Economy (CDS-Solved Paper)

The natural rate of unemployment is the name that was given to a key concept in the study of economic activity by Milton Friedman.

The natural rate of unemployment is the difference between those who would accept a job at the current wage rate and those who are able and willing to take a job.

Private investments in research have severely lagged public investments in India. According to one analysis (Forbes, 2017) there are 26 Indian companies in the list of the top 2,500 global R and D spenders compared to 301 Chinese companies.
Hence, statement 1 is correct.

The economic survey also highlighted that universities play a relatively small role in the research activities of the country.
Hence statement 2 is correct.

SWAYAM is a Massive Online Open Courses (MOOC) programme initiated by Government of India and designed to achieve the three cardinal principles of Education Policy viz., access, equity and quality.

The objective of this effort is to take the best teaching learning resources to all, including the most disadvantaged.

SWAYAM seeks to bridge the digital divide for students who have remained untouched by the digital revolution and have not been able to join the mainstream of the knowledge economy.

According to IMF, India’s gross savings rate has fallen in 2015-16. It was 37% in 2007-08 and recorded 31% in 2015-16. The slowdown is more a function of low incomes, tough economic conditions, falling real returns and high inflation, rather than structural impediments of a rising dependency ratio or a fall in working age population. So, fall in household and public savings is responsible for sharp decline in saving rates. Hence, option (c) is correct.

Price elasticity of demand is a measure of the change in the quantity demanded or purchased of a product in relation to its price change.

Forward shifting takes place if the burden falls entirely on the user, rather than the supplier of the commodity or service in question. For example, an excise tax on luxuries that increases their price  to the purchaser.

Backward shifting occurs when the price of the article taxed remains the same but the cost of the tax is borne by those engaged in producing it. For example, through lower wages and salaries, lower prices for raw materials or a lower return on borrowed  capital.

Finally, a tax may not be shifted at all. For example, a tax on business profits may reduce the net income of the business owner. Hence, option (c) is true.

The law of diminishing marginal utility  is a  law  of economics stating that as a person increases consumption of a product while keeping consumption of other products constant, there is a decline in the  marginal utility  that a person derives from consuming each additional unit of that product.

An ETF or Exchange-Traded Fund, is a  marketable security  that tracks an index, a commodity, bonds or a basket of assets like an index fund. ETFs typically have higher daily  liquidity  and lower fees than mutual fund shares, making them an attractive alternative for individual investors.

Unlike mutual funds, an ETF trades like a common stock on a stock exchange. ETFs experience price changes throughout the day as they are bought and sold. Because it trades like a stock, an ETF does not have its  Net Asset Value (NAV) calculated once at the end of every day like a mutual fund does. Hence, option (c) is not correct.

The National Pension System (NPS) is a voluntary defined contribution pension system administered and regulated by the Pension Fund Regulatory and Development Authority (PFRDA), created by an Act of the Parliament of India on 1st January, 2004.

The age of joining NPS should be between 18 and 65 years old as of the date of submission of his/her application.

Niryat Bandhu Scheme was launched by the Ministry of Commerce and Industry in 2015. The objective of the Niryat Bandhu Scheme is to reach out to the new and potential exporters and mentor the first generation entrepreneurs through orientation programmes, counselling sessions, individual facilitation, etc.

This will facilitate exporter for being able to get into international trade and boost exports from India.
Hence, option (a) is correct.

Monetary policy of India is formulated and executed by RBI to achieve specific objectives. It refers to that policy by which central bank of the country controls the supply of money and cost of money. The monetary policy tools include bank rate and open market operations.

Bank rate refers to the official interest rate at which RBI provides loans to the banking system.

Open market operations refers to the buying and selling of government securities in the market in the open market.

Public debt refers to a part of the total borrowings by the Union Government which includes market loans, treasury bills etc.

Public revenue means the income of the government through all sources. Hence, option (a) is true.