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Question 1 of 10
1. Question
2 points
Which among the following accounts/account for the lowest share in? India’s Gross Domestic Product (GDP)?
Correct
Answer: (d) Explanation: According to the
xpenditure Method ‘, GDP (Gross Domestic Product) is calculated
as C+G+I+ (X-M), where C denotes ̳Private Final Consumption Expenditure (PFCE); G denotes Government Final Consumption Expenditure (GFCE); I denote investment; X denotes exports; and M denotes imports. The PFCE, accounting for around 60% of India’s GDP, is the major driver. The net exports (exports-
imports), accounting for around -3% of India’s GDP, has the lowest share.
Incorrect
Answer: (d) Explanation: According to the
xpenditure Method ‘, GDP (Gross Domestic Product) is calculated
as C+G+I+ (X-M), where C denotes ̳Private Final Consumption Expenditure (PFCE); G denotes Government Final Consumption Expenditure (GFCE); I denote investment; X denotes exports; and M denotes imports. The PFCE, accounting for around 60% of India’s GDP, is the major driver. The net exports (exports-
imports), accounting for around -3% of India’s GDP, has the lowest share.
Question 2 of 10
2. Question
2 points
With reference to the GDP estimation in India, consider the following statements:
The GDP is estimated at the Market Prices, instead of the Factor
The base year for the calculation of the GDP is 2011-12.
The GDP is estimated by the National Statistical Office (NSO). Which of the statements given above are correct?
Correct
Answer: (d) Explanation:
The Gross Domestic Product (GDP) refers to the market value of all final goods and services produced within an economy. Recent changes in the GDP estimation (2015):
Change in the base year from 2004-05 to 2011-12. Usually, the base years are revised at a frequency of 7-10 years by taking into account the changing economic landscape of the country.
Change in the GDP estimation from the GDP at the Factor Cost to GDP at the Market Prices.
Change in the database for capturing economic activity from RBI’s database to the MCA-21 database of the
Ministry of Corporate Affairs. This database is basically used for two purposes:
Estimate the production of goods and services in the organized sector, based upon the tax
Extrapolate the production of goods and services in the unorganized sector, based upon the organized sector activity. The GDP is estimated by the National Statistical Office (NSO).
Incorrect
Answer: (d) Explanation:
The Gross Domestic Product (GDP) refers to the market value of all final goods and services produced within an economy. Recent changes in the GDP estimation (2015):
Change in the base year from 2004-05 to 2011-12. Usually, the base years are revised at a frequency of 7-10 years by taking into account the changing economic landscape of the country.
Change in the GDP estimation from the GDP at the Factor Cost to GDP at the Market Prices.
Change in the database for capturing economic activity from RBI’s database to the MCA-21 database of the
Ministry of Corporate Affairs. This database is basically used for two purposes:
Estimate the production of goods and services in the organized sector, based upon the tax
Extrapolate the production of goods and services in the unorganized sector, based upon the organized sector activity. The GDP is estimated by the National Statistical Office (NSO).
Question 3 of 10
3. Question
2 points
Which among the following countries has introduced the concept of Gross National Happiness (GNH) to measure its socioeconomic progress?
Correct
Answer: (b) Explanation: The phrase G
ross National Happiness‘ (GNH) was first coined by the 4th king of
Bhutan, King Jigme Singye Wangchuck, in 1972, when he declared, ―Gross National Happiness is more important than Gross Domestic Product.‖ The concept implies that sustainable development should take a holistic approach towards the notions of progress and give equal importance to non- economic aspects of well- being. The GNH Index includes both traditional areas of socio-economic concern, such as living standards, health and education, and less traditional aspects of culture and psychological well-being.
Incorrect
Answer: (b) Explanation: The phrase G
ross National Happiness‘ (GNH) was first coined by the 4th king of
Bhutan, King Jigme Singye Wangchuck, in 1972, when he declared, ―Gross National Happiness is more important than Gross Domestic Product.‖ The concept implies that sustainable development should take a holistic approach towards the notions of progress and give equal importance to non- economic aspects of well- being. The GNH Index includes both traditional areas of socio-economic concern, such as living standards, health and education, and less traditional aspects of culture and psychological well-being.
Question 4 of 10
4. Question
2 points
Goods ‘X’ and ‘Y’ are considered to be ‘Complementary Goods’. If the price of goods ‘X’ increases, then what would happen to the demand for goods ‘Y’?
Correct
Answer: (b) Explanation:
Complementary goods are those goods which are used together in satisfying a particular want. Examples of complementary goods are car and petrol, ball pen and refill, etc. If the price of one of them increases, the demand for the other goods will decrease and if the price of one of them falls, the demand for the other will increase.
Incorrect
Answer: (b) Explanation:
Complementary goods are those goods which are used together in satisfying a particular want. Examples of complementary goods are car and petrol, ball pen and refill, etc. If the price of one of them increases, the demand for the other goods will decrease and if the price of one of them falls, the demand for the other will increase.
Question 5 of 10
5. Question
2 points
The Lorenz Curve shows the relationship between
Correct
Answer: (c) Explanation:
The Lorenz Curve shows the percentage of total income earned by cumulative percentage of the population. In a perfectly equal society, 10% of the population would earn 10% of the cumulative income. Similarly, 25% of the population would earn 25% of the cumulative income. Hence, as shown in the figure, in a perfectly equal society, the line inclined at 45° is called the “Line of Perfect Equality”. As inequality increases, the Lorenz Curve deviates from the Line of Equality and shows that the income gets concentrated in a few sections of the society.
