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Economics: CUET Mock Test - 6 - CUET MCQ


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30 Questions MCQ Test CUET Mock Test Series - Economics: CUET Mock Test - 6

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Economics: CUET Mock Test - 6 - Question 1

TISCO stands for

Detailed Solution for Economics: CUET Mock Test - 6 - Question 1

TISCO - Tata Iron and Steel Company Limited.

Economics: CUET Mock Test - 6 - Question 2

Read the following statements regarding National Income estimates and select the correct answer using codes given below :

A. Capital gains and losses are included in National Income.

B. Incomes from illegal activities are not included in National Income.

C. Imputed values of the self occupied houses are included in the National Income.

Detailed Solution for Economics: CUET Mock Test - 6 - Question 2

The correct answer is B and C are correct.

Important Points

  • National Income of any country means the complete value of the goods and services produced by any country during its financial year.
  • It is thus the consequence of all economic activities that are running in any country during the period of one year.
  • In short one can say that the national income of any country is the total amount of income that is accrued by it through various economic activities in one year.
  • It is also helpful in determining the progress of the country.
  • It includes wages, interest, rent, profit, received by factors of production like labour, capital, land and entrepreneurship of a nation.
  • Some of the items that are included in the National Income are:​​​
    • Imputed rent of owner-occupied houses is included in the calculation of national income.
    • Imputed value of goods and services produced for self-consumption are included.
    • Imputed values of the self occupied houses are included in the National Income.
    • Direct taxes such as income tax paid by the employees from their salaries are included.
  • ​Some of the items that are included in the National Income are:
    • ​Sale and purchase of second-hand goods are excluded.
    • Incomes from illegal activities are not included.
    • Expenditure on purchase of old share is excluded.
    • Government expenditure on all transfer payment is excluded.
    • Capital gains and losses are not included in National Income.

Therefore, we can say that statements B and C are correct regarding National Income estimates.

Economics: CUET Mock Test - 6 - Question 3

Match List I with List II

Choose the correct answer from the options given below:

Detailed Solution for Economics: CUET Mock Test - 6 - Question 3

The correct answer is A ‐ II, B ‐ I, C ‐ IV, D ‐ III

Key Points

The correct match is given below:

Important Points Menu cost:

  • When a company alters the prices it offers to its customers, it incurs menu costs.
  • The traditional illustration is a restaurant that must physically print new menus if the prices of its meals change.
  • The major lesson to be learned from menu costs is that some costs are fixed.
  • Menu costs usually are the result of inflation. For Example: if the cost of food, rent, or wages goes up, a restaurant will have to raise its prices to pay for the extra cost and to make the same profit

Quantitative Easing:

  • Quantitative easing is a method of monetary policy employed by central banks.
  • A central bank will buy securities in an effort to lower interest rates, boost the money supply, and encourage more lending to individuals and businesses.
  • During a financial crisis, the objective is to boost economic activity and maintain credit availability.

Pump-Pricing:

  • Pump pricing is a fiscal policy measure used by the government.
  • Pump pricing is the process of boosting an economy through public expenditure, interest rate and tax cuts, usually during a recession.

Phillips Curve:

  • The Phillips curve suggests there is a trade-off between inflation and unemployment, at least in the short term.
  • If there is inflation in an economy, the central bank may increase interest rates.
  • Lower aggregate demand will result from lower investment and consumer expenditure as a result of higher interest rates.
  • This fall in aggregate demand will lead to lower inflation.
Economics: CUET Mock Test - 6 - Question 4
The expenditure made on education, training and health is called :
Detailed Solution for Economics: CUET Mock Test - 6 - Question 4

The correct answer is Human capital.

Important Points

  • Education investment is recognized as one of the main sources of human capital along with other sources like health, migration, on-job training, and information.
  • Human capital refers to the capabilities, experience, and skill sets that employees bring to a business organization.
  • Investment in education is considered one of the main sources of human capital.

Key Points

  • Sources of human capital formation:
    • Expenditure of Education.
    • Expenditure on health.
    • On-the-job training.
    • Expenditure on migration.
    • Expenditure on the information.

Economics: CUET Mock Test - 6 - Question 5

Due to Covid - 19, the Reserve Bank of India cut Repo Rate to 4.4%, the lowest in at least, 15 years. Also, it reduced the CRR by 100 basis points. Previously, it was 4%. The RBI Governor, Dr. Shaktikanta Das, predicted a big global recession and said that India will not be immune. It all depends on how India responds to the situation. Aggregate Demand may weaken and core inflation.

