Indian Economy > Macro Fundamentals > Gdp > Investment

GROWTH MCQs

Total Questions : 112

Page 1 of 12 pages
Question 1. Public procurement of food grains at support prices insures the following.
  1. Stability in farm prices
  2. Remunerative prices to the farmers
  3. Building food stocks for public distribution
Which of the above statements are correct?
  1.    2 and 3
  2.    1 and 2
  3.    Only 3
  4.    1, 2 and 3
 Discuss Question
Answer is Option D. -> 1, 2 and 3
Answer: (d)
Question 2. Which of the following statements are correct about CPI rural, CPI urban and CPI combined index?

  1. Inflation data is published by NSO

  2. The base year is 2011-12

  3. It is released for all India and for states and UTs separately on a monthly basis


Select the correct answer using the code given below:
  1.    (ii) & (iii) only
  2.    (ii) only
  3.    (i) only
  4.    All of the above
 Discuss Question
Answer is Option D. -> All of the above
Answer: (d)
Question 3. Green Revolution is related to
  1.    Pulse production
  2.    Millet production
  3.    Oil seed production
  4.    Wheat production
 Discuss Question
Answer is Option D. -> Wheat production
Answer: (d)
Question 4. The demand for GDP in the economy comes from which of the following sectors:

  1. Household

  2. Private

  3. Government

  4. External


Select the correct answer using the code given below:
  1.    (i), (ii) & (iii) only
  2.    (ii) & (iii) only
  3.    (i) & (ii) only
  4.    All of the above
 Discuss Question
Answer is Option D. -> All of the above
Answer: (d) An economy produces two types of final goods i.e. consumption and capital goods. Consumption goods get consumed and capital goods are used for further production processes (capital goods are also called investment). The value of these two goods produced in the economy in a year is called GDP. These two types of goods i.e. GDP is purchased by the four sectors of the economy Household sector (consumption goods) Private sector (capital goods) Government sector (consumption and capital both) External sector (consumption and capital booth)
Question 5. Why is the Government of India disinvesting its equity in the Central Public Sector Enterprises (CPSEs)?
  1. Government intends to use the revenue earned from the disinvestment mainly to pay back the external debt.
  2. The government no longer intends to retain the managements control of the CPSEs.
Which of the statement(s) given above is/are correct?
  1.    Only 2
  2.    Only 1
  3.    Neither 1 nor 2
  4.    Both 1 and 2
 Discuss Question
Answer is Option C. -> Neither 1 nor 2
Answer: (c)
Question 6. Which of the following are not counted in India’s GDP calculation?

  1. Informal sector activity

  2. Re-exports


Select the correct answer using the code given below:
  1.    Both (i) & (ii)
  2.    (ii) only
  3.    (i) only
  4.    Neither (i) nor (ii)
 Discuss Question
Answer is Option D. -> Neither (i) nor (ii)
Answer: (d) Informal economic activity constitutes around 30% of the GDP. We may not be able to measure it accurately but while calculating the GDP figures informal activity is extrapolated based on formal activities and are included in GDP. Re-exports means, something imported and then processed and then again exported. So, whatever goes in processing will be part of our GDP. For example, India imported crude oil worth Rs 50 and then refined/processed it and then exported it in Rs. 80, then Rs. 80 – Rs. 50 = Rs. 30 will be included in India’s GDP
Question 7. Capital formation in a country will necessarily lead to which of the following:

  1. Increase in ICOR

  2. Decrease in ICOR

  3. Economic growth


Select the correct answer using the code given below:
  1.    (iii) only
  2.    (ii) & (iii) only
  3.    (i) & (iii) only
  4.    None of the above
 Discuss Question
Answer is Option A. -> (iii) only
Answer: (a) Capital formation means the production of capital goods. Production of capital goods leads to the future production of goods and services and hence economic growth. So, statement (iii) is true Production of capital goods increases the capital stock in the economy but does not tell whether there is an increase in efficiency of that capital. Efficiency is measured as how much output is produced from how much of inputs. So, we can’t say that ICOR will increase or decrease with capital formation. Basically, if you increase the number of hours you study, still you cannot say that the “number of pages per hour” that you study will increase or decrease.
Question 8. Small Scale and Cottage Industries are important because
  1.    Government helps them
  2.    they provide more employment
  3.    management is easy
  4.    they are traditional
 Discuss Question
Answer is Option B. -> they provide more employment
Answer: (b)
Question 9. Consider the following statements

  1. Capital goods are final goods and are not used as an input

  2. Intermediate goods are those which have been produced but should be further transformed before they can be used for any purpose


Select the correct answer using the code given below:
  1.    Both (i) & (ii)
  2.    (ii) only
  3.    (i) only
  4.    Neither (i) nor (ii)
 Discuss Question
Answer is Option B. -> (ii) only
Answer: (b) Intermediate goods are semi-finished goods that have been produced by a process but cannot be used as it is and need to go through further production/transformation process to be converted into a final good. For example, steel sheets. The steel sheets cannot be used as it is and needs to be transformed into final products like automobiles, appliances etc. So (ii) the statement is true. A particular good will be capital in nature only if it possesses the following three characteristics: It is a produced durable output of a man-made process It again acts as an input for the further production processes (to be sold in the market) While acting as an input, it does not get transformed or consumed (hence it’s a final good)
Question 10. Consider the following statements regarding India’s merchandise trade:

  1. India’s merchandise imports as a percentage of GDP has steadily decreased in the last decade

  2. India’s merchandise exports as a percentage of GDP has steadily decreased in the last decade


Select the correct answer using the code given below:
  1.    Both (i) & (ii)
  2.    (ii) only
  3.    (i) only
  4.    Neither (i) nor (ii)
 Discuss Question
Answer is Option D. -> Neither (i) nor (ii)
Answer: (d) Refer the Trends Economic Survey 2019-20, Vol- 2, Page no. 76 and 79