Incorrect
Answer: (c) Explanation:
The Lorenz Curve shows the percentage of total income earned by cumulative percentage of the population. In a perfectly equal society, 10% of the population would earn 10% of the cumulative income. Similarly, 25% of the population would earn 25% of the cumulative income. Hence, as shown in the figure, in a perfectly equal society, the line inclined at 45° is called the “Line of Perfect Equality”. As inequality increases, the Lorenz Curve deviates from the Line of Equality and shows that the income gets concentrated in a few sections of the society.
Question 6 of 10
6. Question
2 points
6) Which among the following factors is/are likely to affect the demand for the goods in an economy?
1. Prices of the goods
2. Prices of the related goods
3. Income level of the buyer
Select the correct answer using the code given below:
Correct
Answer: (d) Explanation:
The demand for goods is defined as the quantity of the good purchased at a given price at a given time. Individual demand refers to the quantity of a commodity that an individual buyer is willing to buy at a given price per unit of time. Hence, the demand is dependent on a number of factors, such as: (i) Price of the commodity; (ii) Price of the related goods; (iii) Income of the buyer; and (iv) Tastes and preferences of the buyer.
Incorrect
Answer: (d) Explanation:
The demand for goods is defined as the quantity of the good purchased at a given price at a given time. Individual demand refers to the quantity of a commodity that an individual buyer is willing to buy at a given price per unit of time. Hence, the demand is dependent on a number of factors, such as: (i) Price of the commodity; (ii) Price of the related goods; (iii) Income of the buyer; and (iv) Tastes and preferences of the buyer.
Question 7 of 10
7. Question
2 points
Which one of the following is the correct definition of “unemployment rate” in an economy?
Correct
Answer: D Explanation:
The unemployment rate is defined as the number of unemployed people as percent of the labor force. The labor force includes the people who are either employed or unemployed, i.e. who don’t have a job but are actively looking for one. So, option (d) is correct
Incorrect
Answer: D Explanation:
The unemployment rate is defined as the number of unemployed people as percent of the labor force. The labor force includes the people who are either employed or unemployed, i.e. who don’t have a job but are actively looking for one. So, option (d) is correct
Question 8 of 10
8. Question
2 points
The term “Helicopter money” sometimes seen in the news recently, it means
Correct
Answer: B Explanation:
Helicopter money is the term used for a large sum of new money that is printed and distributed among the public by the central bank to stimulate the economy during a recession or when interest rates fall to zero. It is also referred to as a helicopter drop, in reference to a helicopter scattering supplies from the sky. So, option (b) is correct
Incorrect
Answer: B Explanation:
Helicopter money is the term used for a large sum of new money that is printed and distributed among the public by the central bank to stimulate the economy during a recession or when interest rates fall to zero. It is also referred to as a helicopter drop, in reference to a helicopter scattering supplies from the sky. So, option (b) is correct
Question 9 of 10
9. Question
2 points
9) Which of the following are included as “capital expenditure”?
1. Loans raised by the union government from the public.
2. Investment by the union government in shares.
3. Loans and advances by the union government to state governments. Select the correct answer using the code given below.
Correct
Answer: B Explanation:
The capital expenditures are expenditures of the government which result in creation of physical or financial assets or reduction in financial liabilities. This includes expenditure on the acquisition of land, building, machinery, equipment, investment in shares, and loans and advances by the central government to state and union territory governments, PSUs and other parties. So, statement 2 and 3 are correct.
The capital receipts are loans raised by Government from public, called market loans, borrowings by Government from Reserve Bank and other parties through sale of Treasury Bills, loans received from foreign Governments and bodies, and recoveries of loans from State and Union Territory Governments and other parties. So, statement 1 is not correct.
Incorrect
Answer: B Explanation:
The capital expenditures are expenditures of the government which result in creation of physical or financial assets or reduction in financial liabilities. This includes expenditure on the acquisition of land, building, machinery, equipment, investment in shares, and loans and advances by the central government to state and union territory governments, PSUs and other parties. So, statement 2 and 3 are correct.
The capital receipts are loans raised by Government from public, called market loans, borrowings by Government from Reserve Bank and other parties through sale of Treasury Bills, loans received from foreign Governments and bodies, and recoveries of loans from State and Union Territory Governments and other parties. So, statement 1 is not correct.
Question 10 of 10
10. Question
2 points
Consider the following statements about the “Open Market Operations”:
1. It is an instrument of monetary policy under which only purchase of government Treasury Bills and bonds takes place.
2. It is used as a means of controlling the money supply. Which of the statements given above is/are correct?
Correct
Answer: B Explanation:
Open Market Operations are market operations conducted by central banks by way of sale/purchase of government securities to/from the market with an objective to adjust the rupee liquidity conditions in the market on a durable basis. The government securities in India include Treasury Bills (T-bills), Cash Management Bills (CMBs), dated G-Secs, and State Development Loans (SDLs). So, statement 1 is not correct. The objective of Open Market Operations is to regulate the money supply in the economy. When the RBI wants to increase the money supply in the economy, it purchases the government securities from the market and it sells government securities to suck out liquidity from the system.
So, statement 2 is correct.
Incorrect
Answer: B Explanation:
Open Market Operations are market operations conducted by central banks by way of sale/purchase of government securities to/from the market with an objective to adjust the rupee liquidity conditions in the market on a durable basis. The government securities in India include Treasury Bills (T-bills), Cash Management Bills (CMBs), dated G-Secs, and State Development Loans (SDLs). So, statement 1 is not correct. The objective of Open Market Operations is to regulate the money supply in the economy. When the RBI wants to increase the money supply in the economy, it purchases the government securities from the market and it sells government securities to suck out liquidity from the system.
So, statement 2 is correct.
