Ramesh Singh Test: Economic Planning


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QUESTION: 1

Consider the following statements regarding 5-year plans:

1. A comprehensive plan sets targets to cover all major aspects of the economy.

2. A partial plan sets only targets for the agriculture and public sector.

Which of these statements are correct?

Solution:  
  • A comprehensive plan sets targets to cover all major aspects of the economy, while a partial plan may go for setting such targets for a part of the economy (i.e., agriculture, industry, public sector, etc.). 

  • Taken broadly, the planning process itself can be described as an exercise in which a government first chooses social objectives, then sets various targets (i.e., economic targets), and finally organises a framework for implementing, coordinating and monitoring the development plan.

QUESTION: 2

Consider the following statements regarding planning in India:

1. Planning is a process

2. Planning must have well-defined goals 

Which of these statements are not correct?

Solution:  
  • Planning is a process - It means planning is a process of doing something. Till we have some goals and objectives left regarding our lives, the process might continue. Planning is not an end in itself. As processes accelerate and decelerate, change direction and course, so also does planning. 

  • Planning must have well-defined goals - After the Second World War, several countries went for development planning. 

QUESTION: 3

Which of the following are correctly matched? 

1. Family planning - A country trying to optimise the use of its revenues for different categories of expenditures 

2. Financial planning - the process of providing suitable physical and social infrastructure for the erstwhile or the upcoming urban areas

Choose from the following options.

Solution:  
  • Trying to achieve a particular size of family for different countries came to be known as family planning. 

  • The process of providing suitable physical and social infrastructure for the erstwhile or the upcoming urban areas came to be known as town/urban planning. 

  • A country trying to optimise the use of its revenues for different categories of expenditures came to be known as financial planning. Financial planning is more popularly known as budgeting. Every budget, be it of the government or the private sector is nothing but an exercise in financial planning.

QUESTION: 4

Consider the following statements:

1. China and India were examples of planned economies.

2. The USA and Canada were examples of non planned economies.

Which of these statements are correct?

Solution:  
  • Many countries announced that they will be planned economies, yet some others didn't go for any such policy announcements. 

  • The Soviet Union, Poland, China, France, India are examples of the former category while the USA, Canada, Mexico fall in the latter category.

QUESTION: 5

Which country started the first regional planning?

Solution:  
  • It was at the regional level that planning was used as part of the development policy by any country the first time. It was the USA which started the first regional planning.

QUESTION: 6

Consider the following statements:

1. Official experiment in the area of national planning is rooted in the Soviet Union. 

2. It was also called the Gosplan.

Which of these statements are correct?

Solution:  
  • The official experiment in the area of national planning is rooted in the Bolshevik Revolution of Russia (1917)—the Soviet Union. 

  • Dissatisfied with the pace of industrialisation, it was in 1928 that Joseph Stalin announced its policy of central planning for the Soviet Union.

  • The State Planning Committee, commonly known as Gosplan, was the agency responsible for central economic planning in the Soviet Union.

QUESTION: 7

Which of the following are the features of Imperative planning? 

1. Numerical targets of growth and development 

2. No role for the market 

3. Limited private participation in the economy

Choose from the following options.

Solution:  
  • Numerical (i.e, quantitative) targets growth and development are set by the plan. For example, five lakh tonnes of steel, two lakh tonnes of cement, etc., will be produced/built in the coming 5 or 6 years. 

  • As the state controls the ownership rights over the resources, it is very much possible to realise the above-cited planned targets. 

  • Almost no role for the market, no price mechanism with all economic decisions to be taken in a centralised way by the state government. 

  • No private participation in the economy, only the state plays the economic role

QUESTION: 8

Which of the following economies were also known as centrally planned economies?

1. Poland 

2. China 

3. USSR

Choose from the following options.

Solution: That is why such economies are also known as the Centrally Planned Economies of the USSR, Poland, Hungary, Austria, Romania. etc., and finally China.

QUESTION: 9

Imperative planning is followed by:

Solution:

 

 

QUESTION: 10

Which of the following are the features of Indicative planning? 

1. It is followed by socialist economies. 

2. It replaces the price system and works through the market.

3. Qualitative targets of growth are set up. 

Choose from the following options.

Solution:
  • Every economy following the indicative planning were mixed economies. 

  • Unlike a centrally planned economy (countries following imperative planning) indicative planning works through the market (price system) rather than replaces it. 

  • Side by side setting numerical/quantitative targets (similar to the practice in the imperative planning) a set of economic policies of indicative nature is also announced by the economies to realise the plan targets. 

  • The indicative nature of economic policies, which are announced in such planning, basically encourages or discourages the private sector in its process of economic decision making.

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