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003 Economy Previous Year Questions

Economy Previous Year Questions

Q1. Which among the following sector of Indian Economy is maximum dependent on economic developments in advanced nations?
1. Manufacturing Sector
2. Agricultural Sector
3. Mining Sector
4. Services Sector
Which statement is/are correct
(a) 1 only (b) 2 only
(c) 3 only (d) 4 only
Ans: (b)

Q2. ‘VAT’ is imposed-
(a) Directly on consumer
(b) on first stage of production
(c) on all stages between production and sale
(d) on final stage of production
Ans: (c)

Q3. Consider the following statements regarding Commercial Paper
(CP) in India:
1. It is a money market instrument issued in the form of a Promissory Note.
2. Only scheduled commercial banks are eligible to issue Commercial Papers.
3. It can be issued for maturities between a minimum of 7 days and a maximum of up to one year from the date of issue.
Which of the statements given above are correct?
(a) 1 and 2 only (b) 2 and 3 only
(c) 1 and 3 only (d) 1, 2 and 3
Ans: (c)

Q4. The depreciation boosts exports in most economies but in India it caused panic in markets. What can be the most appropriate reason for this situation?
1. Small base of manufacturing sector
2. High Inflation
3. High public debt
Which the correct answer from the codes given below:
(a) 1 and 2 only (b) 2 and 3 only
(c) 1 and 3 only (d) 1, 2 and 3
Ans: (d)

Q5. Which of the following organizations publishes the Press Freedom Index (PFI)?
(a) World Economic Forum
(b) United Nations Development Program (UNDP)
(c) International Monetary Fund (IMF)
(d) Reporters Without Borders
Ans: (d)

Q6. A consumer is said to be in equilibrium, if
(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
Ans: (a)

Q7. Among the following who are eligible to benefit from the “Mahatma Gandhi National Rural Employment Guarantee Act”?
(a) Adult members of only the scheduled caste and scheduled tribe households
(b) Adult members of below poverty line (BPL) households
(c) Adult members of households of all backward communities
(d) Adult members of any household
Ans: (d)

Q8. The moral case for CSR, .. that it is the right thing to do, is justified by which of the following arguments?
(a) That the corporation is a creation of society and should therefore serve its needs.
(b) That the corporation is a legal creation and therefore cannot be a moral agent.
(c) Large corporations do not have the power or resources to address society’s problems.
(d) Business decisions will have social and environmental consequences which will be addressed by governments.
Ans: (a)

Q9. Consider the following statements regarding Non Performing Assets (NPAs):
1. Non Performing Assets (NPAs) are debts for which the lending bank has not received any interest or principal repayment for an extended period of time.
2. If a loan installment is not paid to a bank or financial institution for two months continuously, it is considered an NPA.
3. NPAs create a burden on financial institutions and hence they are often good indicators of the health of a financial institution.
Which of the statements given above are correct?
(a) 1 and 2 only (b) 2 and 3 only
(c) 1 and 3 only (d) 1, 2 and 3
Ans: (c)

Q10. When the RBI wants to inject liquidity into the economy, it may adopt the following:
1. Buy the government securities from the banks
2. Enter into reverse repo operations
3. Raise Cash Reserve Ratio
4. Reduce SLR
Which the correct answer using the codes given below:
(a) 1 only (b) 1 and 4 only
(c) 1,2 and 4 only (d) 1, 2, 3 and 4
Ans: (b)

Q11. In Economy Tobin tax is considered a solution of Economic slowdown. Tobbin tax is:
(a) Levied on borrowings of commercial banks from the central bank.
(b) Levied on transaction of goods and services within borders of a country.
(c) Levied on export and import of luxurious goods.
(d) Levied on short term international transactions of currency.
Ans: (d)

