Ramesh Singh : Miscellaneous - 7


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QUESTION: 1

Consider the following statements.

1. The long term measure is to cool down Inflation is to make money costlier.

2. The short term is to increase the Bank Rate or Repo Rate.

3. Another short term measure is to increase production.

Which of these statements is/are correct?

Solution:
  • The governments may take recourse to tighter monetary policy to cool down either the demand-pull or the cost-push inflations.

  • This is intended to cut down the money supply in the economy by siphoning out the extra money (as RBI increases the Cash Reserve Ratio of banks in India) from the economy and by making money costlier (as RBI increases the Bank Rate or Repo Rate in India) This is a short-term measure. In the long-run, the best way is to increase production with the help of the best production practices.

QUESTION: 2

Which of the following is also known as structural Inflation?

Solution: This inflation takes place when the supply falls drastically and the demand remains at the same level. Such situations arise due to supply-side accidents, hazards or mismanagement which is also known as “structural inflation'. This could be put in the demand-pull inflation' category.

QUESTION: 3

Consider the following statements about GDP Deflator.

1. This is the ratio between GDP at Current Price and GDP at Constant Prices.

2. If GDP at Current Prices is equal to the GDP at Constant Prices, GDP deflator will be 1, implying no change in the price level.

3. GDP deflator is acclaimed as a better measure of price behaviour because it covers all goods and services produced in the country.

Which of these statements is/are correct?

Solution:
  • If GDP at Current Prices is equal to the GDP at Constant Prices, GDP deflator will be 1, implying no change in the price level.

  • The GDP deflator is acclaimed as a better measure of price behaviour because it covers all goods and services produced in the country (because the weight of services has not been equitably accounted in the Indian "headline inflation', i.e., inflation at WPI).

QUESTION: 4

Consider the following statements about the non-accelerating Inflation rate of unemployment.

1. The NAIRU is that rate of unemployment which is consistent with a constant rate of inflation

2. The upward and downward forces on price and wage neutralise each other and there is no tendency of change in the rate of inflation

Which of these statements is/are correct?

Solution:
  • The NAIRU is that rate of unemployment which is consistent with a constant rate of inflation.

  • It means at NAIRU, the upward and downward forces on price (inflation) and wage (unemployment) neutralise each other and there is no tendency of change in the rate of inflation.

  • We may say that the NAIRU is the lowest unemployment rate that an economy can sustain without any upward pressure on the inflation rate.

QUESTION: 5

What the government can do to bring about the situation of Reflation?

1. Printing of extra money

2. Interest rate cuts

3. Higher public expenditure

Which of these statements is/are correct?

Solution:
  • Reflation is a situation often deliberately brought by the government to reduce unemployment and increase demand by going for higher levels of economic growth.

  • Governments go for higher public expenditures, tax cuts, interest rate cuts, etc Fiscal deficit rises, extra money is generally printed at higher levels of growth, wages increase and there is almost no improvement in unemployment.

QUESTION: 6

What is the effect of inflation on the expenditure?

1. Increased prices make our consumption levels fall as goods and services we buy get costlier.

2. Inflation makes investment expenditure decrease as a result of the increased cost of money.

Which of these statements is/are correct?

Solution:
  • Inflation affects both the forms of expenditures -consumption as well as investment.

  • Increased prices make our consumption levels fall as goods and services we buy get costlier.

QUESTION: 7

Which of the following are correctly matched?

1. Economic holding - which gives work to an average size family having one plough under the traditional farming system

2. Family holding - which ensures a minimum satisfactory standard of living in a family

3. Optimum holding - the maximum size of the holding which must be possessed and owned by a family

Which of these statements is/are correct?

Solution:
  • Family holding - which gives work to an average size family having one plough under the traditional farming system.

  • Economic holding - which ensures a minimum satisfactory standard of living in a family.

  • Optimum holding - the maximum size of the holding which must be possessed and owned by a family.

QUESTION: 8

The whole process of Land Reforms could benefit only to the

Solution:

Data regarding the numerical achievements of land reforms have been highly discouraging.

(i) Tenancy reforms provided tenants with rights, but only 4 percent of the total operated areas in the country (14.4 million hectares of the operated area by 11 million tenants by 1992).

(ii) Redistribution of ownership rights of the land took place, but only up to 2 per cent of the total operated area in the country (less than 2 million hectares among the 4.76 million people by 1992).

(iii) Taken together, the whole process of land reforms could benefit only 6 percent of the operated area of the country with a negligible socio-economic positive impact.

QUESTION: 9

Which of the following statements are correct about the National Land Records Modernization Programme?

1. It was started in 2016 aimed at updating and digitising land records.

2. The intent is to move from conclusive title to presumptive title.

Which of these statements is/are correct?

Solution: Programme (NLRMP), started in 2008, aims at updating and digitising land records by the end of the Twelfth Plan. Eventually, the intent is to move from the presumptive title (where registration of a title does not imply the owner's title is legally valid) to a conclusive title (where it does).

QUESTION: 10

Consider the following statements about the Green Revolution?

1. Initially it was started for wheat and rice

2. It increased the productivity level to 10 times

Which of these statements is/are incorrect?

Solution: It is the introduction of new techniques of agriculture, which became popular by the name of Green Revolution (GR) in the early 1960s—at first for wheat and by the next decade for rice, too. It revolutionised the very traditional idea of food production by giving a boost by more than 250 per cent to the productivity level.

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