015-I)
1. The rate of growth of Real Gross Domestic Product has steadily increased in the last decade.
2. The Gross Domestic Product at market prices (in rupees) has steadily increased in the last decade.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
 

Solutions

1. (d) The highest percentage of population in India in 1997 is in the age group of 5-14 years.
2. (a) Euro issue includes issue of ADR (American Depositary Receipts) and GDR (Global Depositary Receipts) . A scheme has been initiated during 1992 under which Indian companies are permitted to raise foreign currency resources through issue of Foreign Currency Convertible Bonds (FCCBs) and/or issue of ordinary equity shares through Global Depositary Receipts (GDRs) /American Depositary Receipts (ADRs) to foreign investors i. e. institutional investors or individuals (including NRIs) residing abroad.
3. (d) Though the people below the poverty line were the target group for employment, the preference was to be given to the Scheduled Castes, Scheduled Tribes and freed bonded labourers. Thirty percent of the employment opportunities were to be reserved for women in rural areas.
4. (b) Narasimham Committee for Financial Sector Reforms (1991) has suggested reduction in SLR, CRR and priority sector financing reducing it from 40% to 10%. Most of the suggestion of the committee were not implemented.
5. (d) Corporation tax is a direct tax levied, collected and appropriated by the Union or the central government. No part of this tax can be assigned to the states.
6. (a) Our economic planners are not emphasizing development of small scale industries in their plan strategies.
7. (d) Capital output ratio is the amount of capital needed to produce one unit of output.
It explains the relationship between level of investment and the corresponding economic growth lower capital output ratio Shows productivity of capital and technological progress.
8. (a) New Economic Policy was adopted in 1991 based on Rao-Manmohan model. Stabilization component of any economy is essentially a short-term programme while the structural readjustment component is a long term process.
9. (b) The full convertibility of the Indian currency means that the rupee is freely exchangeable into other international currencies and vice versa. Also, this would mean that international investors can buy and sell Indian assets at will. After 1994, the rupee has been partially convertible which means that the currency is changed freely into foreign currency for business and trade expenses. But it cannot be converted freely for acquiring overseas assets. Experts feel full convertibility of rupee would facilitate growth and higher foreign investments.
10. (b) There is no relation between the proportion of population of India living below the poverty line and Increase in India’s national income.
11. (b) Progressive Tax is a process in which as the income of a person increases, rate of income tax on the income also goes up. Regressive Expenditure is a process in which government spending decreases with the increase in income of people and government tends to spend more on poor in comparison to rich people.
12. (b)
13. (d) HDI or Human Development Index measures achievements in terms of life expectancy, literacy and adjusted real income (standard of living) . First HDR calculations were made in 1990 by Mehboob-ul-Huq.
14. (a) Wholesale Price Index (WPI) is an index used by the Reserve Bank of India till 2014 to measure inflation. WPI is the price of a representative basket of wholesale goods. It takes a basket of 697 items into account and shows the combined prices. The RBI, ex-governor Raghuram Rajan, Shifted to consumer Price Index (CPI) is because WPI neglects services and the bottlenecks between a wholesaler and a retailer. CPI, based on 260 commodities including certain services, measures the change in Prices at the retail level. The base year of CPI is 2012.
15. (a) Globalism is the policy of placing the interests of the world above those of individual nations. This also means that there would be free movement of goods and services across national boundaries. Socialism is an economic system based on state ownership of means of production including capital. Universalism means application of certain basic principles at universal level.
16. (b) National Income is the money value of all final goods and services produced in an economy during a financial year. At the level of an economy, value of final goods and services is equal to the total income of all factors of production viz labour, capital, land and entrepreneurship.
17. (d) MAT or Minimum Alternative Tax was introduced in the budget of 1996-97. Under MAT a company is required to pay a minimum tax of 7% of the book profit in case the tax on the total income computed under the normal provisions of law works out to less than this amount.
18. (b) Chelliah Committee on Tax Reforms – 1993; Omkar Goswami Committee on Industrial Sickness – 1994; Rangarajan Committee on Disinvestment of Shares in PSUs – April 1993; RN Malhotra Committee on Reforms in Insurance Sector – 1993.
19. (a) According to 2001 census the correct sequence in descending order of the states for female literacy rate is Kerala – 87. 7%, Mizoram – 86. 7%, Goa – 76. 5%, Nagaland – 61. 5%.
20. (c) Capital account convertibility means free conversion of cross-border capital flows. Any entity can convert domestic currency into hard currency at the prevailing market rate and take hard currency out of the country without the need of offering any explanation.