Besides reduction in CRR and Repo Rate, what other measures can be taken by the Government of India through budgetary policy to combat recession?

Detailed Solution for Economics: CUET Mock Test - 6 - Question 5

The correct answer is Option 4.

Key Points

  • Expansionary fiscal policy: The expansionary, or loose policy is a form of macroeconomic policy that seeks to encourage economic growth. This policy is designed to boost the economy. It is mostly used in times of high unemployment and recession. It leads to the government lowering taxes and spending more or one of the two. The aim is to stimulate the economy and ensure consumers' purchasing power does not weaken.
    • It is part of the general policy prescription of Keynesian economics, to be used during economic slowdowns and recessions in order to moderate the downside of economic cycles.
  • The basic objective of expansionary policy is to boost aggregate demand to make up for shortfalls in private demand. It is based on the ideas of Keynesian economics, particularly the idea that the main cause of recessions is a deficiency in aggregate demand.
  • Expansionary policy is intended to boost business investment and consumer spending by injecting money into the economy either through direct government deficit spending or increased lending to businesses and consumers.
  • It includes tax cuts, transfer payments, rebates, and increased government spending on projects such as infrastructure improvements. Hence, Option 4 is the correct answer.
    • For example, it can increase discretionary government spending, infusing the economy with more money through government contracts.
  • However, expanding too much can cause side effects such as high inflation or an overheated economy. There is also a time lag between when a policy move is made and when it works its way through the economy.

Additional Information

  • Fiscal policy, is an estimate of taxation and government spending that impacts the economy.
  • There are two types of fiscal policy:
    • Expansionary fiscal policy: This policy is designed to boost the economy. It is mostly used in times of high unemployment and recession.
    • Contractionary fiscal policy: As the term suggests, this policy is designed to slow economic growth in case of high inflation. The contractionary fiscal policy raises taxes and cuts spending.
  • There are two key tools of the fiscal policy:
    • Taxation: Funds in the form of direct and indirect taxes, capital gains from investment, etc, help the government function. Taxes affect the consumer's income and changes in consumption lead to changes in the real gross domestic product (GDP).
    • Government spending: It includes welfare programs, government salaries, subsidies, infrastructure, etc. Government spending has the power to raise or lower real GDP, hence it is included as a fiscal policy tool.
  • Some of the key objectives of fiscal policy are economic stability, price stability, full employment, optimum allocation of resources, accelerating the rate of economic development, encouraging investment, and capital formation and growth.
  • In India, the Union finance minister formulates the fiscal policy.
Economics: CUET Mock Test - 6 - Question 6
Which of the following international organizations helps its member countries during the Balance of Payment Crisis?
Detailed Solution for Economics: CUET Mock Test - 6 - Question 6

The correct answer is International Monetary Fund.

Key Points

  • The International Monetary Fund(IMF) helps its member countries in the time of Balance of Payment(BoP) Crisis.
  • BoP crisis, also known as the currency crisis, occurs when a nation is unable to pay for essential imports or service its external debt repayments.
  • Balance of Payment records all the transactions with other countries both of Government or Private Sector.
  • Balance of Payments mainly composed of two accounts the current account and capital account.

Additional Information

About Internation Monetary Fund

  • IMF is an international economic organisation founded in 1945 and headquartered in the USA.
  • IMF principal function is to advice member countries to maintain strict financial discipline to avoid economic crisis.
  • IMF helps member countries in the time of currency crisis and other difficult situations with its measures like Special Drawing Rights, Extended Fund Facility, and Reserve Tranche.
  • IMF has 190 member countries and its Managing Director is Kristalina Georgieva.
Economics: CUET Mock Test - 6 - Question 7
Which apex body was set up to coordinate the activities of all institutions involved in the rural financing system?
Detailed Solution for Economics: CUET Mock Test - 6 - Question 7

NABARD

Key Points

  • NABARD (National Bank for Agriculture and Rural Development):
    • Established on 12 July 1982 by an act of the Indian Parliament, NABARD is the apex institution in the country responsible for the overall regulation and licensing of regional rural banks and cooperative banks in India.
    • It plays a crucial role in the development of the agriculture and rural sector by providing and regulating credit and other facilities to promote these sectors.
    • Its main focus is to uplift rural India by increasing the credit flow for elevation of agriculture & rural non-farm sector and also works towards policy planning and operations in the field of credit for agriculture and other economic activities in rural areas in India.

