Ramesh Singh Test: Introduction to Economics- 1 - UPSC MCQ

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.

Statement-I correctly mentions that India transitioned to calculating national income at market price in January 2015. Statement-II correctly points out that the transition to market price calculation was facilitated by the implementation of the Goods and Services Tax (GST). Both statements are individually correct and do not contradict each other, but Statement-II does not provide an explanation for Statement-I; hence, the correct answer is option (b).

Statement-I correctly outlines the characteristics and historical background of a Market Economy, emphasizing its roots in capitalism and free market principles. Statement-II accurately describes the core tenets of a Non-Market Economy, highlighting the central role of the state in resource management and economic decision-making. Moreover, Statement-II complements Statement-I by providing a contrasting view of economic organization based on societal ownership. Hence, both statements are factually correct, and Statement-II effectively explains the nature of a Non-Market Economy in relation to a Market Economy.

1. Primary Sector - Oil Exploration: Correctly matched. The primary sector involves economic activities that exploit natural resources, such as mining, agriculture, and oil exploration.

2. Secondary Sector - Banking: Incorrectly matched. The secondary sector is related to the processing of raw materials and industrial activities. Banking falls under the tertiary sector, which involves services.

3. Tertiary Sector - Education: Correctly matched. The tertiary sector includes all service-related economic activities, such as education, healthcare, banking, and communication.

4. Quaternary Sector - Research and Development: Correctly matched. The quaternary sector is also known as the 'knowledge' sector and includes activities related to education, research, and development.

Thus, pairs 1, 3, and 4 are correctly matched, while pair 2 is incorrectly matched.

Statement 1: Correct. The World Bank acknowledged the necessity of state intervention in the economy, moving away from its earlier support for free market principles. This shift recognized the limitations of a purely market-driven approach and the importance of state involvement in addressing economic issues.

Statement 2: Correct. By the mid-1980s, non-market economies began to integrate elements of market economies, signifying a trend towards the mixed economic system. This adaptation was part of a broader recognition that a blend of market and state mechanisms was necessary for optimal economic performance.

Statement 3: Incorrect. France officially adopted national planning in 1944-45, not the early 1930s. This period marked the formal adoption of the mixed economic system in France, following the disruptions caused by World War II.

Therefore, the correct answer is Option B: 1 and 2 Only.

- Statement 1: Lionel Robbins characterized economics as the study of managing limited resources in 1935. This is correct. Lionel Robbins’ definition highlighted the necessity of making choices due to the scarcity of resources.

- Statement 2: The secondary sector includes activities related to agriculture and mining. This is incorrect. The secondary sector encompasses activities involving the processing of raw materials from the primary sector, such as manufacturing and industrial activities. Agriculture and mining are part of the primary sector.

- Statement 3: John Maynard Keynes is known as the father of microeconomics. This is incorrect. John Maynard Keynes is known as the father of macroeconomics, particularly noted for his work "The General Theory of Employment, Interest and Money" published in 1936.

Therefore, the correct answer is Option A: 1 Only.

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​

1. Santiago Consensus - Proposed by James D. Wolfensohn: Correct. The Santiago Consensus was indeed proposed by James D. Wolfensohn, the then President of the World Bank Group, emphasizing inclusive socio-economic development.

2. Net Domestic Product (NDP) - GDP minus Depreciation: Correct. NDP is calculated by subtracting depreciation from GDP, representing the net value of goods and services after accounting for wear and tear.

3. Gross National Product (GNP) - GDP plus Income from Abroad: Correct. GNP includes the GDP of a country along with the net income received from abroad, which includes remittances, interest on external loans, and external grants.

4. Gross Domestic Product (GDP) - Total value of all final goods and services produced within a nation's boundaries during a one-year period: Correct. GDP measures the total market value of all final goods and services produced within a country during a specific period, typically a year.

All four pairs are correctly matched.

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).

The IMF has used purchasing power parity (PPP)-adjusted Gross Domestic Product (GDP) measures in their World Economic Outlook (WEO)1 since 1993 and, more recently, as an element of the formula that is used to help guide decisions on the distribution of its members' quotas.