21. (a) A consumer is said to be in equilibrium when he feels that he “cannot change his condition either by earning more or by spending more or by changing the quantities of thing he buys”. A rational consumer will purchase a commodity up to the point where the price of the commodity is equal to the marginal utility obtained from the thing.
22. (a) Supply-side economics is a school of macroeconomics that argues that economic growth can be most effectively created by lowering barriers for people to produce (supply) goods and services as well as invest in capital. The investment and expansion of businesses will increase the demand for employees. Typical policy recommendations of supply side economists are lower marginal tax rates and less regulation.
23. (d) The Human Poverty Index (HPI) was an indication of the Standard of living in a country, developed by the United Nations (UN) to complement the Human Development Index (HDI) and was first reported as a part of the Human Development Report in 1997. In 2010, it was supplanted by the UN’s Multidimensional Poverty Index.
24. (c) A price index is a normalized average (typically a weighted average) of price relatives for a given class of goods or services in a given region, during a given interval of time. The current Price Index (base 1960) is nearly 330. This means that the price of the weighted mean of price of certain items has increased 3. 3 times.
25. (a) Devaluation is a deliberate downward adjustment to the value of a country’s currency relative to another currency, group of currencies or standard. It is a monetary policy tool used by countries that have a fixed exchange rate or semi-fixed exchange rate. After devaluation of the currency, country’s goods become cheaper for foreigners and become more competitive in a global market. This leads to increase in exports.
26. (a) Budget deficit = Total Receipts – Total Expenditure
Fiscal deficit is the sum of Budget deficit plus Borrowings and other liabilities Hence, fiscal deficit is greater than budgetary deficit.
27. (a) Till 2011, India used to define the poverty line based on a method defined by a task fore in 1979. It was based on expenditure for buying food worth 2,400 calories in rural areas, and 2,100 calories in Urban areas.
In 2011, the Suresh Tendulkar Committee defined the poverty line on the basis of monthly spending on food, education, health, electricity and transport. However, this has also faced criticism. The NDA government has now constituted a 14-member task force under NITI Aayog’s vice-chairman Arvnd Panagariya to come out with recommendations for a realistic poverty line.
28. (a) Income tax is levied and collected by Union government or the central government and distributed between itself and states.
29. (b) According to the recent data made available by Central Statistical Organisation, the incidence of poverty is highest in tribes of Bihar, Orissa and Madhya Pradesh.
30. (c) Madhya Pradesh was the first state to have calculated Human Development Report in 1995, under the guidance of Prof. Amartya Sen.
31. (c)
32. (a) Boom is a period of time during which sales of a product or business activity increases very rapidly. In the stock market, booms are associated with bull markets, whereas busts are associated with bear markets. Recession is A significant decline in activity across the economy, lasting longer than a few months. It is visible in industrial production, employment, real income and wholesale-retail trade. Depression is a severe and prolonged downturn in economic activity. In economics, a depression is commonly defined as an extreme recession that lasts two or more years. Economic Recovery is a period of increasing business activity signaling the end of a recession. Much like a recession, an economic recovery is not always easy to recognize until at least several months after it has begun.
33. (d) The National Human Development Report 2001, is an attempt to map the state of human development in India. While considering the state of human development, and the related economic, educational and health attainments, the report analyses governance for human development. To facilitate monitoring, many process indicators have been created. The Human Development Index, Gender Disparity Index and Human Poverty Index have been calculated for India after modifying the UNDP methodology.
34. (d) Megacities of India have more than 5 million population. But not all the major megacities are located on the sea coast or are sea ports. Delhi, which is the national capital is not a sea port.
35. (b) Kandla Port handled the highest volume of traffic at (81. 12 MT) , followed by paradip (74. 40MT) , JNPT (48. 89 MT) Mumbai (47. 53 MT) and Visakhapatnam (46. 56 MT) during April to December 2017
36. (d)
37. (d) Per capita real income is nothing but NNP at factor cost. It means national income is sum total of all factor incomes adjusted for increase in prices.
38. (a) Revenue deficit = revenue receipts – Revenue expenditure; Budget deficit = Total receipts – Total expenditure; Fiscal deficit = Revenue receipts + Non-debt creating capital receipts – Total expenditure (F. D. is government borrowings) ; Primary deficit = Fiscal deficit – Interest payments.
39. (b) Indirect taxes are the charges that are levied on goods and services. Some of the significant indirect taxes include Value Added Tax, Central Sales Tax, Central Excise Duty, Customs Duty, stamp duties and expenditure tax. Property tax, Corporation tax and Wealth tax are examples of direct taxes.
40. (c) The option (c) gross national product at market price minus depreciation minus indirect tax plus subsidies.
