(FREE) ECONOMY OF INDIA -IMPORTANT SOLVED MCQ

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Answer with Explanation

  1. Consider the following statement about Gross National Product
  2. It Includes Factor income earned by the factors of production of the rest of the world employed in the domestic economy
  3. It excludes Factor income earned by the domestic factors of production employed in the rest of the world

Choose the correct answer from the following code:

(A) Only 1

(B) Only 2

(C) Both 1 and 2

(D) None of the above

Ans: (D)

Explanation:

GNP = GDP + Factor income earned by the domestic factors of production employed in the rest of the world – Factor income earned by the factors of production of the rest of the world employed in the domestic economy

Hence, GNP = GDP + Net factor income from abroad (Net factor income from abroad =

Factor income earned by the domestic factors of production employed in the rest of the world – Factor income earned by the factors of production of the rest of the world employed in the domestic economy).

 

2 Consider the following statement

  1. Net National Product at market price = Gross Domestic Product – Depreciation
  2. Net National Income at factor cost = Personal Income

Choose the correct answer from the following code:

(A) Only 1

(B) Only 2

(C) Both 1 and 2

(D) None of the above

Ans: (a)

Explanation:

We have already noted that a part of the capital gets consumed during the year due to wear and tear. This wear and tear is called depreciation. Naturally, depreciation does not become part of anybody’s income. If we deduct depreciation from GNP the measure of aggregate income that we obtain is called Net National Product (NNP).

NNP = GNP – Depreciation

It is to be noted that all these variables are evaluated at market prices. Through the expression given above, we get the value of NNP evaluated at market prices.

Thus, NNP at factor cost = National Income (NI ) = NNP at market prices – (Indirect taxes– Subsidies) = NNP at market prices – Net indirect taxes (Net indirect taxes = Indirect taxes – Subsidies)

3 Consider the following statements:

  1. Real GDP increases when the value of goods and services increases.
  2. Nominal GDP is the value of GDP at current prevailing prices

Choose the correct answer from the following code:

(A) Only 1

(B) Only 2

(C) Both 1 and 2

(D) None of the above

Ans: (B)

Explanation:

Real GDP is calculated in a way such that the goods and services are evaluated at some constant set of prices (or constant prices). Since these prices remain fixed, if the Real GDP changes we can be sure that it is the volume of production which is undergoing changes. Nominal GDP, on the other hand, is simply the value of GDP at the current prevailing prices. For example, suppose a country only produces bread. In the year 2000. It had produced 100 units of bread; price was Rs 10 per bread. GDP at current price was

Rs 1,000. In 2001 the same country produced 110 units of bread at price Rs 15 per bread.

Therefore nominal GDP in 2001 was Rs 1,650 (=110 × Rs 15). Real GDP in 2001 calculated at the price of the year 2000 (2000 will be called the base year) will be 110 × Rs 10 = Rs 1,100.

4 Which of the following is a measure of Inflation in an economy?

  1. GDP deflator
  2. Consumer Price Index
  3. Whole sale Price Index

Choose the correct answer from the following code

(A) Only 2

(B) Only 2 and 3

(C) Only 1 and 3

(D) All the above

Ans: (D)

Explanation:

Notice that the ratio of nominal GDP to real GDP gives us an idea of how the prices have moved from the base year (the year whose prices are being used to calculate the real GDP) to the current year. In the calculation of real and nominal GDP of the current year, the volume of production is fixed. Therefore, if these measures differ it is only due to change in the price level between the base year and the current year. The ratio of nominal to real GDP is a well known index of prices. This is called GDP Deflator.

There is another way to measure change of prices in an economy which is known as the

Consumer Price Index (CPI). This is the index of prices of a given basket of commodities which are bought by the representative consumer. Wholesale Price Index is a measure of the changes in the price of product which are traded in bulk.

5 Consider the following statements:

  1. An increase in GDP implies a better quality of life of the people of the country
  2. Services provided by women in their household is not calculated in the GDP

Choose the correct answer from the following code:

 

(A) Only 1

(B) Only 2

(C) Both 1 and 2

(D) None of the above

Ans: (B)

Explanation:

Statement 1 is incorrect: Quality of life is not only dependent on the income of an individual. Again, an increase in GDP does not even indicate an overall increase in income because of skewed distribution of Income.

Statement 2 is correct: Services provided by women in their household is not paid for so it not attributed to the GDP.

6 National Disposable Income does not include which of the following?

(A) Net National Product at Factor cost

(B) Gifts to the government in cash and kind

(C) Indirect taxes

(D) Subsidy

Ans: (D)

Explanation:

National Disposable Income = Net National Product at market prices + Other current transfers from the rest of the world The idea behind National Disposable Income is that it gives an idea of what is the maximum amount of goods and services the domestic economy has at its disposal.

Current transfers from the rest of the world include items such as gifts, aids, etc.

NNP at factor cost + Indirect Taxes – Subsidy = NNP at market prices

7 Match the following pair are correctly matched

Committee                                         Poverty Line

1- Y K Alagh                     Consumption Expenditure of household

2 Lakdawala                               Precisely as starvation

3 Tendulkar                                     Costs Of Living

Choose the correct answer from the following code

(A) Only 1 and 2

(B) Only 1 and 3

(C) Only 3

(D) All the above

Ans: (C)

Explanation:

Committee                              Poverty Line

1 Y K Alagh                         Precisely as starvation

2 Lakdawala                      Consumption Expenditure of household

3 Tendulkar                                    Cost Of Living

8 Sustainable Action for Transforming Human capital (SATH) program is launched by:

(A) Niti Aayog

(B) Ministry of Human Resource development

(C) World Bank and Ministry of Human Resource development

(D) None of the above

Ans: (A)

Explanation:

NITI Aayog has launched SATH, a program providing ‘Sustainable Action for Transforming Human capital’ with the State Governments. The vision of the program is to initiate transformation in the education and health sectors.

