MPTET Varg 1 Economics Mock Test - 1 - MPTET MCQ

दिए गये वाक्य में 'शब्द-अर्थ प्रयोग' की त्रुटि है। यहाँ 'प्रकृति हमें अभ्यन्तर' सार्थक शब्द नही है और इससे सही अर्थ प्रकट नही हो रहा।

• अत: सार्थक शब्द 'प्रकृति हमें निरंतर' होना चाहिए।
• सही वाक्य - प्रकृति हमें निरंतर परोपकार का संदेश देती है।

स्पष्टीकरण

• निरंतर - सदा, लगातार, बिना किसी अंतराल के।
• अभ्यन्तर - वस्तु का भीतरी भाग।

अन्य संबंधित बिंदु

शब्द-अर्थ प्रयोग की अशुद्धि:-

• कभी-कभी वाक्यों में सही शब्दों की जगह उनके ही सादृश लगने वाले शब्दों का प्रयोग अर्थ में परिवर्तन का कारण बन जाता है,
• जिसके कारण वाक्य का सही अर्थ ही बदल जाता है और यह वाक्य में शब्द-अर्थ प्रयोग की अशुद्धि कहलाती है।

उदाहरण -

• अशुद्ध रूप - राष्ट्रपति ने पुरस्कार भेंट किए।
• शुद्ध रूप - राष्ट्रपति ने पुरस्कार प्रदान किए।

The correct answer is 'persistent'.

Explanation

• Relentless: Not stopping or changing.(रुकना या बदलना नहीं)
  • ​E.g.- My elder brother is busy in the relentless fight against crime.
• Persistent: Determined to continue doing something even though people say that you are wrong or that you cannot do it.(
  कुछ करते रहने का दृढ़ संकल्प, भले ही लोग कहें कि आप गलत हैं या आप ऐसा नहीं कर सकते)
  • ​​E.g.- He has been a persistent critic of the president.

Hence, the correct answer is 'Persistent'.

Other Related Points

• Lenient: Not as severe or strong in punishment or judgment as would be expected.(सज़ा या निर्णय उतना कठोर या कठोर नहीं जितना अपेक्षित होगा)
  • ​​​E.g.- They believe that judges are too lenient with terrorist suspects.
• Intermittent: Not happening regularly or continuously; stopping and starting repeatedly or with periods in between.(नियमित या लगातार नहीं हो रहा; बार-बार रुकना और शुरू होना या बीच-बीच में पीरियड्स होना)
  • ​​​​E.g.- Although she made intermittent movie appearances, she was essentially a stage actress.
• Merciful: Someone who is merciful is willing to be kind to and forgive people who are in their power.(कोई व्यक्ति जो दयालु है वह उन लोगों के प्रति दयालु होने और उन्हें माफ करने को तैयार रहता है जो उनकी शक्ति में हैं)
  • ​​​​​E.g.- "God is merciful," said the priest.

The logic follows here is:

All the given options follow the same sequence as given in the question except option (ii).

In option (4), '90' is written in place of '09'. So, the incorrect combination is 'ii'.

Hence, the correct answer is "option (4)".

The correct answer is 26 January 1950.

Explanation

• The Indian Constitution, which came into effect on 26 January 1950, has the dubious distinction of being the longest in the world.
• The Constitution of India was framed between December 1946 and November 1949. During this time its drafts were discussed clause by clause in the Constituent Assembly of India.
• In all, the Assembly held eleven sessions, with sittings spread over 165 days.
• The Constituent Assembly had 300 members. Of these, six members played particularly important roles. Three were representatives of the Congress, namely, Jawaharlal Nehru, Vallabh Bhai Patel, and Rajendra Prasad.
• Besides this Congress trio, a very important member of the Assembly was the lawyer and economist B.R. Ambedkar. Serving with him were two other
  lawyers, K.M. Munshi from Gujarat and Alladi Krishnaswamy Aiyar from Madras.

• These six members were given vital assistance by two civil servants. One was B. N. Rau, Constitutional Advisor to the Government of India, and the other was the Chief Draughtsman, S. N. Mukherjee.