41. (c)
42. (b) Procurement price is the support price at which the government will buy whatever quantum farmers wants to sell to the government in the event of private traders not buying the product. This is done to give a fair price to the farmer and to create a buffer stock of food grains to meet public distribution system requirements.
43. (b) Pradhan Mantri Gramodaya Yojana was launched in order to achieve the objective of sustainable human development at the village level. It has 6 components viz. , primary health, Primary education, rural shelter, rural drinking water, nutrition and Rural electrification. Upto 100% FDI is allowed in respect of projects relating to electricity generation, transmission and distribution, other than atomic reactor power plants.
44. (c)
45. (d) Capital account convertibility means free conversion of cross-border capital flows, implying that anybody can convert domestic currency into hard currency at the market rate and take the hard currency out of the country.
46. (d) Stamp duty is a form of tax that is levied on documents. It is levied by the union or the central government and collected and appropriated by the state governments. (Entry 91 in the union list; entry 63 in the state list of Seventh Schedule of Constitution of India)
47. (a) As per the census of 2001, Chhattisgarh has the highest female literacy of 51. 85, Orissa has 50. 51%, Madhya Pradesh – 50. 29 and Rajasthan has 43. 85%.
48. (b) Increase in exemption limit to Rs 1 lakh to for the general categories of taxpayers. A higher exemption limit of Rs 1. 50 lakh for widows and senior citizens was one of the recommendation of the task, force on direct taxes under the chairmanship of Dr. Vijay. Kelkar in the year 2002.
49. (d) As per 1991 census, Pondicherry and Delhi had the literacy rates of 75. 3 and 74. 7 respectively.
50. (d) As per census 2001, child sex ratio in Haryana was 861, in Punjab 876 and in Sikkim 875. Hence, Haryana and Sikkim were the two states with lowest sex ratios. The population per sq. km. of area in Arunachal Pradesh was 13, in Meghalaya was 103 and in Mizoram was 42. Hence, the two states with the lowest population per sq. km of area are Arunachal Pradesh and Mizoram. Kerala has both the highest literacy rate and sex ratio.
51. (b) In 1999, the IMF established the Poverty Reduction and Growth Facility (PRGF) to make the objectives of poverty reduction and growth more central to lending operations in its poorest member countries.
52. (c) Fiscal responsibility and budget management act aims to bring down Fiscal deficit to 3% by 2008 and the revenue deficit to zero by 2008.
53. (a) Contribution of different sectors to national income. Services – 55. 1%, Industry – 26. 4%, Agriculture – 18. 5%
54. (b) Participatory Notes (PNs / P-Notes) are instruments used by investors or hedge funds that are not registered with the SEBI (Securities and Exchange Board of India) to invest in Indian securities. Participatory notes are instruments that derive their value from an underlying financial instrument such as an equity share and, hence, the word, ‘derivative instruments’. SEBI permitted FIIs to register and participate in the Indian stock market in 1992.
55. (d) Rice production was 96. 69 Million tonnes in 2007-08.
56. (d)
57. (d) Fringe Benefits Tax (FBT) was the tax applied to most, although not all, fringe benefits. A new tax was imposed on employers by India’s Finance Act 2005 and was introduced for the financial year commencing April 1, 2005. The Fringe Benefit Tax was abolished in the Finance Bill of 2009. Securities Transaction Tax (STT) is the tax payable on the value of taxable securities transaction. STT was introduced in India by the 2004 budget and is applicable with effect from 1st October 2004. Interest tax is imposed as a special tax on interest accrued in specified cases. The Interest Tax Act of 1974 governs the tax process associated with the imposition and collection of interest tax. The Act applies to all scheduled Banks that are required to pay tax on the chargeable interest amounts they have on their deposits. The act is no longer applicable with regard to chargeable interest accruing after 31 March 2000.
58. (c) Deflation is a decrease in the prices of goods and services. It occurs when the annual inflation rate falls below 0% which is a negative inflation rate. This is different from Disinflation which is a slow-down in the inflation rate. This is a situation when inflation declines to lower levels but prices continue to rise.
59. (c) ADR is an American Depositary Receipt which represents ownership in the shares of a non-US company that trades in U. S. financial markets.
GDR is global Depositary Receipt is a bank certificate issued in more than one country for shares in a foreign company. A GDR is very similar to ADR. SDR is special Drawing Rights. It is an international type of monetary reserve currency, created by the IMF in 1969. SDR can be thought as an artificial currency used by the IMF and defined as a basket of national currencies.
60. (a) CRR or the Cash Reserve Ratio is that ratio of the total deposits held by a bank which it has to keep with the central bank of country.