Additional Information

  • RRBs (Regional Rural Banks):
    • RRBs were established in 1975 under the provisions of the Ordinance promulgated on the 26th September 1975 and the RRB Act, 1976 to provide sufficient banking and credit facility for agriculture and other rural sectors.
    • These banks are created to serve the rural areas with basic banking and financial services. However, they are not responsible for coordinating the activities of all institutions involved in the rural financing system, but they do play a significant role in rural banking.
  • RBI (Reserve Bank of India):
    • As the central bank of India, RBI regulates the monetary and financial system of the country. It was established on April 1, 1935, according to the provisions of the Reserve Bank of India Act, 1934.
    • Its primary role is to oversee the nation's currency and money supply and to manage the main payment systems. While it has vast powers in terms of regulation of the financial system, the specific task of coordinating the activities of all institutions involved in the rural financing system is more directly managed by NABARD.
  • SBI (State Bank of India):
    • As a multinational public sector bank and financial services statutory body, SBI is a major banking organization in India. It was established in 1806 as the Bank of Calcutta, making it the oldest commercial bank in the Indian subcontinent.
    • While SBI plays a significant role in banking and finance in both urban and rural areas of India, it does not have the mandate to coordinate the activities of all institutions involved in the rural financing system, which is a role specifically designated to NABARD.
Economics: CUET Mock Test - 6 - Question 8

Match List - I with List - II.

Choose the correct answer from the options given below :

Detailed Solution for Economics: CUET Mock Test - 6 - Question 8

Key Points

  • Income Method (A) matches with Aggregate of factor incomes (IV).
    • The income method calculates GDP by adding up all incomes earned by households and businesses, including wages, profits, and taxes minus subsidies. This method focuses on the income received by factors of production in an economy.
  • Expenditure Method (B) matches with Aggregate of final expenditures (III).
    • This method calculates GDP by adding up total consumption, investment, government spending, and net exports. It represents the total amount spent on the nation's final goods and services.
  • Real GDP (C) matches with Calculated at constant prices (II).
    • Real GDP is adjusted for changes in the price level, providing a more accurate figure of economic growth by using constant prices. This removes the effect of inflation and allows comparison between different years.
  • Nominal GDP (D) matches with Calculated at current prices (I).
    • Nominal GDP is calculated using current market prices, without adjusting for inflation. This means it can be influenced by changes in price level and does not solely reflect changes in the quantity of goods and services produced.

Therefore the correct pairing is:
A - IV: Income Method - Aggregate of factor incomes
B - III: Expenditure Method - Aggregate of final expenditures
C - II: Real GDP - Calculated at constant prices
D - I: Nominal GDP - Calculated at current prices

Economics: CUET Mock Test - 6 - Question 9
Adoption of new technology is called _______.
Detailed Solution for Economics: CUET Mock Test - 6 - Question 9
Given your request, here is the detailed explanation for the correct answer, following the sample format provided:

Modernisation is the adoption of new technology.

Key Points

  • Modernisation:
    • Refers to the process of adopting new technologies and innovations, leading to improved tools, machinery, and systems that enhance productivity and efficiency in various sectors.
    • It signifies a transformation from traditional or old methods to contemporary practices, especially in the context of industrial, social, and economic changes.
    • Modernisation encompasses a broad range of activities including upgrading infrastructure, implementing advanced technological systems, and adopting new ways of thinking and governance.

Additional Information

  • Liberalisation:
    • Refers to the relaxation of government restrictions, usually in areas like trade and investment.
    • Not directly related to the adoption of new technology but can create an environment that fosters technological growth and modernisation.
  • Globalisation:
    • Describes the process of interaction and integration among people, companies, and governments worldwide.
    • While it facilitates the spread of technology and ideas, it is more about the global flow of goods, services, and culture than the adoption of technology within a specific society.
  • Green Revolution:
    • Refers specifically to the increase in agricultural production resulting from the introduction of high-yield variety seeds and the use of chemical fertilizers and pesticides.
    • It is a specific instance of modernisation in the agricultural sector but does not encompass the broader concept of adopting new technology across various sectors.
Economics: CUET Mock Test - 6 - Question 10

Arrange the sequence of events relating to establishment of equilibrium in the economy.

