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Which method is usually used for calculating the purchasing power parity by the IMF?
  • a)
    Gross Domestic Product
  • b)
    Net domestic product
  • c)
    Net National Product
  • d)
    Gross National Product 
Correct answer is option 'A'. Can you explain this answer?

Deepa Iyer answered
 
  • GNP is the 'national income' according to which the IMF ranks the nations of the world in terms of the volumes—at purchasing power parity (PPP). 
  • India is ranked as the 3rd largest economy of the world (after China and the USA), while as per the nominal/ prevailing exchange rate of the rupee, India is the 7th largest economy (IMF, April 2016). Now such comparisons are done using the GDP, too.

Consider the following statements: 
1. If the national income is being derived at ‘Factor Cost', the indirect taxes do not need to be deducted from it.
2. In this case, the government does not have to add their income accruing from indirect taxes to the national income.
Which of these statements is/ are correct?
  • a)
    1 Only
  • b)
    Both 1 and 2
  • c)
    2 Only
  • d)
    None of the above
Correct answer is option 'C'. Can you explain this answer?

Kabir Verma answered
 
  • If the national income is being derived at ‘market cost, the indirect taxes do not need to be deducted from it. 
  •  
    In this case, the government does not have to add their income accruing from indirect taxes to the national income. It means that the confusion in the case of national income accounting at factor cost is only related to indirect taxes.
 
 
 

Consider the following pairs:
1. Gross Domestic Product (GDP): Total value of all final goods and services produced within a nation's boundaries during a one-year period.
2. Net Domestic Product (NDP): GDP minus income from abroad.
3. Gross National Product (GNP): GDP adjusted for depreciation.
4. Net National Product (NNP): GNP minus depreciation.
How many pairs given above are correctly matched?
  • a)
    Only two pair
  • b)
    Only one pairs
  • c)
    Only three pairs
  • d)
    All four pairs
Correct answer is option 'A'. Can you explain this answer?

Upsc Toppers answered
1. Gross Domestic Product (GDP): Correctly matched. GDP is indeed the total value of all final goods and services produced within a nation's boundaries during a one-year period.
2. Net Domestic Product (NDP): Incorrectly matched. NDP is actually GDP minus depreciation, not income from abroad.
3. Gross National Product (GNP): Incorrectly matched. GNP is GDP plus income from abroad, not adjusted for depreciation.
4. Net National Product (NNP): correctly matched.
Alternatively, NNP can be calculated as:
NNP=Gross National Product−Depreciation​NNP=Gross National Product−Depreciation​

Consider the following statements:
1. The Market Economy, as discussed by Adam Smith, operates primarily through government regulations.
2. In a Socialist model, the state controls natural resources but not labor.
3. The Non-Market Economy is also known as a command economy or centrally planned economy.
Which of the statements given above is/are correct?
  • a)
    1 Only
  • b)
    1 and 2 Only
  • c)
    2 and 3 Only
  • d)
    3 Only
Correct answer is option 'D'. Can you explain this answer?

Lakshya Ias answered
1. The Market Economy, as discussed by Adam Smith, operates primarily through government regulations. *(Incorrect)*: Adam Smith's Market Economy is characterized by minimal government intervention, emphasizing the "invisible hand" of the market forces of demand and supply. It operates through laissez-faire policies, which advocate for non-interference by the government.
2. In a Socialist model, the state controls natural resources but not labor. *(Incorrect)*: In the Socialist model, the state controls both natural resources and labor. This ensures that resources are used for the well-being of all and prevents economic inequality by eliminating private property rights.
3. The Non-Market Economy is also known as a command economy or centrally planned economy. *(Correct)*: The Non-Market Economy, often linked to socialism and communism, is indeed referred to as a command economy or centrally planned economy. In this system, the state makes all economic decisions and controls the production and distribution of goods.
Therefore, the correct answer is Option D (3 Only).

What does the Beijing Consensus propose as an alternative to the policies advocated by the Washington Consensus?
  • a)
    Constant experimentation and innovation
  • b)
    Reduced state intervention in economies
  • c)
    Imposition of neoliberal policies on nations
  • d)
    Market fundamentalism and globalization
Correct answer is option 'A'. Can you explain this answer?

K.L Institute answered
The Beijing Consensus, introduced as an alternative to the Washington Consensus, emphasizes constant experimentation and innovation as one of its core pillars. This approach contrasts with the Washington Consensus's focus on neoliberal policies and market fundamentalism. The Beijing Consensus advocates for gradual reforms, peaceful distributive growth, and selective incorporation of foreign ideas, offering a different perspective on economic development and governance.

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