61. (b) Alter the Abhijit Sen committee’s proposals in 2004-05, the government had approved the proposal to release or wholesale price based inflation data on a monthly basis, instead of every week. The base year was changed to 2004-05 from 1993-94. However data on primary and fuel items was continued to release on a weekly basis. Consumer Price Index food group has a weight of 39. 1 percent as compared to the combined weight of 24. 4 percent (food articles and Manufactured food products) in wholesale Price Index food basket.
62. (b) Recession is a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.
Slow down is a period of slow economic growth, especially one that follows a period of robust growth
Melt down follows normally a black swan event and quickly results is financial assets loosing in vlaue, often resulting in liquidity crisis. The stock market in India suffered melt down from Sensex 20,000 in mid 2008 to 10,000 in mid 2009.
63. (d) Over the past few decades, it has been the private sector that has really driven capacity-creation in Indian higher education. Serious thinking on downsizing bureaucracy had begun in the early 1990s. A sub-group set up by the Planning Commission had suggested in 1993 that the Union government should weed out at least 2,000 senior-level positions in various ministries.
64. (b) The correct answer is (b) .
65. (b) The demographic dividend is a rise in the rate of economic growth due to a rising share of working age people in a population. This usually occurs late in the demographic transition when the fertility rate falls and the youth dependency rate declines.
66. (d) VAT, being a ‘tax on sale or purchase of goods within a State’ is a State Subject by virtue of Entry 54 of State List of the Seventh Schedule of the Constitution of India. Since VAT/Sales tax is a State subject, the Central Government has been playing the role of a facilitator for successful implementation of VAT.
67. (d) Darwin’s “struggle for existence” in natural history is analogous to the class struggle in “human History”. So option (c) stands incorrect. The sketch of dialectical materialism given by Karl Marx explains that Dialectical principle is of universal application and all the development is “struggle of opposites” or “conflict of opposites”. Thus option d stands correct in this question.
68. (c) Under Article 266 (1) of the Constitution of India, all revenues ( example tax revenue from personal income tax, corporate income tax, customs and excise duties as well as non-tax revenue such as licence fees, dividends and profits from public sector undertakings etc. ) received by the Union government as well as all loans raised by issue of treasury bills, internal and external loans and all moneys received by the Union Government in repayment of loans shall form a consolidated fund.
69. (c) The Base effect refers to the tendency of a small change from a low initial amount to the current amount which is translated into a large percentage and appears as large. It is usually used in context of inflation. It indicates the change in the inflation rate in the current period with respect to the base period.
70. (d)
71. (a) Commercial Banks – 60%
Co-operative Banks – 30%
RRB and others – 10%
72. (a) 1. Placing Annual Financial Statement before the Parliament
2. Withdrawal of moneys from Consolidated Fund of India only after passing the Appropriation Bill
3. Provisions of supplementary grants and vote-on-account
5. Introducing Finance Bill in the Parliament
73. (d) All the statements are correct.
74. (a) Deficit financing refers to the difference between expenditure and receipts. In public finance, it means the govt. is spending more than what it is earning. Deficit financing is a necessary evil in a welfare state as the states often fail to generate tax revenue which is sufficient enough to take care of the expenditure of the state. The basic intention behind deficit financing is to provide the necessary impetus to economic growth by artificial means.
75. (d) Priority sector lending constitutes the lending to–agriculture, micro and small enterprises, micro credit, education, housing and weaker sections.
76. (b) In India’s foreign exchange reserve, it includes foreign currency deposits, bonds, gold reserves, SDRs and IMF reserve position. Foreign exchange reserves are an important part of the international investment position of a country.
77. (d) National Income is the money value of all the final goods and services produced by a country during a period of one year. National Income consists of a collection of different types of goods and services of different types.
78. (b) Capital Account comprises of Foreign loans, Foreign Direct Investment and Portfolio Investment. Capital Account is the net result of public and private international investments flowing in and out of a country. Portfolio investment is the buying of shares and bonds. FDI is the investments by foreigners in a country or the citizens investing in foreign countries.
79. (c) It is an activity by a central bank(RBI) to buy or sell government securities. The aim of open market operations is to manipulate the short term interest rate and the supply of base money in an economy, and indirectly control the total money supply.
80. (d) 12th Five Year Plan of the Government of India (2012-17) aims at faster, sustainable and more inclusive growth.
81. (a) Marginal Standing Facility rate is the rate at which banks borrow funds overnight from the Reserve Bank of India (RBI) against approved government securities. Net Demand and time liability is the sum of demand and time liability of Banks with public and other banks wherein assets with other banks is subtracted to get net liability of other bank.
82. (b) Due to recession in 2008, the growth rate of the Indian economy had declined for the next few years from 8-9% to 5-6%. Even though the growth rate had declined, it never became negative. So, the GDP at market prices has always increased year on year since last one decade
 

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