(A) This will cause unintended decumulation of inventories

(B) This process continues till ex-ante aggregate demand becomes equal to ex-ante aggregate supply

(C) The producers will respond by increasing output

(D) If ex-ante demand for final goods by firms and households is greater than the output the producers plan to produce in a given year

(E) When output increases, both employment and income rise

Choose the correct answer from the options given below:

Detailed Solution for Economics: CUET Mock Test - 6 - Question 10

The correct answer is '(D), (A), (C), (E), (B)'

Key Points

  • Sequence of events leading to equilibrium:
    • The process towards equilibrium begins when ex-ante demand for final goods by firms and households is greater than what producers plan to produce within a given year (D).
    • This discrepancy leads to an unintended decumulation of inventories (A), as the actual demand exceeds the planned supply.
    • In response to the falling inventories, producers increase output (C) to meet the higher demand.
    • As output increases, it results in higher employment and income (E), which further fuels demand.
    • The cycle of adjustment continues until ex-ante aggregate demand equals ex-ante aggregate supply (B), establishing equilibrium in the economy.

Additional Information

  • Why other options are incorrect:
    • Options that do not start with the discrepancy between ex-ante demand and planned production (D) miss the initial trigger for the sequence towards equilibrium.
    • Any sequence that does not follow the logical order of events from increased demand leading to decumulation of inventories, followed by increased production, resulting in higher employment and income, and finally achieving equilibrium, fails to accurately describe the process of establishing equilibrium in an economy.
  • Understanding economic equilibrium:
    • Economic equilibrium is a state where economic forces such as supply and demand are balanced.
    • The sequence leading to equilibrium highlights the dynamic nature of economic adjustments in response to changes in demand and supply conditions.
Economics: CUET Mock Test - 6 - Question 11
Investment in education, health, migration and information are the sources of :
Detailed Solution for Economics: CUET Mock Test - 6 - Question 11
Now, using the provided sample format, here is the explanation for why "Human capital formation" is the correct answer to the given question:

Human capital formation is the process of improving the knowledge, skills, competencies, and attributes of people in a country, thereby enhancing their productivity and ability to contribute to the economy.

Key Points

  • Human capital formation:
    • Investments in education enhance an individual's skills and knowledge base, making them more productive and innovative.
    • Health investments ensure a healthier workforce, reducing absenteeism and increasing the efficiency of workers.
    • Migration can lead to human capital formation as it often involves the movement of skilled individuals who seek better opportunities, thereby transferring knowledge and skills.
    • Investing in information encompasses training and the development of digital skills, enabling individuals to participate more fully in a modern, digital economy.

Additional Information

  • Physical capital formation:
    • Refers to the increase in physical assets such as machinery, buildings, and infrastructure. While important for economic growth, it does not directly pertain to the development of the workforce's skills or health.
  • Economic growth:
    • While human capital formation contributes to economic growth, economic growth itself is a broader concept that includes increases in the production of goods and services in an economy. It is an outcome rather than a source of investment.
  • Productivity:
    • Productivity improvements can result from human capital formation, but productivity as a concept is the efficiency of production processes and not a source of investment.
Economics: CUET Mock Test - 6 - Question 12

Which year regarded as Year of great divide

Detailed Solution for Economics: CUET Mock Test - 6 - Question 12

The year 1921 is taken as the demographic divide for the reason that before this year, the population was not stable, sometimes it increased and at other times it decreased.
The growth rate of population was generally low before 1921. But after this year, there has been considerable and continuous increase in the population.
Between 1901 and 1911, the total increase in population was 5.9% and between 1911 and 1921, there was a decrease of 0.39%. In the decade of 1921-1931, the increase was 11.1%, from 1931 to 1941, it was 14.00% and during 1941-1951, it was 13.5%. It is going increasingly since then. Hence the year 1921 is rightly called the demographic divide.

Economics: CUET Mock Test - 6 - Question 13

How much percentage of import and export were restricted to be between India and Britain

Detailed Solution for Economics: CUET Mock Test - 6 - Question 13

As much as half of the foreign trade was restricted to Britain. Before colonial period, India was exporting manufactured goods which enjoyed worldwide demand. Under the colonial rule, India was reduced to a supplier of raw materials like jute, cotton, indigo, wool, sugar etc.

Economics: CUET Mock Test - 6 - Question 14

Census is conducted after every

Economics: CUET Mock Test - 6 - Question 15

Following were the main land tenure system prevailing during British colonial period:

Detailed Solution for Economics: CUET Mock Test - 6 - Question 15

Under British Rule, there were three main types of land tenure systems in India. They were Zamindars, Mahalwari and Rayatwari.

Economics: CUET Mock Test - 6 - Question 16

Jute industries were located in

Detailed Solution for Economics: CUET Mock Test - 6 - Question 16

Jute Textile Industry is one of the major Industries in the Eastern India, particularly in West Bengal.

