Structure of the Indian Economy & Demographics (Part-I)

Total Questions: 50

11. A redistribution of income in a country can be best brought about through: [1996]

(a) progressive taxation combined with progressive expenditure
(b) progressive taxation combined with regressive expenditure
(c) regressive taxation combined with regressive, expenditure
(d) regressive taxation combined with progressive expenditure

Correct Answer: (b) progressive taxation combined with regressive expenditure

Solution:Progressive Tax is a process in which as the income of a person increases, rate of income tax on the income also goes up. Regressive Expenditure is a process in which government spending decreases with the increase in income of people and government tends to spend more on poor in comparison to rich people.

12. As per the 1991 Census, the average size of households in terms of number of persons per household in respect of the given states follows the sequence (highest first, lowest last). [1996]

(a) Haryana, Uttar Pradesh, Kerala, Tamil Nadu
(b) Uttar Pradesh, West Bengal, Gujarat, Kerala
(c) Gujarat, Haryana, Uttar Pradesh, West Bengal
(d) Uttar Pradesh, West Bengal, Tamil Nadu, Kerala

Correct Answer: (b) Uttar Pradesh, West Bengal, Gujarat, Kerala

Solution:Uttar Pradesh, West Bengal, Gujarat, Kerala.

13. Human Development Index comprises literacy rates, life expectancy at birth and [1997]

(a) Gross National Product per head in the US dollars
(b) Gross Domestic Product per head at real purchasing power
(c) Gross National Product in US dollars
(d) National Income per head in US dollars

Correct Answer: (d) National Income per head in US dollars

Solution:HDI or Human Development Index measures achievements in terms of life expectancy, literacy and adjusted real income (standard of living). First HDR calculations were made in 1990 by Mehboob-ul-Huq.

14. In India, inflation is measured by the: [1997]

(a) Wholesale Price Index number
(b) Consumers Price Index for urban non-manual workers
(c) Consumers Price Index for agricultural workers
(d) National Income Deflation

Correct Answer: (a) Wholesale Price Index number

Solution:Wholesale Price Index (WPI) is an index used by the Reserve Bank of India till 2014 to measure inflation. WPI is the price of a representative basket of wholesale goods. It takes a basket of 697 items into account and shows the combined prices. The RBI, ex-governor Raghuram Rajan, Shifted to consumer Price Index (CPI) is because WPI neglects services and the bottlenecks between a wholesaler and a retailer. CPI, based on 260 commodities including certain services, measures the change in Prices at the retail level. The base year of CPI is 2012.

15. Given below are two statements, one labelled as Assertion (A) and the other labelled as Reason (R). [1997]

Assertion (A): The emergence of economic globalism does not imply the decline of socialist ideology.

Reason (R): The ideology of socialism believes in Universalism and globalism.

In the context of the above two statements which one of the following is correct?

(a) Both A & R are true & R is the correct explanation of A
(b) Both A & R are true but R is not the correct explanation of A
(c) A is true but R is false
(d) A is false but R is true

Correct Answer: (a) Both A & R are true & R is the correct explanation of A

Solution:Globalism is the policy of placing the interests of the world above those of individual nations. This also means that there would be free movement of goods and services across national boundaries.

Socialism is an economic system based on state ownership of means of production including capital. Universalism means application of certain basic principles at universal level.

16. National Income is: [1997]

(a) Net National Product at market price
(b) Net National Product at factor cost
(c) Net Domestic Product at market price
(d) Net Domestic Product at factor cost

Correct Answer: (b) Net National Product at factor cost

Solution:National Income is the money value of all final goods and services produced in an economy during a financial year. At the level of an economy, value of final goods and services is equal to the total income of all factors of production viz labour, capital, land and entrepreneurship.

17. The Minimum Alternative Tax (MAT) was introduced in the Budget of the Government of India for the year: [1997]

(a) 1991-92
(b) 1992-93
(c) 1995-96
(d) 1996-97

Correct Answer: (d) 1996-97

Solution:MAT or Minimum Alternative Tax was introduced in the budget of 1996-97. Under MAT a company is required to pay a minimum tax of 7% of the book profit in case the tax on the total income computed under the normal provisions of law works out to less than this amount.

18. Match List-I with List-II and select the correct answer. [1997]

List-I (Committee)	List-II (Chaired by)
A. Disinvestment of shares in Public Sector Enterprises	1. Rajah Chelliah
B. Industrial Sickness	2. Omkar Goswami
C. Tax Reforms	3. R.N. Malhotra
D. Reforms in Insurance Sector	4. C. Rangarajan

Codes:

	A	B	C	D
(a)	1	4	2	3
(b)	4	2	1	3
(c)	4	1	2	3
(d)	1	3	4	2

Correct Answer: (b)

Solution:Chelliah Committee on Tax Reforms 1993; Omkar Goswami Committee on Industrial Sickness-1994; Rangarajan Committee on Disinvestment of Shares in PSUs - April 1993; RN Malhotra Committee on Reforms in Insurance Sector-1993.

19. What is the correct sequence of the descending order of the following States in respect of female literacy rates as per the 2001 census? [1997]

1. Mizoram

2. Kerala

3. Goa

4. Nagaland

Choose the correct answer using the codes given below:

(a) 2, 1, 3, 4
(b) 2, 3, 4, 1
(c) 2, 4, 1, 3
(d) 1, 2, 4, 3

Correct Answer: (a) 2, 1, 3, 4

Solution:According to 2001 census the correct sequence in descending order of the states for female literacy rate is Kerala - 87.7%, Mizoram-86.7%, Goa-76.5%, Nagaland - 61.5%.

20. The Capital Account Convertibility of the Indian Rupee implies: [1998]

(a) that the Indian Rupee can be exchanged by the authorised dealers for travel
(b) that the Indian Rupee can be exchanged for any major currency for the purpose of trade in goods and services
(c) that the Indian Rupee can be exchanged for any major currency for the purpose of trading financial assets
(d) None of the above

Correct Answer: (c) that the Indian Rupee can be exchanged for any major currency for the purpose of trading financial assets

Solution:Capital account convertibility means free conversion of cross-border capital flows. Any entity can convert domestic currency into hard currency at the prevailing market rate and take hard currency out of the country without the need of offering any explanation.

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