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

Total Questions: 50

21. Which of the following statements is/are true with respect to Phillips Curve? [Morning Shift-2016 (I)]

1. It shows the trade-off between unemployment and inflation.
2. The downward sloping curve of Phillips Curve is generally held to be valid only in the short run.
3. In the long run, Phillips Curve is usually thought to be horizontal at the Non-Accelerating Inflation Rate of Unemployment (NAIRU).
Select the correct answer using the codes given below

Correct Answer: (c) 1 and 2
Solution:

Philips Curve depicts a negative relationship between inflation and unemployment. At higher levels of inflation, there will be unemployment and vice-versa.

This curve is valid only in the short run. The long run Philip Curve is seen as vertical line at the natural rate of unemployment, where the rate of inflation has no effect on employment. Hence, option (c) is correct.

22. Which one of the following nations is not a member of the Eurasian Economic Union? [Morning Shift-2016 (I)]

Correct Answer: (d) Uzbekistan
Solution:

The Eurasian Economic Union (EEU) is an Economic Union of States located primarily in Northern Eurasia.

A treaty aiming for the establishment of EEU was signed on 29th May, 2014 by leaders of Belarus, Kazakhstan and Russia. Uzbekistan is not the member of EEU.

23. BRICS leaders signed the agreement to establish a New Development Bank at the summit held in [Morning Shift-2016 (I)]

Correct Answer: (c) Fortaleza, Brazil (2014)
Solution:

The term ‘BRIC’ was coined in 2001, by the then Chairman of Goldman Sachs, Jim O’ Neill. BRICS –– Brazil, Russia, India, China and South Africa since 2009, the BRICS nations have met annually at formal summit.

BRICS leaders decided to established a ‘New Development Bank’ in his SHIKAR summit which was held on 15th July, 2014 in fortaleza, Brazil. First summit ––Yekaterinburg, 2009. In 2010, South Africa became the member.

24. Shishu, Kishor and Tarun are the schemes of [Morning Shift-2016 (I)]

Correct Answer: (b) Micro Units Development and Refinance Agency Limited (MUDRA)
Solution:

Micro Units Development and Refinance Agency (MUDRA) Bank is a public sector financial institution in India. The bank will classify its clients into three categories
• Shishu––Allowed loans up to ₹50000
• Kishor––Allowed loans ₹50000 -₹5 lakh
• Tarun––Allowed loans  ₹5 lakh - ₹10 lakh
Those eligible to borrow from MUDRA bank are small manufacturing unit, shopkeeper, fruit and vegetable vendors, artisans.

25. Which of the following statements are true with respect to the concept of EFFICIENCY as used in mainstream economics? [Morning Shift-2016 (I)]

1. Efficiency occurs when no possible reorganisation of production can make anyone better off without making someone else worse off.

2. An economy is clearly inefficient if it is inside the Production Possibility Frontier (PPF).

3. At a minimum, an efficient economy is on its Production Possibility Frontier (PPF).

4. The terms such as ‘Pareto Efficiency’, ‘Pareto Optimality’ and ‘Allocative Efficiency’ are all essentially one and the same which denote ‘efficiency in resource allocation’.
Select the correct answer using the codes given below

Correct Answer: (d) 1, 2, 3 and 4
Solution:

In microeconomics, economic efficiency is a situation in which nothing can be improved without something else being hurt.

Hence, Statement 1 is correct. The Pareto Efficiency states that any point within the PPF curve is considered inefficient because the total output of
commodities is below the output capacity. In situations with limited resources, an efficient economy lies along the PPFcurve.

Hence the statement 2 and 3 are correct. The terms such as ‘Pareto Efficiency’,‘Pareto Optimality’ and ‘Allocative Efficiency’ are all essentially one and the same which denote ‘efficiency in resource allocation’.
Hence, statement 4 is also correct.

26. Which one of the following nations has faced severe economic crisis in the year 2015 resulting in default in repayment of IMF loan? [Morning Shift-2016 (I)]

Correct Answer: (b) Greece
Solution:

The International Monetary Fund (IMF) is an organisation of 188 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth and reduce poverty around the world.

Greece is the first developed country. Who has faced severe economic crisis in the year 2015 and did not deposit the installment of the loan, taken by the IMF.

27. Which of the following is not a ‘Public Good’? [Morning Shift-2016 (I)]

Correct Answer: (a) Electricity
Solution:

A public good is a product (National Defence, Light House, Public Parks) that one individual can consume without reducing its availability to another individual and from which no one is excluded. Hence option (a) is not a public good.

28. Which one of the following is not among the aims of the Second Five Year Plan (1956-57 to 1960-61)? [Morning Shift-2016 (I)]

Correct Answer: (c) Achieve self-sufficiency in foodgrains and increase agricultural production to meet the requirements of industry and exports
Solution:

Second Five Year Plan was based on the PC Mahalanobis model. The objectives of this Plan were:
(i) Rapid industrialisation with particular emphasis on the development of basic and heavy industries.
(ii) Promote socialist pattern of society (as envisaged at Avadi summit of INC, 1955).
(iii) To increase national income by 25%.
(iv) Expansion of employment and reduction of inequality.
(v) Increase the vote of investment from 7%-11% of GDP.
Hence, option(c) is not the aims of the Second Five Year Plan (1956-57 to 1960-61).

29. Which of the following is/are the example(s) of Transfer Payment(s)? [Morning Shift-2016 (I)]

1. Unemployment allowance
2. Payment of salary
3. Social security payments
4. Old age pension
Select the correct answer using the codes given below

Correct Answer: (c) 1, 3 and 4
Solution:

Transfer payment as the name suggest, is done through by transferring the cash benefits (part of Government’s Welfare Scheme) to the beneficieries.

Unemployment allow once social security paymeils, and old age pension are the examples of Transfer payment.

30. Which of the following statements with regard to UID/Aadhar Card are correct? [Morning Shift-2016 (I)]

1. It is a 12-digit unique form of identification for all residents of India.
2. It is an identity number along with the biometric information of the individuals.
3. It is a national identity and citizenship card.
Select the correct answer using the codes given below

Correct Answer: (b) 1 and 2
Solution:

Unique Identification Number (UID) renamed as Aadhar, is a 12 digit individual indentification number with the biometric information of individual, issued by Unique Identification Authority of India (UIDAI).

Aadhar is an important component of government’s JAM trinity, i.e. Jan Dhan, Aadhar and Mobile phone.

Recently, government passed a bill to provide Aadhar, a statutory status. But its not a national identity and cilizenship card. Hence, option (b) is correct.