Qts 1. Who authored the book, Planned Economy for India?
(A) M. Visvesvaraya
(B) J. R. D. Tata
(C) G. D. Birla
(D) Pattabhi Sitaramayya
Ans. (A)
Exp:-M Visvesvaraya is the author of the book planned Economy for India in 1934.M.Visvesaraya (1860-1962) was an engineer by profession and a great statesman of India.
M.Visvesvaraya received India's highest honour, the Bharat Ratana, in 1955. The book makes an attempt to present a brief but comprehensive view of the Indian situation in its economics aspects.
Qts 2. In India, National Income is computed by which of the following?
(A) Planning Commission
(B) Ministry of finance
(C) Central Statistical Organisation
(D) Reserve Bank of India
Ans. (C)
Exp: National Income is value of all final goods and services produced in a country within a span of time. In India, after independence it was calculated by Government appointed National Income Committee set up in 1949 Under the chairmanship of Prof. P.C. Mahalanobis with two others (Prof. D.R. Gadgil and V. K. R. V Rao). Since 1955 National Income estimates are being prepared by Central Statistical Organisation. Central Statistics Office generally known as Central Statistical Organisation was established on 2 May 1951. It coordinates all the statistical activities and also evolves statistical standards. It has five divisions which are classified according to their work.
Divisions are as follows:
1. National Accounts Division (NAD): responsible for preparation of national accounts that is GDP, Capital formation etc.
2. Social Statistics Division (SSD): responsible for monitoring various socio-economic goals like Millennium Development goals etc.
3. Economic Statistics Division (ESD): responsible for conducting Economic Census and Annual Survey of Industries and Index of Industrial Production.
4. Training Division: responsible for training manpower to collect and compile various statistical datas.
5. Coordination and Publication Division (CAP): responsible for coordinating various works within CSO.
Qts 3. 'Planning from below' is known as-
(A) Centralized planning
(B) Decentralized planning
(C) Functional planning
(D) Structural planning
Ans. (B)
Qts 4. National Income is the-
(A) Net National Product at market price
(B) Net National Product at factor cost
(C) Net Domestic Product at market price
(D) Net Domestic Product at factor cost
Ans. (B)
National Income = NNP - ( Indirect tax + Subsidies)
Factor cost based on Base year Rupee value
Market Price based on Present money value
Qts 5.The Gandhian Plan was expounded in 1944 by-
(A) N.R. Sarkar
(B) Kasturi Bhai Lal Bhai
(C) Jai Prakash Narayan
(D) Shriman Narayan Agarwal
Ans. (D)
Qts 6. Consider the following prerequisites for planning.
It is -
1. For balanced socio-economic development.
2. For extending the benefits of development in an even manner.
3. For focusing on removal of regional disparities.
4. For maximizing the utilization of available resources of these.
CODES:
(A) Only 1 and 2 are correct.
(B) Only 1, 2 and 3 are correct.
(C) Only 2, 3 and 4 are correct.
(D) 1, 2, 3 and 4 are correct.
Ans. (D)
Exp: Economic planning is a technique to manage a vast and diversed economy.
It is a process of analysing the available resources and making a framework to reach development. Due to complex nature of economy ie rapid change in economic environment, there is need of economic planning. In a country like India, Economic planning objectives can be grouped under following tags:
(A) An improvement in standard of living.
(B) Raising employment opportunities
(C) Reduction in social, economic and regional disparities.
(D) Removal of poverty, educational backwardness and other development evils.
(E) Self-reliance and innovation.
Qts 7.Match the following plans and programmes:
Plans Programmes
a 1st plan 1 Rapid Industrialisation
b. 2nd plan 2. Agriculture and Community Development
c. 3rd plan 3. Expansion of basic industries
d. 4th plan 4. Minimum Needs programme
e. 5th plan 5. Achievement of self reliance and growth with stability
Select the correct answer from the code below-
Code:
a b c d e
A 1 2 3 4 5
B 2 1 4 5 3
C 2 1 3 4 5
D 2 1 3 5 4
Ans. (D)
Exp: Plan Objectives & Programmes
First Plan (1951-56)
The Plan Focused an agriculture, price stability, power and Transport.
