National Income & Gross Domestic Product (Economic Development) Part-I

Total Questions: 55

31. One of the reasons for India's occupational structure remaining more or less the same over the years has been that : [U.P.S.C (Pre) 1995]

Correct Answer: (a) investment pattern has been directed towards capital intensive industries
Solution:The occupational structure of any country is defined by the segment of a country's population that is engaged in economic ventures and various professions. In India after independence, inspite of multiple times increase in GDP and inspite of huge changes in the share of primary, secondary and tertiary sector in GDP, the occupational structure is still more or less remained the same as it was earlier.

The main reason behind that is the investment pattern has been directed towards capital intensive industries. It has been one of the chief criticisms of planning in India, which emphasised the capital intensive industries in place of promoting the labour intensive industries.

The efforts of the planners with regard to the development of the industries turned beneficiary towards the large scale capital sector, whilst the small scale and cottage industries failed to respond to the developments. The large scale industries are intensively capital oriented, and their development failed to procure employment to the workforce.

32. Which of the following activities constitute real sector in the economy ? [U.P.S.C (Pre) 2022]

1. Farmers harvesting their crops

2. Textile mills converting raw cotton into fabrics

3. A commercial bank lending money to a trading company.

4. A corporate body issuing Rupee Denominated Bonds overseas.

Select the correct answer using the code given below :

Correct Answer: (a) 1 and 2 only
Solution:The real sector of an economy is the key section as activities of this sector persuade economic output and is represented by those economic segments that are essential for the progress of GDP of the economy.

The real sector of economy concerns the production, purchase and flow of goods and services within an economy. It is contrasted with the financial sector of economy, which concerns the aspects of the economy that deal purely in transactions of money and other financial assets, which represent owner- ship or claims to ownership of real sector goods and ser- vices.

Among the given activities, farmers harvesting their crops and textile mills converting raw cotton into fabrics constitute real sector in the economy, while a commercial bank lending money to a trading company and a corporate body issuing Rupee Denominated Bonds overseas are parts of financial sector activities. Hence, option (a) is the correct answer.

33. Which among the following is NOT a major factor of economic growth ? [U.P.P.C.S. (Pre) 2021]

Correct Answer: (d) Technocrats and Bureaucrats
Solution:Major factors of economic growth are as follows :

• Natural Resources

• Physical Capital or Infrastructure

• Population or Labour

• Human Capital

• Technology

• Law

Among the given options, Technocrats and Bureaucrats are not the major factors of economic growth. So, option (d) is the correct answer.

34. Which one of the following is a sign economic growth ? [R.A.S./R.T.S. (Pre) 2013]

Correct Answer: (b) A sustained increase in real Per Capita Income.
Solution:Economic growth indicates the growth in the real income in any economy in a specific time period. Generally it is said that if there is an increase in Gross Domestic product, Gross National Product and Per Capita Income, then there is economic growth of the country, but the most suitable measure of the economic growth and development is a sustained increase in real Per Capita Income.

Per-Capita Income - The per-capita income of a nation is a rudimentary indication of its wealth. The per-capita income of a nation is calculated by dividing its GDP by its population. The most important metric is real per-capita income. Real GDP per capita is calculated as Real GDP divided by the population.

The per-capita income is used to compare nations' standards of living and is stated in regularly used international currencies such as the Dollar, Euro, and others. The real GDP is useful in determining a country's evolution. Previously, real per capita income was utilised due to the absence of a quantifiable gauge of economic progress

35. The best index of economic development is provided by : [B.P.S.C (Pre) 2022]

Correct Answer: (b) growth in per capita real income from year to year
Solution:Economic growth indicates the growth in the real income in any economy in a specific time period. Generally it is said that if there is an increase in Gross Domestic product, Gross National Product and Per Capita Income, then there is economic growth of the country, but the most suitable measure of the economic growth and development is a sustained increase in real Per Capita Income.

Per-Capita Income - The per-capita income of a nation is a rudimentary indication of its wealth. The per-capita income of a nation is calculated by dividing its GDP by its population. The most important metric is real per-capita income. Real GDP per capita is calculated as Real GDP divided by the population.

