Ramesh Singh Test: Economics - 2 - UPSC MCQ

The top 5 biggest GDPs in the world are USA, China, Germany,Japan, India  

Intermediate goods refer to those goods which are used either for resale or for further production. Final goods refer to those goods which are used for final consumption.
Options a, b and c are intermediate goods where as option d is a final good as it is directly consumed by the user. 

The correct option is Option C.

There are four main aggregate expenses to measure GDP: household consumption, corporate investment, government spending on goods and services, and net exports, which are equivalent to exports minus imports of goods and services.

Till 2015, GDP was measured in terms of factor cost at constant prices. This has been changed from 2015 onwards, GDP at market cost and at constant prices will be considered as India’s GDP. 

• Year: The base year for calculating India's GDP was changed from 2004-05 to 2011-12.


• Reason for Change: The change in the base year was necessary to reflect the changes in the economy's structure and composition since 2004-05.


• Frequency of Revision: The base year is typically revised every five years to ensure that the GDP calculation accurately represents the current economic scenario.


• Impact: The change in the base year affects various economic indicators and policy decisions based on GDP data.


• Implementation: The new series based on the 2011-12 base year was implemented in January 2015.

Therefore, the correct answer is C: 2015, when the base year was changed to 2011-12 from 2004-05.

MCA21 is an e-Governance initiative of Ministry of Corporate Affairs (MCA), Government of India that enables an easy and secure access of the MCA services to the corporate entities, professionals and citizens of India 
The MCA21 application is designed to fully automate all processes related to the proactive enforcement and compliance of the legal requirements under the Companies Act, 1956, New Companies Act, 2013 and Limited Liability Partnership Act, 2008. This will help the business community to meet their statutory obligations.

Macroeconomics studies larger phenomena such as inflation, price levels, rate of economic growth, national income, gross domestic product (GDP), and changes in unemployment etc.
Microeconomics: Microeconomics is a branch of economics that studies the behavior of individual units in making decisions regarding the allocation of scarce resources and the interactions among these individual units. 

GVA at basic prices = factor cost + (Production taxes - Production subsidies) 
Examples of production taxes are land revenues, stamps and registration fees and tax on profession. Examples of production subsidies include, input subsidies to farmers, subsidies to village and small industries, administrative subsidies to corporations or cooperatives, etc Some examples of product taxes are excise tax, sales tax, service tax and import and export duties. Product subsidies include food, petroleum and fertilizer subsidies, interest subsidies given to farmers, households, etc.

Gross National Product (GNP) is the total value of goods and services produced by the people of a country in a given year. It is not territory specific.
GNP = GDP + Net Factor Income from Abroad (NFIA) 

• Income Disparities: The main reason why the GNP of India is less than its GDP is because foreigners earn more in India than what Indians earn abroad. This creates a discrepancy in the income flow, leading to a difference between GNP and GDP.



• Foreign Direct Investment: Foreign companies operating in India also contribute to this difference. They repatriate profits back to their home countries, which affects the GNP of India.



• Remittances: Additionally, remittances sent by Indian expatriates working abroad may not be significant enough to offset the higher earnings of foreigners in India, further widening the gap between GNP and GDP.



• Government Policies: Lack of government support to Indian companies abroad can also play a role in this discrepancy. If Indian companies are not able to compete effectively in the global market, it can impact the overall GNP of the country.

By considering these factors, we can understand why the GNP of India is less than its GDP.

Only those goods and services which have a monetary value affixed to them are considered while calculating GDP.

Net factor income from abroad is included in GNP
GDP gives importance to where goods and services are produced.
Negative externalities such as environmental pollution are not considered while calculating GDP

C is the correct option. Both Are correct.

• Growth is the expansion of some object, institution or population which is measurable and is always quantitative whereas development is related to qualitative improvement,” said the Reader of the department of Economics, Mangalore University Prof Shripathi Kalluraya.
• Inclusive growth is a concept that advances equitable opportunities for economic participants during economic growth with benefits incurred by every section of society. The definition of inclusive growth implies direct links between the macroeconomic and microeconomic determinants of the economy and economic growth.
   