Hence, we conclude that the Indian Constitution came into effect on 26 January 1950.

Important Points

Timeline of Formation of the Constitution of India

Children at the Foundational Stage need to engage with texts in a variety of forms (e.g., picture books, storybooks, graded readers, and worksheets).

ExplanationThe following are the principles for textbook design:-

• Curriculum Principle: The textbook should be designed specifically to achieve the Competencies as articulated for the Foundational Stage. Textbook developers and designers should not only be aware of the competencies of the particular domain or subject area for which the textbook is being developed but also of the Competencies for the whole Stage. This would allow them to bring in horizontal connections across the domains in the Foundational Stage.
• Discipline Principle: Textbook developers should have sound knowledge of applied linguistics and mathematics. The content and sequence included in the textbook should be careful not to contradict some of the core principles of these disciplines.
• Pedagogy Principle: Textbook developers need to have a clear understanding of the pedagogy that is appropriate for the Competency and content (e.g., in language the balanced approach of including oral language, phonics, and word-solving instruction and meaning-making needs to be incorporated all together).
• Technology Principle: Textbook developers should be aware of the current technology and audio-visual materials available for enhancing the learning experience of children. Activities that involve digital technology and references to external material should be embedded appropriately in the textbook.
• Diversity and Inclusion: In the Indian context, it is important to maintain diversity and inclusion as an important principle in the choice of content for textbooks.

Thus, it is concluded that exclusion principle is not a principle for textbook design.

• It is the output and price range where a business can barely cover all of its variable costs. 
  
• The lowest point of the average variable cost (AVC) has been reached. It is the point where the average variable cost (AVC) curve crosses the marginal cost (MC) curve.

​Hence, the correct answer is that the point where the firms can meet their variable costs is called the production stop point.

The correct answer is Both 1 and 2.

Explanation

• Equilibrium refers to a state of rest when no change is required. A firm (producer) is said to be in equilibrium when it has no inclination to expand or to contract its output. This state either reflects maximum profits or minimizes losses.
• There are two methods for the determination of Producer’s Equilibrium:
  • ​Total Revenue and Total Cost Approach (TR-TC Approach)
  • Marginal Revenue and Marginal Cost Approach (MR-MC Approach)
• ​The producer can attain the equilibrium level under two different situations:
  • ​When Price remains Constant (It happens under Perfect Competition). In this situation, the firm has to accept the same price as determined by the industry. It means any quantity of a commodity can be sold at that particular price.
  • When Price Falls with rising in output (It happens under Imperfect Competition). In this situation, the firm follows its own pricing policy. However, it can increase sales only by reducing the price.
• Marginal Revenue-Marginal Cost Approach (MR-MC Approach):
  • ​MC = MR:
    • ​As long as MC is less than MR, it is profitable for the producer to go on producing more because it adds to its profits. He stops producing more only when MC becomes equal to MR.
  • ​MC is greater than MR after MC = MR output level:
    • ​When MC is greater than MR after equilibrium, it means producing more will lead to a decline in profits.

Concept:

Mean: Mean is the average or the most common value in a collection of numbers

Median: The middle value of the given numbers when arranged in an order.

Mode: The mode is the value that is repeatedly occurring in given numbers

Calculation:

Relation between Mean, Median and Mode will be

⇒ Mode = (3 × Median) - (2 × Mean)

∴ The required result will be "{Mode = (3 × Median) - (2 × Mean)}.

The correct answer is V.K.R.V. Rao.

Explanation

• About Dr. V.K.R.V. Rao
  • Dr. Vijayendra Kasturi Ranga Varadaraja Rao (8 July 1908 – 25 July 1991) was an Indian economist, politician, and educator.
  • Dr. V.K.R.V. Rao applied a combination of census of output and census of income methods to estimate national income.
  • While dividing the whole economy into separate categories he included agriculture, pastures, forests, fishing, hunting, and mining in the first category and applied the output method to derive the value of output in these sectors.
  • Other economic activities like industry, trade, transport, administrative services and public utilities, professions, liberal arts, and domestic services were included in the second category and applied the income method to derive the amount of income generated by all these services.