The per-capita income is used to compare nations' standards of living and is stated in regularly used international currencies such as the Dollar, Euro, and others. The real GDP is useful in determining a country's evolution. Previously, real per capita income was utilised due to the absence of a quantifiable gauge of economic progress

36. The most appropriate measure of a country's economic growth is its - [U.P.P.C.S. (Pre) 2013, U.P. Lower Sub. (Pre) 2013, Chhattisgarh P.C.S. (Pre) 2015, U.P.S.C (Pre) 2001]

Correct Answer: (d) Per Capita Product (PCP)
Solution:The most suitable measure of the economic growth of any country is its Per Capita Real Income or Per Capita Net National Product. It is used to measure a country's standard of living and thus a better indicator or economic growth and development.

Per-Capita Income - The per-capita income of a nation is a rudimentary indication of its wealth. The per-capita income of a nation is calculated by dividing its GDP by its population. The most important metric is real per-capita income. Real GDP per capita is calculated as Real GDP divided by the population.

The per-capita income is used to compare nations' standards of living and is stated in regularly used international currencies such as the Dollar, Euro, and others. The real GDP is useful in determining a country's evolution. Previously, real per capita income was utilised due to the absence of a quantifiable gauge of economic progress

37. The standard of living in a country is represented by : [U.P.P.C.S. (Mains) 2013]

Correct Answer: (b) Per Capita Income
Solution:The most suitable measure of the economic growth of any country is its Per Capita Real Income or Per Capita Net National Product. It is used to measure a country's standard of living and thus a better indicator or economic growth and development.

Per-Capita Income - The per-capita income of a nation is a rudimentary indication of its wealth. The per-capita income of a nation is calculated by dividing its GDP by its population. The most important metric is real per-capita income. Real GDP per capita is calculated as Real GDP divided by the population.

The per-capita income is used to compare nations' standards of living and is stated in regularly used international currencies such as the Dollar, Euro, and others. The real GDP is useful in determining a country's evolution. Previously, real per capita income was utilised due to the absence of a quantifiable gauge of economic progress

38. Increase in absolute and per capita real GNP do not connote a higher level of economic development, if : [U.P.S.C (Pre) 2018]

Correct Answer: (c) poverty and unemployment increase
Solution:Economic growth is a conservative concept and it denotes the rise in a nation's actual level of output whereas economic development is comparatively a normative concept, and it denotes economic growth with enhancement in the standards of living.

Better standard of living includes various things like safe drinking water, improved sanitation systems, medical facilities, spread of primary education to improve literacy rate, eradication of poverty, increase in employment opportunities etc.

Thus, increase in absolute and per capita real GNP (i.e. economic growth) do not connote a higher level of economic development, if poverty and unemployment increases.

39. The growth rate of Per Capita Income at current prices is higher than that of Per Capita Income at constant prices, because the latter takes into account the rate of: [U.P.S.C (Pre) 2000]

Correct Answer: (b) increase in price level
Solution:Per Capita Income at constant prices is obtained by adjusting the effects of inflation (increase in price level) from Per Capita Income at current prices.

Thus, it is clear that the growth rate of Per Capita Income at current prices will be comparatively more than the growth rate of Per Capita Income at constant prices and this difference will be equal to the corresponding growth rate of inflation or increase in price level.

40. That the Per Capita Income in India was Rs. 20 in 1867-68, was ascertained for the first time by : [U.P.S.C (Pre) 2000, U.P.P.C.S. (Pre) 2007,U.P.P.C.S. (Mains) 2013]

Correct Answer: (d) Dadabhai Naoroji
Solution:Dadabhai Naoroji was the first to estimate National Income of India in 1867-68. According to his estimates the Per Capita Income of India was Rs. 20 at that time.      Per capita income (PCI) or total income measures the average income earned per person in a given area (city, region, country, etc.) in a specified year.

It is calculated by dividing the area's total income by its total population. PCI compares and assesses the economic situations of countries with varying population sizes.

The measurement of a country's per capita income is done by dividing the total national income of a particular country or state by the population in that specific geographical region.

When calculating a country's PCI, every individual is taken into account. The calculation includes men, women, children, and babies. This is mainly because the measurement considers the entire country's population or specific geographical location