9 In India, A village would be considered as electrified if

  1. The number of households electrified should be at least 50% of the total number of households in the village.
  2. Electricity is provided to public places like Schools, Panchayat Office, Health Centers,

Dispensaries, Community centers

  1. Basic infrastructure such as Distribution Transformer and Distribution lines are provided in the inhabited locality as well as the Dalit Basti hamlet where it exists.

Choose the correct answer from the following code:

(A) 1 and 3 only

(B) 1 and 2 only

(C) 2 and 3 only

(D) 1,2 and 3

Ans: (C)

Explanation:

As per the latest definition, a village would be declared as electrified, if:

  1. Basic infrastructure such as Distribution Transformer and Distribution lines are provided in the inhabited locality as well as the Dalit Basti hamlet where it exists.
  2. Electricity is provided to public places like Schools, Panchayat Office, Health Centers, Dispensaries, Community centers etc.
  3. The number of households electrified should be at least 10% of the total number of households in the village hence statement 1 is the only incorrect statement.

10 Which of the following organisation publish Inclusive development index?

(A) World economic forum

(B)  World bank

(C) Sustainable solutions development network

(D) United Nations Department of Economic and Social Affairs (UN/DESA)

Ans: (A)

Explanation:

Inclusive development index is published by world economic forum. India was ranked 62nd among 74 emerging economies on World Economic Forum’s Inclusive Development Index.

11 Consider the following statements:

  1. Potassium bromated is commonly used as a food additive
  2. Potassium bromated is known to cause cancer
  3. Potassium bromated as a food add on is not yet banned in India

Choose the correct answer from the following code:

(A) 1 and 2 Only

(B) 2 and 3 Only

(C) 1 and 3 Only

(D) 1,2 and 3

Ans: (A)

Explanation:

Statement 1 is correct: Potassium bromated typically increases dough strength, leads to

Higher rising and gives uniform finish to baked products. Potassium iodate and Potassium

bromated is used as a flour treatment agent.

Statement 2 is correct: Potassium bromated and Potassium iodate commonly used to as a food additive are known to be carcinogenic

Statement 3 is incorrect: The government banned the use of potassium bromated as a food additive following a Centre for Science and Environment (CSE) study that found its presence in bread caused cancer. As far as potassium iodate is concerned, it has been referred to a scientific panel.

12 The furthest point from land also known as the “oceanic pole of inaccessibility” is nicknamed as which of the following:

(A) Point X

(B) Delta-P

(C) Point Verde

(D) Point Nemo

Ans: (D)

Explanation:

The furthest point from land also known as the “oceanic pole of inaccessibility” is nicknamed as Point Nemo, meaning “no-one” in Latin and was first discovered in 1992.

This remote oceanic location is 2,688 kilometers from the nearest land—Ducie Island. As Point Nemo lies in the South Pacific Gyre and the region is so isolated from landmasses that wind does not carry much organic matter, there is little to feed for survival.

13 “An economy for the 99%” is an important paper for governments all over the world. This paper is published by which of the following:

(A) World economic forum

(B) Oxfam

(C) Melbourne Mercer

(D) AT Kearney

Ans: (B)

Explanation:

An economy for the 99% – Oxfam briefing paper looks at inequalities in our current economy and calls for a more human economy. Specifically it focuses on how large corporations and the super-rich are driving the inequality crisis and what can be done to change this. It considers the false assumptions that have led us down this path, and shows how we can create a fairer world based on a more human economy – one in which people, not profit, are the bottom line and which prioritizes the most vulnerable. India’s richest 1% now hold 58% of the country’s wealth.

14 The Death penalty report is published by which of the following:

(A) Walk free foundation

(B) Heritage foundation

(C) Amnesty international

(D) Social progress imperative

Ans: (C)

Explanation:

The death penalty report is published by amnesty international. China remained the

World’s top executioner – but the true extent of the use of the death penalty in China is unknown as this data is classified as a state secret; the global figure of at least 993 excludes the thousands of executions believed to have been carried out in China. At the end of 2017, 106 countries (a majority of the world’s states) had abolished the death penalty in law for all crimes and 142 countries (more than two-thirds) had abolished the death penalty in law or practice.

15 Which of the following indicators is a part of ease of doing business index released by the World Bank?

  1. Getting electricity
  2. Registering property
  3. Resolving insolvency
  4. Trading across borders
  5. Access to credit

Choose the correct answer from the following code:

(A) 1,3 and 4 only

(B) 2,3,4 and 5 only

(C) 1,3,4 and 5 only

(D) All of the above

Ans: (D)

Explanation:

Ease of doing business index – It was released as part of the World Bank’s annual report titled Doing Business 2017: Equal Opportunity for All. It was introduced in 2004.The ranking of country is based on index averages the country’s percentile rankings on 11 indicators each having equal weightage. The indicators are –

  1. Ease of starting business
  2. Getting electricity
  3. Dealing with construction permits
  4. Registering property
  5. Protecting investors
  6. Access to credit
  7. Employing workers
  8. Trading across borders
  9. Paying taxes
  10. Enforcing contracts &
  11. Resolving insolvency

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