Important Points

• During the British period, several estimates of national income were made by Dadabhai Naoroji, William Digby, Findlay Shirras, Shah and Khambatta, V.K.R.V. Rao, and R.C. Desai.
• Among all these estimates of national income in India, the estimates of Dadabhai Naoroji, Findlay Shirras, and Shaw and Khambatta have computed the value of the output produced by the agricultural sector and then added some proportion of the income generated by the non-agricultural sectors, but these estimates were proven to be unscientific.

Thus, The first person who made use of a combination of the census of output and census of income methods for estimating national income in the pre-independence period in India was Dr. V.K.R.V. Rao.

An indifference curve is a graph showing a combination of two goods that give the consumer equal satisfaction and utility. Each point on an indifference curve indicates that a consumer is indifferent between the two and all points give him the same utility.

• People seek the highest level of utility, which means that they wish to be on the highest possible indifference curve. However, people are limited by their budget constraints, which show what tradeoffs are actually possible. The solution to this problem, i.e. the combination of goods and services that will maximize an individual’s total utility given their budget, is called the consumer equilibrium. The consumer is in equilibrium when he maximizes his utility, given his income and the market prices.
• A budget line is a graphical representation of various combinations of two goods that a consumer can afford at specified prices of the products at a particular income level. A budget line can be drawn on the basis of the expenditure plan.
• Consumer equilibrium exists at the point on the indifference curve where the budget line is tangent to the curve. Thus, at the equilibrium point, the slope of the budget line is equal to the slope of the indifference curve.

The correct answer is Agricultural produce. Explanation

• Minimum Support Price (MSP) is a form of market intervention by the Government of India to insure agricultural producers against any sharp fall in farm prices.
• CACP recommends MSP to Cabinet Committee on Economic Affairs (CCEA) and its decision/recommendations are not binding. It is a statutory body under the Ministry of Agriculture.
• MSP ensures a profit of at least 50% over the cost of production for the farmers.
• As of now, CACP recommends MSPs of 23 commodities, which comprise 7 cereal (paddy, wheat, maize, sorghum, pearl millet, barley, and ragi), 5 pulses (gram, tur, moong, urad, lentil), 7 oilseeds (groundnut, rapeseed-mustard, soybean, sesamum, sunflower, safflower, niger seed), and 4 commercial crops

Other Related Points

• The national electric grid in India has an installed capacity of 407.8 GW as of 30 September 2022. Renewable power plants, which also include large hydroelectric power plants, constitute 40.4% of the total installed capacity.
• The government introduced the Direct Benefit Transfer (DBT) system in fertilizers in October 2016. A 100% subsidy on various fertilizer grades is released to the fertilizer companies under the fertilizer DBT system based on actual sales made to the beneficiaries by the retailers.

Thus, the Minimum support price is related to Agricultural produce.

The correct answer is ​Rise in share of Industry sector in the GDP.

Explanation

• Industrial Indicator is a statistical combination of multiple factors.
• The Big three Industrial Indicators are
  • Gross Domestic Product (GDP)
  • Inflation
  • Unemployment
• GDP is an essential Indicator because the fall and rise of GDP created a significant impact on other Indicators.

Important Points

• GDP:
  • Gross Domestic Product (GDP) is the total monetary value of final goods and services produced in the economic territories of a country in a given year.
  • The total GDP of India is currently $ 3.46 trillion.
  • According to World Economy Ranking 2022, India has recently overtaken the UK to become the fifth largest economy in the world.
• Inflation:
  • Inflation refers to a general increase in the prices of goods and services in an economy in a given period.
  • According to RBI October month retail, Inflation is 6.77%

Explanation

• The aspect of capitalism is that private property can be passed on from one generation to another.
• Therefore those who inherit capital can enjoy high income even without any effort.
• They have access to the best private education and jobs.

