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Question 1 of 10
1. Question
2 points
If a factory is running at peak production with certain number of labourers then the marginal
productivity of labour will be:
Correct
c)
Marginal productivity of labour =
Change in output
Change in labour
Marginal productivity of labour means how much extra production will increase by adding one extra
labour. When a factory is running at peak production, then its production cannot be increased even
by adding more labourers. So, marginal productivity of labour will be zero.
Incorrect
c)
Marginal productivity of labour =
Change in output
Change in labour
Marginal productivity of labour means how much extra production will increase by adding one extra
labour. When a factory is running at peak production, then its production cannot be increased even
by adding more labourers. So, marginal productivity of labour will be zero.
Question 2 of 10
2. Question
2 points
Economic growth in a country will necessarily have to occur if:
Correct
Answer:
. (c)Investment in the economy means production of capital goods.
When the economy produces all consumption goods and no capital goods (investment) then its GDP
shall remain constant i.e. it will not grow. But till the time there is net production of capital goods i.e.
investment in the economy, the production of goods and services (GDP) will keep on increasing.
Capital formation means production of capital goods. So, if there is capital formation, it will necessarily
lead to increase in GDP i.e. economic growth.
Incorrect
Answer:
. (c)Investment in the economy means production of capital goods.
When the economy produces all consumption goods and no capital goods (investment) then its GDP
shall remain constant i.e. it will not grow. But till the time there is net production of capital goods i.e.
investment in the economy, the production of goods and services (GDP) will keep on increasing.
Capital formation means production of capital goods. So, if there is capital formation, it will necessarily
lead to increase in GDP i.e. economic growth.
Question 3 of 10
3. Question
2 points
A country is going through a phase of industrialization. Which of the following statements are
correct?
Consider the following statements regarding ‘GDP Deflator’:
(i) It is an index of price which is calculated as the ratio of nominal GDP to real GDP
(ii) The weights differ according to the production level of each good in GDP deflator
Select the correct answer using the code given below:
Correct
Answer. (c)
GDP deflator is an index of price and measures the price changes quarterly. GDP deflator = nominal
GDP/real GDP
CPI and WPI indices are calculated by fixing the weights of different goods and services but in case of
GDP deflator, it varies as per actual production level.
(Its highly technical, if you don’t understand, leave it, will provide a video
Incorrect
Answer. (c)
GDP deflator is an index of price and measures the price changes quarterly. GDP deflator = nominal
GDP/real GDP
CPI and WPI indices are calculated by fixing the weights of different goods and services but in case of
GDP deflator, it varies as per actual production level.
(Its highly technical, if you don’t understand, leave it, will provide a video
Question 5 of 10
5. Question
2 points
36.Consider of the following statements are correct about CPI rural, CPI urban and CPI combined index?
(i) Inflation data is published by NSO
(ii) The base year is 2011-12
(iii) It is released for all India and for states and UTs separately on a monthly basis
Select the correct answer using the code given below:
Correct
Answer:
(D)
Incorrect
Answer:
(D)
Question 6 of 10
6. Question
2 points
Consider the statements regarding the various inflation indices published in the country:
(i) Wholesale Price Index (WPI) does not represent the inflation in services
(ii) Consumer Price Index (CPI) represents the inflation in goods and services
(iii) CPI and WPI represent the inflation of imported goods also
(iv) GDP deflator captures the inflation of the goods and services produced domestically
Select the correct answer using the code given below:
Correct
Answer:
(d)
Services are not traded/transacted in the wholesale markets. So, WPI data does not include the inflation
due to services.
So, (i) statement is true
When goods are imported in India, first they move to the wholesale mandis and then they come in the
retail markets. So, wholesale prices and retail prices both get impacted because of the imported
goods.
So, (iii) statement is true.
As the formula of GDP Deflator (is) = Nominal GDP
Real GDP
Since, GDP includes only domestic goods and services, hence, GDP Deflator does not include the
inflation due to imported goods and services.
So, (iv) statement is true.
Incorrect
Answer:
(d)
Services are not traded/transacted in the wholesale markets. So, WPI data does not include the inflation
due to services.
So, (i) statement is true
When goods are imported in India, first they move to the wholesale mandis and then they come in the
retail markets. So, wholesale prices and retail prices both get impacted because of the imported
goods.
So, (iii) statement is true.
As the formula of GDP Deflator (is) = Nominal GDP
Real GDP
Since, GDP includes only domestic goods and services, hence, GDP Deflator does not include the
inflation due to imported goods and services.
So, (iv) statement is true.
