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Poverty, Planning, Finance and Economic/Social Development (Part-II)

📆 March 17, 2025

Total Questions: 50

11. The Multi-dimensional Poverty Index developed by Oxford Poverty and Human Development Initiative with UNDP support covers which of the following? [2012-1]

1. Deprivation of education, health, assets and services at household level

2. Purchasing power parity at national level

3. Extent of budget deficit and GDP growth rate at national level

Select the correct answer using the codes given below:

Correct Answer: (a) 1 only
Solution:Deprivation of education, health, assets and services at household level

MPI presents estimates for 107 developing countries (77% of the world total).

The MPI identifies overlapping deprivations that people experience across the same three dimensions i.e. health, education and standard of living (HDI).

12. Which of the following is/are among the noticeable features of the recommendations of the Thirteenth Finance Commission? [2012-1]

1. A design for the Goods and Services Tax, and a compensation package linked to adherence to the proposed design

2. A design for the creation of lakhs of jobs in the next ten years in consonance with India's demographic dividend

3. Devolution of a specified share of central taxes to local bodies as grants

Select the correct answer using the codes given below:

Correct Answer: (c) 1 & 3 only
Solution:The 13th finance commission has an elaborate design for the GST. Statement 1 is correct. Statement 2 is incorrect. Report basically discusses the improved implementation of the existing schemes. The third statement is correct. The report in its para 10.44 mentions: "Taking into account the demand of local bodies that they be allowed to benefit from the buoyancy of central taxes and the constitutional design of supplementing the resources of Panchayats and municipalities through grants-in-aid, we recommend that local bodies be transferred a percentage of the divisible pool of taxes cover and above the share of the states, as stipulated by us, after converting this share to grant-in-aid under Article 275."

13. Consider the following specific stages of demographic transition associated with economic development: [2012-1]

1. Low birthrate with low death rate

2. High birthrate with high death rate

3. High birthrate with low death rate

Select the correct order of the above stages using the codes given below:

Correct Answer: (c) 2, 3, 1
Solution:Demographic Transition is the transition from high birth and death rates to lower birth and death rates as a country or region develops from a pre-industrial to an industrialized economic System.

14. Under which of the following circumstances may 'capital gains' arise? [2012-1]

1. When there is an increase in the sales of a product

2. When there is a natural increase in the value of the property owned

3. When you purchase a painting and there is a growth in its value due to increase in its popularity

Select the correct answer using the codes given below:

Correct Answer: (b) 2 & 3 only
Solution:Capital gain is an increase in the value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price. The gain is the difference between a higher selling price and a lower purchase price. The increase in the sales of a product does not mean increase the selling price of the product.

15. Which of the following measures would result in an increase in the money supply in the economy? [2012-1]

1. Purchase of government securities from the public by the Central Bank

2. Deposit of currency in commercial banks by the public

3. Borrowing by the government from the Central Bank

4. Sale of government securities to the public by the Central Bank

Select the correct answer using the codes given below:

Correct Answer: (c) 1 & 3
Solution:1. Purchase of government securities from the public by the Central Bank

3. Borrowing by the government from the Central Bank

16. Which of the following would include Foreign Direct Investment in India? [2012-1]

1. Subsidiaries of foreign companies in India

2. Majority foreign equity holding in Indian companies

3. Companies exclusively financed by foreign companies

4. Portfolio investment

Select the correct answer using the codes given below:

Correct Answer: (d) 1, 2 & 3 only
Solution:A Foreign direct investment (FDI) involves establishing a direct business interest in a foreign country, such as buying or establishing a manufacturing business, while foreign Portfolio Investment (FPI) refers to investing in financial assets such as stocks or bords in a foreign country. Hence, FDI does not involve portfolio Investment.

17. Who among the following constitute the National Development Council? [2013-1]

1. The Prime Minister

2. The Chairman, Finance Commission

3. Ministers of the Union Cabinet

4. Chief Ministers of the States

Select the correct answer using the codes given below.

Correct Answer: (b) 1, 3 & 4 only
Solution:The National Development Council includes the Prime Minister, Union ministers, Chief ministers of all states. administrative heads of the Union Territories and members of the planning commission.

18. To obtain full benefits of demographic dividend, what should India do? [ [2013-1]

Correct Answer: (a) Promoting skill development
Solution:To reap the benefits of demographic dividend, skills have to be developed because a relatively larger portion of population fall under the category of productive labour force when there is a demographic dividend.

19. A rise in general level of prices may be caused by : [2013-1]

1. an increase in the money supply

2. a decrease in the aggregate level of output

3. an increase in the effective demand

Select the correct answer using the codes given below.

Correct Answer: (d) 1, 2 & 3
Solution:General Price rise may be caused by an increase in the money supply as the real value of the money reduces. The higher aggregate price level will reduce the purchasing power subsequently reducing the consumer spending. Effective demand also increases when there is less purchasing power due to inflation.

20. Which one of the following is likely to be the most inflationary in its effect? [2013-1]

Correct Answer: (d) Creating new money to finance a budget deficit
Solution:Extremely high rates of inflation are generally associated with high rates of money growth. It is often the result of financing large deficits by printing money.
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