Q12. Match List I with List II and select the correct answer using the codes given below the Lists:
List I : List II
A. WTO : 1. Provides loans to address shortterm balance of payment problems
B. IDA : 2. Multi-lateral trade negotiation body
C. IMF : 3. Sanction of soft loans
D. IBRD : 4. Facilitating lendings and borrowings for reconstruction and development
(a) 2 3 4 1
(b) 2 3 1 4
(c) 3 2 4 1
(d) 3 2 1 4
Ans: (b)

Q13. Consider the following statements regarding Indian Planning:
1. The Second Five-Year Plan emphasized on the establishment of heavy industries.
2. The Third Five-Year Plan introduced the concept of import substitution as a strategy for industrialization.
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
Ans: (a)

Q14. Consider the following factors:
1. High Investment in industries
2. Expanding market for product
3. Dynamic entrepreneurship
Which of the above are required for accelerated growth of an economy ?
(a) Only 1 (b) 1 & 2
(c) 1, 2 & 3 (d) 2 & 3
Ans: (c)

Q15. Import substitution refers to:
(a) importing new items in place of old items of imports.
(b) gradual reduction of imported goods to save foreign exchange.
(c) increasing domestic supply of goods by imposing import restrictions.
(d) replacing import items by domestic production of such items.
Ans: (d)

Q16. Excess burden of tax means:
(a) the net welfare loss from a tax
(b) very heavy subsidy burden
(c) burden over and above the money burden
(d) equality of money burden and real burden
Ans: (c)

Q17. Consider the following statements:
1. A higher capital-output ratio indicates efficient use of capital in the economy.
2. A higher Gini coefficient indicates greater inequality.
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
Ans: (b)

Q18. Consider the following factors regarding an industry:
1. Capital investments 2. Business turnover
3. Labour force 4. Power consumption.
Which of these determine the nature a size of the industry?
(a) 1, 3 and 4
(b) 1, 2 and 4
(c) 2, 3 and 4
(d) 2 and 3
Ans: (b)

Q19. The process of budget making after re-evaluating every item of expenditure in every financial year is known as-
(a) Performance Budgeting
(b) Deficit Budgeting
(c) Zero Based Budgeting
(d) Fresh Budgeting
Ans: (c)

Q20. What is government owned companies?
I. They are primarily meant to provide essential services such as railways.
II. They are public enterprises that came into existence by a Special Act of the Parliament.
III. They are companies in which 51% or more of the paid up capital is held by the central or any state government (partly or wholly by both).
IV. They are set up whenever it is felt that certain functions need to be discharged outside the governmental set up with some amount of independence and flexibility without day-to-day interference from the governmental machinery
(a) Only III (b) I & III
(c) Only II (d) None of the above
Ans: (a)

Q21. Which of the following industries are the major beneficiaries of the Mumbai ports?
(a) Iron and Steel Industry
(b) Sugar and Cotton Textile Industry
(c) Cotton Textile and Petrochemical Industry
(d) Engineering and Fertilizer Industry
Ans: (c)

Q22. Consider the following statements regarding sterilisation done by RBI.
1. It counters the effect on money supply caused by a balance of payments surplus or deficit.
2. Open market operations(OMO) can be done for sterilization
Which of the above statements is/are correct?
(a) 1 only (b) 2 only
(c) Both 1 and 2 (d) None of the above.
Ans: (c)

Q23. A firm is in equilibrium when its
(a) marginal cost equals the marginal revenue
(b) total cost is minimum
(c) total revenue is maximum
(d) average revenue and marginal revenue are equal
Ans: (a)

Q24. Productivity being low, cottage industry produced a lot because
(a) It employs large number of people
(b) No power is needed to manufacture most of the products
(c) Raw material is generally available locally
(d) It caters mostly to the rural population
Ans: (a)

Q25. Consider the following statements :
1. The forest cover in India Constitutes around 20% of its geographical area. Out of the total forest cover, dense forest constitutes around 40%
2. The National Forestry Action Programme aims at bringing one-third of the area of India under tree/forest cover.
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
Ans: (b)

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