Priority sectors were construction of roads. construction of irrigation and water electricity
projects for the development of agriculture.
During this Plan the inception of Community Development programme (1952) was also done which was referred as Silent revolution.
Second Plan (1956-61)
The Plan was based on Mahalanobis Model with the
focus on rapid industrialization. Socialistic pattern of the society was made as the
goal of economic policy.
Khadi and Village industries commission was formed under
khadi and village industries commission Act of 1956.
Third Plan (1961-66)
The aim was to make India a 'self-reliant' and 'self-
generating' economy by promoting basic industries. The plan introduced the concept of import substitution as a strategy for industralisation.
The Plan was thorough failure in reaching the target due to turmoil in environment in the form of Chinese Aggression (1962), Indo-Pak War (1965), and Severe Drought (1965-66).
Fourth Plan (1969-74)
Due to war effects there was birth of twin objectives 'growth with stability' and progressive 'achievement of self reliance' and zero net foreign aid.
Implementation of Family Planning Programmes was done.
Fifth Plan (1974-79)
Prepared & launched by D.P. Dhar
Minimum Need Programme was introduced in Fifth Year Plan to provide basic minimum needs
Qts 8.The second Five Year Plan was base on which model ?
(A) Solow model
(B) Domar Model
(C) Robinson's model
(D) Mahalanobis model
Ans: (D)
Qts 9. Core Sector in the planning means-
(A) Agriculture
(B) Defense
(C) Iron and steel Industry
(D) Selected basic Industry
Ans. (D)
Explanation:
List of core industries is as follows:-
1. Coal
3. Natural Gas
5. Fertilizer
7. Cement
2. Crude oil
4. Petroleum
6 Steel
8. Electricity
So, Core Sector in the planning means selected basic industry.
Qts 10. The basic objective of Fifth Five Years Plan was-
(A) Poverty Removal
(B) Reforms in public distribution system
(C) Inclusive growth
(D) Exclusive growth
Ans. (A)
Qts 11. Indian economy is characterized as-
(A) Backward Economy
(B) Developed Economy
(C) Developing economy
(D) Underdeveloped Economy
Ans. (C)
Exp: Indian economy is characterized as developing economy According to some of the recognized international institution, classification of the world can be done into three categories:- Developed economies, economies in transition and developing economies. This classification is intended to reflect basic economic country conditions, per capita income, life expectancy. literacy rate etc. India is a developing country because India is depicting growth in some of the Socio-Economic Indicators like increase in Net National Product, growth in capital formation, progress in agriculture etc but yet India has not achieved indicators of growth like removal of poverty, better living standard, low mortality rate etc. Developing countries in South Asia are Bangladesh, India, Iran, Nepal, Pakistan & Sri Lanka
Qts 12. The Gandhian economy is based on the principle of
(A) Competition
(B) Trusteeship
(C) State control
(D) None of these
Ans. (B)
Exp: Gandhian economy is a study of interactions in the social system among polity, economy, culture, values and different institution Gandhian economy is based on the principle of trusteeship. Principle of trusteeship seeks individual to dispossess wealth beyond his basic need so that the person who are less capable can realise economic welfare.
Qts 13. Which one of the following is the major feature of the Indian economy?
(A) A capitalist economy
(B) A socialist economy
(C) A mixed economy
(D) None of above
Ans. (C)
Exp:- A mixed economy system have mixed characteristics of the command economy i.e government control and market economy. Economy which works on price mechanism. Mixed economy allows private ownership for the requirement of capital and for producing general goods & services, whereas it allows government intervention to protect public interest also. Overall mixed economy means co-aexistence of public and private sector. Thus Indian economy is characterized as mixed economy.