Important Points

1. It is an economic system based on the private ownership of the means of production and their operation for profit.
2. The essential feature of capitalism is the motive to make a profit.
3. In a capitalist economy, the role of government is very limited.
4. The main functions of government, as given by Adam Smith, are to maintain law and order in a country, make national defence stronger, and regulate the money supply
5. This creates inequality of opportunity as well as the inequality of outcome.
6. Central characteristics of capitalism include
   • wage labour.
   • voluntary exchange
   • property rights recognition
   • private property
   • price system
   • competitive markets
   • capital accumulation

Therefore the correct answer is Private profit.

The correct answer is Option 2.

Explanation

Demand curve:

• Law of Demand states that the quantity demanded and the price of a good is inversely related while other factors do not change.
• So, the demand curve will generally be downward sloping, indicating the negative relationship between the price of a good or service and the quantity demanded.
• Demand curves may be linear or curved.
• A demand curve depicts the price and quantity combinations listed in the demand schedule.
• If the income of the consumer, prices of the goods and choices of the consumer remain the same, then the change in the quantity of good demanded by the consumer will be negatively related to the change in the price of the good.
  • This change in price will be reflected as a shift in the demand curve.
• Factors leading to a shift in the curve are the following:
  • Changes in income levels:
    • For a normal good, higher income levels lead to an outward shift while lower-income levels lead to an inward shift in the demand curve
  • Changes in the market’s size:
    • A growing market leads to an outward shift of the demand curve while a shrinking market results in an inward shift.
  • Changes in the price of related goods and services:
    • If the price of complementary goods decreases, the demand curve will shift outwards. whereas if the price of complementary goods increases, the curve will shift inwards.

The Correct Answer is shift rightward.

Explanation

• Following a change in the underlying determinant of demand, the direction of the demand curve will shift to the left or right.
• Increases in demand are illustrated in the demand curve by a change to the right. This may be caused by a variety of factors, including an increase in sales, an increase in a substitute's price or a decrease in a supplement's price.
• A change in demand to the right implies a rise in the sum requested at any price. Conversely, for a variety of reasons, demand will decrease and cause a change to the left of the demand curve, including a decline in sales, assuming that a good is a normal good, a drop in the price of a replacement, and an increase in the price of a supplement.
• Following a shift in one or more of the underlying determinants of supply, the direction of a supply curve can change. For instance, a cost adjustment, such as a change in the cost of labor or raw materials, can shift the direction of the supply curve.
• The Production Possibility Curve (PPC) is the locus of different combinations of two commodities that can be generated with a given amount of resources and technology (the direction of a moving point). It's also known as the curve of transformation.

The correct answer is variable in the short and long run.

Explanation

• Entrepreneurship
  • Entrepreneurship is the process of developing a business plan, launching and running a business using innovation with the motive to meet customer needs and make a profit.
• Entrepreneurship skills
  • Entrepreneurship skills include skill sets such as effective communication, financial knowledge, leadership, business management, time management, marketing skills, creative and critical thinking, and problem-solving skills.
  • Entrepreneurship skills are variable in the short run and the long run because anyone can develop these skills through theoretical knowledge, training, and practical application.
  • An entrepreneur earns profits as a reward when he applies his entrepreneurship skills to set up and run a business firm.

Thus, entrepreneurship skills are variable in the short run and long run.

The correct answer is Real GDP.

Explanation

• Real GDP:
  • When the GDP is calculated on the basis of a fixed price in a base year.
  • It is an inflation-adjusted measure that reflects the value of all goods and services produced by an economy in a given year.
  • It is often referred to as constant-price GDP, inflation-corrected GDP, or constant dollar GDP.
  • Real GDP makes comparing GDP from year to year and from different years more meaningful because it shows comparisons for both the quantity and value of goods and services.
  • Real GDP is calculated by dividing nominal GDP by GDP deflator and then multiplying by 100.

Other Related Points

• Nominal GDP:
  • The GDP is measured on the basis of the current price index.
  • It is also known as the Current price GDP or Money GDP.
• Nominal GNP:
  • ​It is measured at current prices.
• GNP at Factor Cost:
  • It is the market value of all the final goods and services produced in the domestic territory of a country by normal residents during an accounting year.
  • It includes net factor income from abroad and excludes net indirect taxes.