Economics: CUET Mock Test - 6 - Question 17

Which of the following economist estimated per capita income during colonial period 

Detailed Solution for Economics: CUET Mock Test - 6 - Question 17

India’s per capita income during colonial period was estimated by some individual. Among the notable estimators — Dadabhai Naoroji, William Digby, Findlay Shirras.

Economics: CUET Mock Test - 6 - Question 18

CAGR stands for

Economics: CUET Mock Test - 6 - Question 19

________ was developed by the British Raj as a means to enlarge the size of market for the British goods

Detailed Solution for Economics: CUET Mock Test - 6 - Question 19

Railways assisted British industries to widen the market for their finished products. 

Post and telegraphs were developed to enhance the efficiency and effectiveness of the British administration.

Economics: CUET Mock Test - 6 - Question 20

10 % _____ while 18% workforce were engaged in ______ sector

Detailed Solution for Economics: CUET Mock Test - 6 - Question 20

The three-sector is an economic theory which divides economies into three sectors of activity, manufacturing (secondary 10%), and services (tertiary 18%).

Economics: CUET Mock Test - 6 - Question 21

When was the first census data collected during British India

Detailed Solution for Economics: CUET Mock Test - 6 - Question 21

A systematic and modern population census, in its present form was conducted non synchronously between 1865 and 1872 in different parts of the country. This effort culminating in 1872 has been popularly labeled as the first population census of India However, the first synchronous census in India was held in 1881.

Economics: CUET Mock Test - 6 - Question 22

Life expectancy at the eve of independence was:

Detailed Solution for Economics: CUET Mock Test - 6 - Question 22

The life expectancy of birth in India on the eve of its independence was 32 years.

Economics: CUET Mock Test - 6 - Question 23

Opening of Suez Canal in ____ significantly reduced the cost f transportation of goods between Britain and India

Detailed Solution for Economics: CUET Mock Test - 6 - Question 23

The Suez Canal is an artificial sea-level waterway in Egypt the Mediterranean Sea through the Red Sea via the Gulf of Suez. Construction began in September 1859 and was completed in November of 1869, 10 and a half years later. The Suez Canal is around 190 km in length.

Economics: CUET Mock Test - 6 - Question 24

Railways were introduced in India in

Detailed Solution for Economics: CUET Mock Test - 6 - Question 24

The history of Indian Railways dates back to over 160 years ago. On 16 th April 1853, the first passenger train ran between Bori Bunder (Bombay) abd Thane, a distance of 34 km.

Economics: CUET Mock Test - 6 - Question 25

The estimate given by Dr Rao regarding per capita output was

Detailed Solution for Economics: CUET Mock Test - 6 - Question 25

After independence, the Government of India appointed the National Income Committee in August, 1949 with Prof. P.C. Mahalnobis as its chairman and Prof. D.R. Gadgil and Dr. V.K.R.V. Rao as its two members so as to compile a national income estimates rationally on scientific basis. The first report of this committee was prepared in 1951. The estimate given by Dr Rao regarding per capita output was 0.005.

Economics: CUET Mock Test - 6 - Question 26

Iron and steel industries began coming up in

Detailed Solution for Economics: CUET Mock Test - 6 - Question 26

The Bengal Iron Works was founded at Kulti in Bengal in 1870 which began its production in 1874 followed by The Tata Iron and Steel Company (TISCO) was established by Dorabji Tata in 1907, as part of his father's conglomerate. By 1939 it operated the largest steel plant in the British Empire. The company launched a major modernization and expansion program in 1951.
Prime Minister Jawaharlal Nehru, a believer in socialism, decided that the technological revolution in India needed maximization of steel production. He, therefore, formed a government owned company, Hindustan Steel Limited (HSL) and set up three steel plants in the 1950s.

Economics: CUET Mock Test - 6 - Question 27

Which statement is false?

Economics: CUET Mock Test - 6 - Question 28

Largest share of work force which was 72% was engaged in

Economics: CUET Mock Test - 6 - Question 29

Jute industries were dominated by

Detailed Solution for Economics: CUET Mock Test - 6 - Question 29

The cotton textile mills, mainly dominated by Indians, were located in the western parts of the country, namely, Maharashtra and Gujarat, while the jute mills dominated by the foreigners were mainly concentrated in Bengal.

Economics: CUET Mock Test - 6 - Question 30

What is the value of GNP

Detailed Solution for Economics: CUET Mock Test - 6 - Question 30

GNP means gross national product. it is clear that it is on national level and a nation's resident should be included only. A another word is GDP it is gross domestic product. It includes every Product that has been made in our country it does not matter that who has made it resident or non resident.

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