Economy (CDS-Solved Paper)

Personal Income measures the income that is received by individuals, but not necessarily earned. Disposable personal income, is the amount that households have available for spending and saving after income taxes have been accommodated for.

Personal Disposable Income = Personal Income – Direct taxes paid by households and miscellaneous fees, fines, etc. Hence, option (a) is correct.

Free market is an economic system based on supply and demand with little or no goverment control. It depends on interplay of the forces of demand and supply.

It is a summary description of all voluntary exchanges that take place in a given economic environment.

In some countries, sex ratio is expressed as number of males per thousand females. Whereas, in India, it is expressed as number of females per thousand males. At world level, sex ratio is about 102 males per 100 females. E

urope has highest sex ratio in the world whereas Asia has lowest. Hence, option (d) is incorrect.

The concept of Human Development was developed by economist Mahbub-ul-Haq.
Human Development is defined as the process of Enlarging people’s freedom and opportunities and improving their well being.

‘Demographic Dividend’ means a rise in the rate of economic growth due to a higher share of working age people in a population. The change in working age people is typically brought by a decline in fertility and mortality rates.

Economic model is a theoretical construct representing economic processes by a set of variables and a set of logical relationship between them.

This can be expressed through equations, models etc. They involve simplification of complex processes. They help in gaining an insight into cause and effect.

In a market equilibrium, whenever price of a commodity rises, the demand of commodity declines, in same way when prices fall, demand increases.

So, demand and prices have negative relationship with each other. Therefore, the value of slope of a normal demand curve is negative.

A price floor is a minimum price. It is a regulatory tool. Price floor is defined as an intervertion to raise market prices if the government feels that price is too law.
MSP for Jowar in India or minimum wage are examples of price floor.

In formulating Minimum Supports Price (MSP), the Commission for Agricultural Cost and Prices (CACP) considers
● Cost of production
● Changes in input prices
● Input-output price parity
● Trends in market prices
● Demand and supply
● Inter-crop price parity
● Effect in industrial cost structure
● Effect on cost of living
● Effect on general price level
● International price situation
● Parity between prices paid and prices received by the farmers.
● Effect on issue prices and implication for subsidy.
Hence option (c) is not consider in determing the MSP.