The correct answer is Non-monetised consumption.

Explanation

• Part of the goods and services consumed by the population are produced and consumed without undergoing monetary transactions is non-monetised consumption.
• This non-monetised consumption and the corresponding productive activities go unrecorded in labour statistics and in the national accounts.
• According to the National Income Committee (1949), “A national income estimate measures the volume of commodities and services turned out during a given period counted without duplication”.
• In India, the Central Statistics Office of the Ministry of Statistics and Programme Implementation have been measuring National Income and other related macroeconomic aggregates.
• The domestic product measures all goods and services arising out of economic activity, while national income is the sum of all incomes as a result of the economic activity.
• National income includes only those incomes which are derived directly from the current production of goods and services, which are called factor incomes.
• The presence of Non-monetised consumption is one of the problems in calculating the National Income.
• Various non-market and domestic activities, like child care by mothers and sisters, are not taken into account while estimating the national income of a country.
• In non-monetised consumption, money is not used in transactions.

The correct answer is Option 1, i.e.,

Personal Income (PI) = NI - Undistributed profits - Net interest payments made by households - Corporate tax + Transfer payments to the households from the government and firms.

Explanation

Personal Income:

• From the National Income (NI), which is earned by the firms and government enterprises, a part of the profit is not distributed among the factors of production. This is called Undistributed Profits (UP).
• We have to deduct UP from NI to arrive at Pl since UP does not accrue to the households.
• Similarly, Corporate Tax, which is imposed on the earnings made by the firms, will also have to be deducted from the NI, since it does not accrue to the households.
• On the other hand, the households do receive interest payments from private firms or the government on past loans advanced by them.
• And households may have to pay interests to the firms and the government as well, in case they had borrowed money from either.
• So we have to deduct the net interests paid by the households to the firms and government.
• The households receive transfer payments from the government and firms (pensions, scholarships, prizes, for example) which have to be added to calculate the Personal Income of the households.

Other Related Points

• Personal Disposable Income:
  • When direct taxes are subtracted from personal income, then it is called disposable personal income (DPI).
  • Disposable personal income (DPI) = [Personal income] - [Direct Taxes]

The correct answer is Union Budget 2021-22.

Explanation

• On 1 February 2021, Finance Minister Nirmala Sitharaman presented the first paperless budget. This was done due to the ongoing COVID-19 pandemic in India.
• The Union Budget 2021 was presented in a digital format for the first time to promote the Government of India's (GoI) Digital India flagship programme.

Other Related Points

• The Union Budget of India also referred to as the Annual Financial Statement in Article 112 of the Constitution of India, is the annual budget of the Republic of India.
• The Government presents it on the first day of February so that it could be materialized before the beginning of the new financial year in April.
• Until 2016 it was presented on the last working day of February by the Finance Minister in Parliament.
• The budget division of the department of economic affairs (DEA) in the finance ministry is the nodal body responsible for producing the budget.
• It is presented by means of the Finance Bill and the Appropriation bill has to be passed by Lok Sabha before it can come into effect on 1 April, the start of India's financial year.
• Since 1947, there have been a total of 73 annual budgets, 14 interim budgets, and four special budgets, or mini-budgets.

The correct answer is 15, 59.

Important Points

• The workforce population includes people aged from 15 years to 59 years.
• The workforce population indicates the share of the working-age population in the total population.
• The working-age population is the total population in a particular area that is considered able and likely to work based on the number of people in a predetermined age range.
• The working-age population gives an estimate of the total number of potential workers within an economy.
• The age limits of the working-age population can vary from country to country.
• There were around 521 million workers in India, the second largest after China based on the world factbook data.

The correct answer is Repo Rate.

Explanation

• Repo Rate is the rate at which the Reserve Bank Of India lends money to commercial banks in India if they face a scarcity of funds.
• Current Repo Rate: 6.50 %.
• It is a rate on short-term, collateral-backed borrowing.
• The Repo rate is used by monetary authorities to control inflation.

Reverse Repo Rate

• It is the rate at which the Reverse Bank of India borrows funds from commercial banks.
• It is the rate at which commercial banks in India deposit their excess money with the Reserve Bank of India usually for the short term.
• Current Reverse Repo Rate: 3.35%.