Remittances are money sent home from emigrants working abroad. It is included in GNP and not GDP because GDP takes in to account the value of only those goods and services which are produced within the country. 

In terms of Purchasing Power Parity (PPP) terms, India is the third largest economy in the world behind US and China. 

• United Nations Development Programme (UNDP): The Human Development Report is published annually by the United Nations Development Programme. It was first launched in 1990 and has since become a widely influential publication on human development worldwide.


• Content: The report includes statistics, analysis, and recommendations on various aspects of human development, such as health, education, income, gender equality, and sustainability.


• Global Impact: The Human Development Report is considered an authoritative source of information on human development and is used by policymakers, academics, and development practitioners around the world to inform their work and decision-making.


• Focus: Each year, the report focuses on a specific theme related to human development, such as climate change, inequality, or technology, providing in-depth analysis and insights on the chosen topic.

HDI was developed by a team of economists led by Pakistani economist Mahbub ul Haq .

The United Nations Development Programme (UNDP) published its first Human Development Report (HDR) in 1990. 

The Correct Answer is Option C: Breaking the Gridlock: Reimagining Cooperation in a Polarised World

According to the 2023-24 Human Development Report (HDR), titled ‘Breaking the Gridlock: Reimagining Cooperation in a Polarised World,’ India ranks 134 on the global Human Development Index (HDI). Switzerland has been ranked number one.

• The report has been released by the United Nations Development Programme (UNDP).

HDI measures human development in a country using 3 indicators,
Health: The health component is measured using the life expectancy at birth in the country.
Education: Education component is measured using a. Expected years of schooling for children of school entering age b. Mean years of schooling for adults aged 25 years and above.
Standard of living: This component is measured using per capita income (in US dollars). 

• Human Development Index (HDI): The HDI is a composite index that measures a country's average achievements in three basic aspects of human development: health (life expectancy at birth), education (mean years of schooling and expected years of schooling), and standard of living (gross national income per capita).


• Coverage of Countries: The HDI covers a total of 189 countries in the 2019 report.


• Calculation and Ranking: Each country is assigned a HDI value based on the indicators mentioned above, and then ranked accordingly. The HDI is used to assess and compare the overall development levels of different countries.


• Global Human Development Report: The HDI is published annually in the Global Human Development Report by the United Nations Development Programme (UNDP).

Answer: (b) Only two
Explanation:

• Statement 1 is correct: India ranks 108 out of 166 countries in the Gender Inequality Index (GII) 2022.
• Statement 2 is correct: India’s adolescent birth rate improved from 17.1 in 2021 to 16.3 in 2022.
• Statement 3 is incorrect: India's GII value of 0.437 is lower than the global average of 0.462.

D is the correct option. None of the statements are true.The GII is built on the same framework as the IHDI—to better expose differences in the distribution of achievements between women and men. It measures the human development costs of gender inequality. Thus the higher the GII value the more disparities between females and males and the more loss to human development. 

Answer: (b) Only two
Explanation:

• Statement 1 is correct: India's HDI ranking improved from 135 in 2021 to 134 in 2022.
• Statement 2 is correct: Switzerland is ranked number one on the HDI in 2022.
• Statement 3 is incorrect: The HDI was developed by Pakistani economist Mahbub ul Haq

The phrase ‘gross national happiness’ was first coined by the 4th King of Bhutan, King Jigme Singye Wangchuck, in 1972 when he declared, “Gross National Happiness is more important than Gross Domestic Product.”
The following 4 parameters are used to measure the happiness,
1. Higher per capita income
2. Good Governance
3. Environmental protection
4. Cultural promotion (i.e., inculcation of ethics and spiritual values in life without which, progress may become curse rather than a blessing).