Qts 14.Match List I with List II and select answer using the codes given below in the lists:
List-I
a. Boom
b. Recession
c. Depression
d. Recovery
List II
1. Business activities are of high level with increasing income, output and employment at macro level.
2. Gradual fall of income, output and employment with business activity in a low gear.
3. Unprecedented level of under employment and unemployment, drastic fall in income, output.
4. Steady rise in the general level of prices, income, output and employment.
Codes:
a b c d
A 1 2 3 4
B 1 2 4 3
C 2 1 4 3
D 2 1 3 4
Ans: (A)
Exp: All the codes are matched right. All the options given above relates to business cycle in economics.
Boom is the expansion and peak phase of economy.
Features:-
(i) Trade at highest level
(ii) Increasing income.
(iii) Production at full capacity
(iv) Employment at higher level
(v) Bull Market in stock
(vi) Bear Market in bonds.
(vii) Increase in consumer demand
(viii) Better return on Investment.
Recession is declining phase of economy.
Features:-
(i) Fall in real GDP.
(ii) Gradual Fall in income and employment.
(iii) Decline in production
(iv) lower retail sales.
Depression or Slump is a continue and severe downturn phase of economy.
Features:-
(i) High unemployment rate.
(ii) Downward spiral fall in income and output
(iii) Cataclysmic effect on business.
Recovery is an economic upturn phase of economy.
Features:-
(i) Rising GDP
(ii) Gradual and stable increase in income
(iii) Rise in price level
(iv) Increase in economic activity resulting higher output and employment.
Qts 15.Inflation rate based on consumer price index increases if-
(A) Bank rate is decreased
(B) Reverse repo rate is decreased
(C) Statutory Liquidity ration is increased
(D) Repo rate is increased
Ans. (A)
Exp: Inflation rate based on consumer price index increases if bank rate is decreased.
There is inverse relationship between bank rate and inflation. Because increasing and decreasing bank rate decreases and increases money supply in market.
Bank rate is the rate at which RBI lends money to other commercial banks.
Lower bank rate truly means more money available with bank to lend, hence increased money supply. Increased money supply means more money chasing few goods resulting into in general price level of goods i.e. inflation.
Qts 16. Who amongst the following benefits most from inflation?
(A) Creditors
(B) Debtors
(C) Saving Bank Account Holders
(D) Government Pensioners
Ans. (B)
Exp: Inflation redistributes wealth from creditors to debtors i.e. lenders suffers and borrowers benefit out of inflation. Debtors benefits most from inflation. Because debtors when returning the amount, the amount is equal to amount he has borrowed but it is less in purchasing power.
In simple words for example Mr. X borrow 100 Rs. from Mr. Y. In the year of inflation it means value of money has gone down so at the time of returning the amount Mr. X will paying 100 Rs. but of less value. Lenders or creditor suffers because they are actually receiving an amount which have lower value than before. Effect of Inflation on various entities.
Benefits Loses
Debtors Creditors
Entrepreneurs Consumers
Investors Lower Income group
Farmers Fixed Income group
Upper income Savers if real returns are negative
Producers if prices
rise faster than costs
Bond holders
Shareholders will
get better returns
Qts 17. Which one of the following is NOT a method to control inflation?
(A) Controlling the demand
(B) Controlling the supply of money
(C) Reducing the rate of interest
(D) Rationing of commodities
Ans.(C)
Exp: Reducing the rate of interest is not a method to control inflation. Reducing the rate of interest means easy credit availability ultimately increasing money supply that will only increase inflation.
Inflation means consistent increase in price level of goods and services. That means more money available against few goods. So to control inflation the measures can be either reduce money supply or increase goods availability.-
There are several methods and tools to control inflation
Qts 18.Which one of the following statements is an appropriate description of deflation?
(A) It is a sudden fall in the value of a currency against other currencies
(B) It is persistent recession in both the financial and real sectors of economy
(C) It is a persistent fall in the general price level of goods and services
(D) It is a fall in the rate of inflation over a period of time
Ans. (C)
Exp: Deflation in economy is condition where supply exceeds the demand resulting persistent fall in general price level of goods and services.
In this condition of supply increasing at faster rate than increase in demand, producers are compelled to cut prices in order to stimulate sales.
A persistent deflation is very harmful to economy because continuous deflation forms a downward spiral in economy and in the end total failure of economy.