Sovereign Rate

• It is similar to the corporate bond credit ratings.
• It is based upon an assessment of both the ability and willingness of a country to service its debt.

Prime Lending Rate

• It is an interest rate used by the banks at which banks lend to customers with good credit.

The correct answer is Central Bank is following a tight money policy.

Explanation

• Bank rate refers to the rate at which the Central bank lends money to its clients for the long term.
• An increase in this rate means that the Central bank is following a tight monetary policy as an increase in rates will lead to a decrease in money supply thereby leading to a decrease in inflation and a reduction in investment.
• Hence option 4 is correct.

​​Additional Information

• What is a Cash Reserve Ratio?
  • Cash Reserve Ratio (CRR) is a specific part of the total deposit that is held as a reserve by the commercial banks and is mandated by the Reserve Bank of India (RBI).
  • Significance of CRR
    • CRR is an important tool of the Monetary Policy that provides the following benefits:
    • CRR regulates the money supply and the level of inflation in the country.
    • CRR ensures the security of the reserved amount as the specific amount of the bank’s deposit is stored with the Reserve Bank of India which can be readily available as per the need of the customers.
    • CRR also has a major role to play during high inflation.
      • During high inflation, the Reserve Bank of India increases the CRR rate to reduce the amount of money that is available with the banks.
      • This reduces the excess flow of money in the economy.
    • During the need of funds, the RBIcan lower the rate of the CRR to help the banks in providing loans to various businesses and industries for investment. A low rate of CRR also increases the growth rate of the economy.
• Reverse Repo Rate
  • The reverse repo rate is the rate of interest that is provided by the Reserve bank of India while borrowing money from the commercial banks.
  • In other words, we can say that the reverse repo is the rate charged by the commercial banks in India to park their excess money with RBI for a short-term period.
  • The current reverse repo rate in India as of October 2019 is 4.90%.

Statistical data is classified as quantitative, qualitative, temporal, special(geographical), Boolen data types in statistics there is no mathematical classification of data

∴ Mathematical classification data is correct

Important Point

Qualitative data is defined as the data that approximates and characterizes. Qualitative data can be observed and recorded. This data type is non-numerical in nature. This type of data is collected through methods of observations, one-to-one interviews, conducting focus groups, and similar methods.

Chronological classification = In such a series, time is the main factor according to which data is arranged. For example the production of milk in the country over a period of time

Geographical classification = Place, location or geographical division is the main factor in such a series. For example, a number of listed consumer's goods companies in different countries

Given

7, 5, 13, x, and 9

Formula used

Average = Sum of all observation /Number of observation

Calculation

Average = (7 + 5 + 13 + x + 9)/5

⇒ 10 = (34 + x)/5

⇒ 50 - 34 = x

⇒ 16 = x

∴ Value of x is 16.

The correct answer is Commission for Agricultural Costs & Prices.

Explanation

• Commission for Agricultural Costs & Prices
  • It was formed in January 1965.
  • It recommends the minimum support prices (MSP) and issues prices for paddy and wheat.
  • It is a joint office of the ministry of agriculture & farmers welfare.
  • It raises productivity and overall grain production in line with the emerging demand patterns in the country.
  • It recommends MSPs of 23 commodities, are following:
    • 7 oilseeds including groundnut, rapeseed-mustard, soybean, sesamum, sunflower, safflower, and nigerseed.
    • 7 kinds of cereal including paddy, wheat, maize, sorghum, pearl millet, barley, and ragi.
    • 5 pulses including gram, tur, moong, urad, and lentil.
    • 4 commercial crops include copra, sugarcane, cotton, and raw jute.

