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

Total Questions: 50

31. In an open economy, the national income (Y) of the economy is: (C, I, G, X, M stand for Consumption, Investment, Govt. Expenditure, total exports and total imports respectively. [2000]

(a) Y=C+I+G+X
(b) Y=1+G-X+M
(c) Y=C+I+G+(X-M)
(d) Y=C-G+1+(X-M)

Correct Answer: (c) Y=C+I+G+(X-M)

Solution:Consumption (C), Investment (I), Government purchases (G), X stands for exports and M for imports.
Y=C+I+G+X-M
This identity is called national income accounts identity for an open economy. Consumption refers to household expenditure on various goods and services. Goods are of three types: non-durables (such as food and cloth), durables (such as cars and refrigerators) and services (such as haircut, education and medical care).

32. Match List I with List II and select the correct answer using the codes given below the lists: [2000]

List-I	List-II
A. Boom	1. Business activity at high level with increasing income, output and employment at macro level
B. Recession	2. Gradual fall of income, output and employment with business activity in a low gear
C. Depression	3. Unprecedented level of under employment, and unemployment, drastic fall in income output and employment.
D. Recovery	4. Steady rise in the general level of prices, income, output and employment.

Codes:

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

Correct Answer: (a)

Solution:Boom is a period of time during which sales of a product or business activity increases very rapidly. In the stock market, booms are associated with bull markets, whereas busts are associated with bear markets. Recession is A significant decline in activity across the economy, lasting longer than a few months. It is visible in industrial production, employment, real income and wholesale-retail trade. Depression is a severe and prolonged downturn in economic activity. In economics, a depression is commonly defined as an extreme recession that lasts two or more years. Economic Recovery is a period of increasing business activity signaling the end of a recession. Much like a recession, an economic recovery is not always easy to recognize until at least several months after it has begun.

33. Indian Human Development Report does not give for each sample village: [2000]

(a) Infrastructure and Amenities Index
(b) Education Related Index
(c) Health Related Index
(d) Unemployment Related Index

Correct Answer: (d) Unemployment Related Index

Solution:The National Human Development Report 2001, is an attempt to map the state of human development in India. While considering the state of human development, and the related economic, educational and health attainments, the report analyses governance for human development. To facilitate monitoring, many process indicators have been created. The Human Development Index, Gender Disparity Index and Human Poverty Index have been calculated for India after modifying the UNDP methodology.

34. Consider the following statements about the megacities of India [2000]

1. Population of each megacity is more than 5 million

2. All the megacities are important sea ports

3. Megacities are either national or state capitals

Which of these statements are correct?

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

Correct Answer: (d) 1 & 3

Solution:Megacities of India have more than 5 million population. But not all the major megacities are located on the sea coast or are sea ports. Delhi, which is the national capital is not a sea port.

35. Which one of the following ports of India handles the highest tonnage of import cargo? [2000]

(a) Calcutta
(b) Kandla
(c) Mumbai
(d) Vishakhapatnam

Correct Answer: (d) Vishakhapatnam

Solution:When the question was asked Vishakhapatnam handled highest tonnage of import cargo but now Kandla is largest port which has large volume of space for containers followed by Paradip port.

Kandla port handled the highest traffic volume at 115.40 MT during 2018-19, followed by Paradip (109.27 MT). JNPT (70.70 MT), Visakhapatnam (65.30 MT), Kolkata with Haldia (63.71 MT) and Mumbai (60.58).

36. Which one of the following statements is false? [2000]

The next question is based on the following table. Study the same carefully and attempt the question that follow:

Indicators of development for some Asian Countries
Country	Life	Infant	Adult
	expectancy at birth (years) live births	mortality rate (per 1000)	literacy rate (Percent)
	1995	1966	1995
India	62.4	72	52
China	69.2	38	82
Indonesia	64	47	84
Malaysia	71.4	11	84
Thailand	69.5	31	94
Korea	71.7	6	98
Philippines	67.4	32	95

(a) All countries other than India have over 80% literacy
(b) Malaysia and Korea have life expectancy higher than all other countries
(c) Higher the adult literacy lower is the infant mortality
(d) The life expectancy at birth in India is almost the same as that of Indonesia

Correct Answer: (c) Higher the adult literacy lower is the infant mortality

Solution:According to given data, infant mortality rate is both high and low.

The term "life expectancy" refers to the number of years a person can expect to live. By definition, life expectancy is based on an estimate of the average age that members of a particular population group will be when they die.

37. The most appropriate measure of economic growth is its: [2001]

(a) Gross Domestic Product of a country's
(b) Net Domestic Product
(c) Net National Product
(d) Per Capita Real Income

Correct Answer: (d) Per Capita Real Income

Solution:Per capita real income is nothing but NNP at factor cost. It means national income is sum total of all factor incomes adjusted for increase in prices.

38. Match List I with List II and select the correct answer using the codes given below the lists: [2001]

List-I (Term)	List-II (Explanation)
A. Fiscal deficit	1. Excess of Total Expenditure over Total Receipts
B. Budget deficit	2. Excess of Revenue Expenditure over revenue receipts
C. Revenue deficit	3. Excess of Total Expenditure over Total Receipts less borrowings
D. Primary deficit	4. Excess of Total Expenditure over Total Receipts less borrowings and Interest Payments

Codes:

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

Correct Answer: (a)

Solution:Revenue deficit revenue receipts Revenue expenditure; Budget deficit Total receipts Total expenditure; Fiscal deficit Revenue receipts + Non-debt creating capital receipts - Total expenditure (F.D. is government borrowings); Primary deficit Fiscal deficit Interest payments.

39. Consider the following taxes: [2001]

(a) 1 only
(b) 2&4
(c) 1 & 3
(d) 2 & 3

Correct Answer: (b) 2&4

Solution:Indirect taxes are the charges that are levied on goods and services. Some of the significant indirect taxes include Value Added Tax, Central Sales Tax, Central Excise Duty, Customs Duty, stamp duties and expenditure tax. Property tax, Corporation tax and Wealth tax are examples of direct taxes.

40. The term National Income represents: [2001]

(a) gross national product at market prices minus depreciation
(b) gross national product at market prices minus depreciation plus net factor income from abroad
(c) gross national product at market prices minus depreciation and indirect taxes plus subsidies
(d) gross national product at market prices minus net factor income from abroad

Correct Answer: (c) gross national product at market prices minus depreciation and indirect taxes plus subsidies

Solution:The option (c) gross national product at market price minus depreciation minus indirect tax plus subsidies.

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