Test: Structure Of The Indian Economy & Demographics - 2 (2013 - 2010)


15 Questions MCQ Test UPSC Topic Wise Previous Year Questions | Test: Structure Of The Indian Economy & Demographics - 2 (2013 - 2010)


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QUESTION: 1

Priority Sector Lending by banks in India constitutes the lending to

[2013]

Solution:

Priority sector lending constitutes the lending to agriculture, micro and small enterprises, micro credit, education, housing and weaker sections.

QUESTION: 2

In India, deficit financing is used for raising resources for

[2013]

Solution:

Deficit financing refers to the difference between expenditure and receipts. In public finance, it means the govt. is spending more than what it is earning. Deficit financing is a necessary evil in a welfare state as the states often fail to generate tax revenue which is sufficient enough to take care of the expenditure of the state. The basic intention behind deficit financing is to provide the necessary impetus to economic growth by artificial means.

QUESTION: 3

The Reserve Bank of India (RBI) acts as a bankers’ bank.
This would imply which of the following?
1. Other banks retain their deposits with the RBI.
2. The RBI lends funds to the commercial banks in times of need.
3. The RBI advises the commercial banks on monetary matters.

Select the correct answer using the codes given below:

[2012]

Solution:

All the statements are correct.

QUESTION: 4

Which of the following are the methods of Parliamentary control over public finance in India?
1. Placing Annual Financial Statement before the Parliament
2. Withdrawal of moneys from Consolidated Fund of India only after passing the Appropriation Bill
3. Provisions of supplementary grants and vote-on -account
4. A periodic or at least a mid-year review of programme of the Government against macroeconomic forecasts and expenditure by a Parliamentary Budget Office
5. Introducing Finance Bill in the Parliament

Select the correct answer using the codes given below:

[2012]

Solution:

1. Placing Annual Financial Statement before the Parliament
2. Withdrawal of moneys from Consolidated Fund of India only after passing the Appropriation Bill
3. Provisions of supplementary grants and vote-on-account
4. Introducing Finance Bill in the Parliament

QUESTION: 5

In India, which of the following have the highest share in the disbursement of credit to agriculture and allied activities?

[2011]

Solution:

Commercial Banks – 60%
Co-operative Banks – 30%
RRB and others – 10%

QUESTION: 6

In the context of Indian economy, consider the following statements:
1. The growth rate of GDP has steadily increased in the last five years.
2. The growth rate in per capita income has steadily increased in the last five years.

Which of the statements given above is/are correct?

[2011]

Solution:

QUESTION: 7

A rapid increase in the rate of inflation is sometimes attributed to the “base effect”. What is “base effect”?

[2011]

Solution:

The Base effect refers to the tendency of a small change from a low initial amount to the current amount which is translated into a large percentage and appears as large. It is usually used in context of inflation. It indicates the change in the inflation rate in the current period with respect to the base period.

QUESTION: 8

All revenues received by the Union Government by way of taxes and other receipts for the conduct of Government business are credited to the?

[2011]

Solution:

Under Article 266 (1) of the Constitution of India, all revenues ( example tax revenue from personal income tax, corporate income tax, customs and excise duties as well as non-tax revenue such as licence fees, dividends and profits from public sector undertakings etc.) received by the Union government as well as all loans raised by issue of treasury bills, internal and external loans and all moneys received by the Union Government in repayment of loans shall form a consolidated fund.

QUESTION: 9

Karl Marx explained the process of class struggle with the help of which one of the following theories?

[2011]

Solution:

Darwin’s “struggle for existence” in natural history is analogous to the class struggle in “human History”. So option (c) stands incorrect. The sketch of dialectical materialism given by Karl Marx explains that Dialectical principle is of universal application and all the development is “struggle of opposites” or “conflict of opposites”. Thus option d stands correct in this question.

QUESTION: 10

Which one of the following is not a feature of “Value Added Tax”?

[2011]

Solution:

VAT, being a ' tax on sale or purchase of goods within a State' is a State Subject by virtue of Entry 54 of State List of the Seventh Schedule of the Constitution of India. Since VAT/Sales tax is a State subject, the Central Government has been playing the role of a facilitator for successful implementation of VAT.

QUESTION: 11

India is regarded as a country with “Demographic Dividend’’. This is due to

[2011]

Solution:

The demographic dividend is a rise in the rate of economic growth due to a rising share of working age people in a population. This usually occurs late in the demographic transition when the fertility rate falls and the youth dependency rate declines.

QUESTION: 12

With reference to’ Indian economy, consider the following statements:
1. The Gross Domestic Product (GDP) has increased by four times in the last 10 years.
2. The percentage share of Public Sector in GDP has declined in the last 10 years.

Which of the statements, given above is/ are correct?

[2010]

Solution:
QUESTION: 13

In the context of governance, consider the following:
1. Encouraging Foreign Direct Investment inflows
2. Privatization of higher educational Institutions
3. Down-sizing of bureaucracy
4. Selling/offloading the shares of Public Sector Undertakings

Which of the above can be used as measures to control the fiscal deficit in India?

[2010]

Solution:

Over the past few decades, it has been the private sector that has really driven capacity-creation in Indian higher education. Serious thinking on downsizing bureaucracy had begun in the early 1990s. A sub-group set up by the Planning Commission had suggested in 1993 that the Union government should weed out at least 2,000 senior level positions in various ministries.

QUESTION: 14

In the context of Indian economy, consider the following pairs:

Which of the pairs given above is/are correctly matched?

[2010]

Solution:

Recession is a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.
Slow down is a period of slow economic growth, especially one that follows a period of robust growth Melt down follows normally a black swan event and quickly results is financial assets loosing in value, often resulting in liquidity crisis. The stock market in India suffered melt down from Sensex 20,000 in mid 2008 to 10,000 in mid 2009.

QUESTION: 15

With reference to India, consider the following statements:
1. The Wholesale Price Index (WPI) in India is available on a monthly basis only.
2. As compared to Consumer Price Index for Industrial Workers (CPIIW), the WPI gives less weight to food articles.

Which of the statements given above is/are correct?

[2010]

Solution:

Alter the Abhijit Sen committee’s proposals in 2004-05, the government had approved the proposal to release or wholesale price based inflation data on a monthly basis, instead of every week. The base year was changed to 2004-05 from 1993-94. However data on primary and fuel items was continued to release on a weekly basis. Consumer Price Index food group has a weight of 39.1 percent as compared to the combined weight of 24.4 percent (food articles and Manufactured food products) in wholesale Price Index food basket.