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]

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. Boom1. Business activity at high level with increasing income, output and employment at macro level
B. Recession2. Gradual fall of income, output and employment with business activity in a low gear
C. Depression3. Unprecedented level of under employment, and unemployment, drastic fall in income output and employment.
D. Recovery4. Steady rise in the general level of prices, income, output and employment.

Codes:

ABCD
(a)1234
(b)1243
(c)2143
(d)2134
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]

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?

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.

The United Nations has outlined certain features which pertain to Megacities-

  • Megacities prioritize economic competitiveness and employment.
  • The environment matters, but may be sacrificed for growth.
  • Transport overtakes all other infrastructure concerns.
  • Better governance is a vital step towards better cities.
  • Holistic solutions are desired but difficult to achieve.
  • Cities will seek to improve services, but could do more to manage demand. Technology will help deliver transparency and efficiency.
  • The private sector has a role to play in increasing efficiency.

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

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
CountryLife Infant Adult
expectancy at birth (years) live births mortality rate (per 1000) literacy rate (Percent)
1995 1966 1995
India62.47252
China69.23882
Indonesia644784
Malaysia71.41184
Thailand69.53194
Korea71.7698
Philippines67.43295
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.

Infant Mortality Rate in India

  1. AS per Census 2011, The infant mortality rate, which plays an important role in health planning, has shown a considerable decline from 129 per 1000 live births in 1971 to 110 in 1981 and from 80 in 1991 to 44 in 2011. The child mortality rate has depicted a perceptible decline from 51.9 in 1971 to 41.2 in 1981 and from 26.5 in 1991 to 12.2 in 2011.
  2. Also, World Bank has indicated 28.3 as Infant Mortality Rate of India for 2019.
  3. According to the latest sample registration system Bulletin, Infant Mortality Rate in Kerala – 7 (updated)
  4. Infant Mortality Rate in Madhya Pradesh – 48 (updated)
  5. In India, Nagaland has the best Infant Mortality Rate which is at 4.
  6. As per RBI, the Infant Mortality Rate of the National Capital Delhi is 13.
  7. The infant mortality rate among females is higher than among males in all Indian states except:

    • Chhattisgarh

    • Delhi

    • Madhya Pradesh

    • Tamil Nadu

    • Uttarakhand

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

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.
  • Per Capita Income is determined by dividing National Income by the total population of India. The National Income of India is sum total of the monetary value of goods and services that are produced in India within a period of one year.
  • National Income is determined by three methods, which include:
  • Product Method: In this method, National Income is calculated by taking the monetary value of all goods and services produced by the three sectors of the economy which include the primary sector, secondary sector and tertiary sector.
  • Income Method: In this method, National Income is calculated by taking the sum total of income generated by all Individuals and Companies before they are taxed.
  • Expenditure Method: In this method, National Income is calculated using the formula C + I+ G (X – M) where C is consumer spending, I is investments, G is government spending, M is imports and X is exports.
  • The calculation of Per Capita Income in India is done by the Central Statistical Organization. Other Institutions like RBI also publish their estimates.
  • International organizations like the International Monetary Fund and World Bank also publish these data periodically for most countries of the world.

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 deficit1. Excess of Total Expenditure over Total Receipts
B. Budget deficit2. Excess of Revenue Expenditure over revenue receipts
C. Revenue deficit3. Excess of Total Expenditure over Total Receipts less borrowings
D. Primary deficit4. Excess of Total Expenditure over Total Receipts less borrowings and Interest Payments

Codes:

ABCD
(a)3124
(b)4321
(c)1324
(d)3142
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.
  1. Budget Deficit: the government spends more money than it collects in taxes and revenue.
  2. Revenue Deficit: the government spends more money on its revenue-generating activities, such as tax collection, than it collects in revenue from those activities.
  3. Fiscal Deficit: the government spends more money on all of its activities, including both revenue-generating and non-revenue-generating activities, than it collects in revenue from all sources.
  4. Primary Deficit: the government spends more money on all of its activities, excluding interest payments, than it collects in revenue from all sources.
  5. Effective Revenue Deficit: the govt spends more money on its revenue-generating activities, excluding grants for the creation of capital assets, than it collects in revenue from those activities.

39. Consider the following taxes: [2001]

  1. Corporation tax
  2. Customs duty
  3. Wealth tax
  4. Excise duty

Which of these is/are indirect taxes ?

Correct Answer: (b) 2 & 4
Solution:
  • Indirect Tax refers to the type of tax for which the Impact of Tax and Incidence of Tax fall on different persons or entities.

  • Indirect Taxes are, generally, imposed on goods and services.

    • They differ from direct taxes because they are not levied on a person who pays directly to the government. Instead, they are levied on products/services and are collected by the person selling the product.

  • Indirect Taxes in India are administered by the Central Board of Indirect Taxes and Customs (CBIC), which is a part of the Department of Revenue (under the Ministry of Finance).
  • Some prominent examples of Indirect Taxes in India include:

    • Excise Duty

    • Customs Duty

    • Sales Tax

    • Service Tax

    • Goods and Services Tax (GST)

    • Octroi and Entry Tax

    • Toll Tax

    • Stamp Duty

  • Indirect Tax refers to the type of tax for which the Impact of Tax and Incidence of Tax fall on different persons or entities.
  • Indirect Taxes are, generally, imposed on goods and services.

    • They differ from direct taxes because they are not levied on a person who pays directly to the government. Instead, they are levied on products/services and are collected by the person selling the product.

  • Indirect Taxes in India are administered by the Central Board of Indirect Taxes and Customs (CBIC), which is a part of the Department of Revenue (under the Ministry of Finance).

  • Some prominent examples of Indirect Taxes in India include:

    • Excise Duty

    • Customs Duty

    • Sales Tax

    • Service Tax

    • Goods and Services Tax (GST)

    • Octroi and Entry Tax

    • Toll Tax

    • Stamp Duty

40. The term National Income represents: [2001]

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

National Income denotes the total worth of all final goods and services generated within a country during a specific time frame, typically over the course of one financial year.

  • From a macroeconomic perspective, national income plays a central role in measuring the economic performance and prosperity of a nation.
  • It is utilised in evaluating per capita income, understanding inequality, and comparing growth across countries. It also forms the basis for fiscal policy formulation, taxation, and welfare schemes.
  • Globally, institutions like the World Bank, the IMF, and the United Nations rely on national income statistics to assess global economic trends and design development frameworks.
  • In India, agencies such as the National Statistical Office (NSO) under the Ministry of Statistics and Programme Implementation (MoSPI) handle national income estimation.