Economy (Part-2) (CDS-Solved Paper)

According to Census 2011, population of
Kerala 33406061
Jharkhand 32988134
Assam 31205576
Punjab 27743338
Hence, decresing order of total size of population is Kerala, Jharkhand, Assam, Punjab.

The deviations from the state of full employment are purely temporary in nature. The classical economists believed in the existence of full employment in the economy.

To them, full employment is normal situation and any deviation from this regarded as something abnormal or temporary.

Marshall and Pigou say the tendency of the economic system is to automatically provide full employment in the labour market when the demand and supply of labour are equal.

Capital deepening refers to an increase in capital-output (labour) ratio. It is a situation, where the capital per worker is increasing in the economy. This is also referred to as increase in the capital intensity.

For example, a new technology, which makes capital more productive, therefore, capital deepening will lead to rising labour productivity. Capital deepening is often measured by the rate of change in capital stock per labour hour.

The Economic and Social Commission for Asia and Pacific is located in the United Nations building in Bangkok, Thailand. It is one of the five regional commissions of United Nations Economic and Social Council under the administrative direction of the United Nations headquarters.

It was established in 1947 to encourage economic cooperation among member states.

Bank Run is a panic situation when the large number of customers withdraw cash from deposit accounts. A bank run occurs in a fractional reserve banking system, where banks keeps a small proportion of their assets as cash.

It is the belief of the customers that the financial institution might become insolvent and keep the cash or transfer into other assets.

Inflation is a result of many factors which at compositely in an economy. These factors are responsible for either slack in production of the goods or surge in demand of that good, which causes inflation.

1. Inflation erodes the purchasing power of a currency, hence it gets depreciated.

2. Exports suffer on account of higher input costs and lesser competitions and imports seem attractive on the same amounts.

3. The cost of borrowing decreases as the money paid back is lesser.

4. The holder of a bond gets benefitted while creditor/lender gets to loose money with inflation.
Hence, statements (d) is correct.

National income is calculated from many sectors. It can be classified into three major sectors i.e. primary, secondary and tertiary. The primary sector in India is the highest contributor in the development.

The course of development falls down and share of the secondary sector will be greater than the primary. At a very high level of development, the share of service sector in the national income will be more.

The term ‘hot money’ is used to refer to foreign portfolio investments. Hot money is the flow of funds from one country to another in order to earn a short-term profit on interest rate differences and anticipated exchange rate shifts.

These speculative capital flows are called ‘Hot money’ because they can move very quickly in and out of markets, potentially leading to market instability.

The credit rating agencies in India mainly includes ICRA and CRISIL. ICRA was formally referred to the Investment Information and Credit Rating Agencies in India.

CARE Ratings commenced ITS operations in April 1993. Over the period, it has established itself as the second-largest credit rating agency in India.

Their main functions are to grade the different sectors and companies in terms of performance and offer solutions for upgradation.