Question 7 of 10
7. Question
2 points
Wholesale Price Inflation (WPI) index includes price change of which of the following sectors:
(i) Agriculture
(ii) Mining
(iii) Manufacturing
(iv) Electricity
Select the correct answer using the code given below:
Correct
Answer:
d)
Wholesale Price Index (WPI) is released by Office of Economic Advisor, Department for Promotion of
Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry. The Base year has been revised
to 2011-12 and includes 697 items. WPI inflation measures the average change in prices of commodities
for bulk sale at the level of early stage of transactions pertaining to four sectors namely agriculture,
mining, manufacturing and electricity. WPI does not cover services. WPI covers commodities falling
under three Major Groups namely:
• “Primary Articles” (weight 22.62%) like agricultural commodities and minerals
• “Fuel and Power” (weight 13.15%) like coal and electricity and
• “Manufactured Products” (weight 64.23%) like textiles, leather, machine tools
The prices tracked are agri-market (mandi) prices for agricultural commodities, ex-factory prices for
manufactured products and ex-mines prices for minerals. The prices used for compilation do not include
indirect taxes in order to remove the impact of fiscal policy. This is in consonance with best international
practices and makes the new WPI conceptually closer to “Produce Price Index” used internationally.
Weight given to each commodity covered in the WPI basked is based on the net traded value of the item
in the year 2011-12. The net traded value is the value of output in the year 2011-12 adjusted for net
imports. Thus, net traded value represents the total transactions of each product in the economy during
the base year
Incorrect
Answer:
d)
Wholesale Price Index (WPI) is released by Office of Economic Advisor, Department for Promotion of
Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry. The Base year has been revised
to 2011-12 and includes 697 items. WPI inflation measures the average change in prices of commodities
for bulk sale at the level of early stage of transactions pertaining to four sectors namely agriculture,
mining, manufacturing and electricity. WPI does not cover services. WPI covers commodities falling
under three Major Groups namely:
• “Primary Articles” (weight 22.62%) like agricultural commodities and minerals
• “Fuel and Power” (weight 13.15%) like coal and electricity and
• “Manufactured Products” (weight 64.23%) like textiles, leather, machine tools
The prices tracked are agri-market (mandi) prices for agricultural commodities, ex-factory prices for
manufactured products and ex-mines prices for minerals. The prices used for compilation do not include
indirect taxes in order to remove the impact of fiscal policy. This is in consonance with best international
practices and makes the new WPI conceptually closer to “Produce Price Index” used internationally.
Weight given to each commodity covered in the WPI basked is based on the net traded value of the item
in the year 2011-12. The net traded value is the value of output in the year 2011-12 adjusted for net
imports. Thus, net traded value represents the total transactions of each product in the economy during
the base year
Question 8 of 10
8. Question
2 points
Consider the following statements regarding CPI and WPI:
(i) CPI includes indirect taxes
(ii) WPI includes indirect taxes
Select the correct answer using the code given below
Correct
Answer :
. (a)
CPI includes indirect taxes. So, when government increases GST rate, it is captured in the CPI data. But
in the new series of WPI (2011-12), government has excluded indirect
Taxes while measuring WPI. This is in consonance with international practices and will make the new
WPI conceptually closer to Producer Price Index (PPI).
Incorrect
Answer :
. (a)
CPI includes indirect taxes. So, when government increases GST rate, it is captured in the CPI data. But
in the new series of WPI (2011-12), government has excluded indirect
Taxes while measuring WPI. This is in consonance with international practices and will make the new
WPI conceptually closer to Producer Price Index (PPI).
Question 9 of 10
9. Question
2 points
Consider the following statement with reference to ‘Income Elastcity of Demand’:
(i) It measures the responsiveness of demand for a particular good to changes in consumer
income.
(ii) Using this concept, it is possible to tell if a particular good represents a necessity or a
luxury.
Which of the statements given above is/are correct?
Correct
Answer:
(C)
Income elasticity of demand is calculated as the ratio of the percentage change in quantity demanded to
the percentage change in income. It measures the responsiveness of the quantity demanded for a good
or service to a change in income.
If income elasticity of demand of a commodity is less than 1 that means that with change in income,
demand is not changing much, that means, it is a necessity good. If the elasticity of demand is
greater than 1, it is a luxury good or a superior good
Incorrect
Answer:
(C)
Income elasticity of demand is calculated as the ratio of the percentage change in quantity demanded to
the percentage change in income. It measures the responsiveness of the quantity demanded for a good
or service to a change in income.
If income elasticity of demand of a commodity is less than 1 that means that with change in income,
demand is not changing much, that means, it is a necessity good. If the elasticity of demand is
greater than 1, it is a luxury good or a superior good