Other Related Points

• Indian Council of Agricultural Research
  • ICAR was first reorganized in 1965.
  • The Indian Council of Agricultural Research is an autonomous organization.
  • It is under the Department of Agricultural Research and Education (DARE), Ministry of Agriculture and Farmers Welfare, Government of India.
  • Headquarters- New Delhi.
  • There is a total of 101 ICAR institutes and 71 agricultural universities spread across the country.
• NITI Aayog
  • NITI Aayog is not a constitutional body.
  • It was established on January 1, 2015.
  • It is formed in place of the Planning Commission. o The ex-officio Chairman of this is the Prime Minister.
  • It is the premier policy Think Tank of the Government of India, providing both directional and policy inputs.

The correct answer is 2013.

Explanation

• In September parliament enacted the National Food Security Act, 2013.
  • The state government of Madhya Pradesh on 21^st July 2017 appointed a four-member food commission headed by IAS (retd.) Rajkishore Swain.
  • The commission was appointed in accordance with the National Food Security Act (NFSA) 2013.
  • The commission will be responsible for monitoring the implementation of the provisions of the National Food Security Act 2013 in the state.
  • It will be responsible for monitoring -
    • Distribution of the food grains under the Public Distribution System (PDS).
    • Implementation of the Midday Meal Scheme and Integrated Child Development Services scheme in the state.

The correct answer is ​Index of Industrial Production.

Explanation

• The Index of Industrial Production (IIP) is an index that indicates the performance of various industrial sectors of the Indian economy, during a given period with respect to that in a chosen Base period- 2011-12.
• The IIP index is computed and published by the Central Statistical Office (CSO) on a monthly basis.
  • CSO or Central Statistical Organisation operates under the Ministry of Statistics and Programme Implementation (MoSPI).
• The Central Statistics Office (CSO) revised the base year of the all-India Index of Industrial Production (IIP) from 2004-05 to 2011-12 on 12 May 2017.
  • Revisions in the IIP are necessitated to maintain representativeness of the items and producing entities and also address issues relating to the continuous flow of production data.
• IIP is a key economic indicator of the manufacturing sector of the economy.
• Mining, manufacturing, and electricity are the three broad sectors in which IIP constituents fall.
  • Electricity, crude oil, coal, cement, steel, refinery products, natural gas, and fertilisers are the eight core industries that comprise about 40% of the weight of items included in the Index of Industrial Production.
• The factory production data (IIP) is used by various government agencies such as the Ministry of Finance, the Reserve Bank of India (RBI), private firms and analysts, among others for analytical purposes.
  • The data is also used to compile the Gross Value Added (GVA) of the manufacturing sector in the Gross Domestic Product (GDP) on a quarterly basis.
• The CSO uses secondary data to reach the monthly IIP number.
  • The data is sourced from various agencies in different ministries or departments of the government.
  • The Department of Industrial Policy and Promotion (DIPP) is the source for the major chunk of data for the calculation.

Costs incurred by businesses consist of fixed and variable costs.

• Variable expenses do not remain constant when production levels change. On the other hand, fixed costs are costs that remain constant regardless of production levels (such as office rent).
• Understanding which costs are variable and which costs are fixed is important to business decision-making.

Important Points

• Variable cost is a production expense that increases or decreases depending on changes in a company’s manufacturing activity.
• The raw materials used as components of a product are considered variable costs because this type of expense typically fluctuates based on the number of units produced.
• Variable costs tend to change depending on output quantity.
• An increase in output elevates costs, while reduced output leads to a decrease in costs.​

Thus, we can conclude that the Cost of raw materials is a variable cost in the short run.

Other Related Points

• Fixed costs remain the same regardless of production or manufacturing output.
• Therefore, variable costs could be considered direct costs of production volume, rising in response to the increase in production and decreasing with lower production.

• When output and the capital stock grow at the same rate, macroeconomically speaking, this is known as balanced growth.
• The long-term stability of real interest rates can be explained by this development path, but it is predicated on some significant assumptions.
• The idea behind balanced growth from the supply side is that different economic sectors should develop simultaneously to avoid creating obstacles to economic development.
• Agriculture, industry, internal trade, transportation, etc., should all develop at the same time, for instance.
• The initial interpretation of the BG philosophy was the wide-scale extension of economic activity to bridge the gap between private and social return.

Hence, The original interpretation of balanced growth relates to Large scale expansion of activities to overcome divergence between private and social benefits.