Practice Macro fundamentals gdp investment growth - indian economy mcq Online Quiz (set-2) For All Competitive Exams
Q-1) If a factory is running at peak production with certain number of labourers then the marginal productivity of labour will be:
(a)
(b)
(c)
(d)
Marginal productivity of labour = $\text"Change in output"/\text"Change in labour"$
Marginal productivity of labour means how much extra production will increase by adding one extra labour.
When a factory is running at peak production, then its production cannot be increased even by adding more labourers. So, the marginal productivity of labour will be zero.
Q-2) Consider the following statements. - In India, State Governments do not have the power to auction non-coal mines.
- Andhra Pradesh and Jharkhand do not have gold mines.
- Rajasthan has iron ore mines.
Which of the statement(s) given above is/are correct?
(a)
(b)
(c)
(d)
Q-3) The visit of foreigners in India to see the various places/events in the country, amounts to which of the following in terms of economy:
(a)
(b)
(c)
(d)
Exports means produced within the country and sold to foreigners (or non-residents). If a foreigner is coming to India and then purchasing goods and services, then it is a case of exports.
In the same way, if a foreigner is coming to India for medical treatment or tourism then the foreigner is basically purchasing medical and tourism services produced in our country.
So, the best possible answer is exports.
Q-4) Consider the following statements. - The Food Safety and Standards Act, 2006 replaced the Prevention of Food Adulteration Act, 1954.
- The Food Safety and Standards Authority of India (FSSAI) is under the charge of Director General of Health Services in the Union Ministry of Health and Family Welfare.
Which of the statement(s) given above is/are correct?
(a)
(b)
(c)
(d)
Q-5) Which of the following is included in National Food Security Mission (NFSM)?
(a)
(b)
(c)
(d)
Q-6) RBI has set up a committee to study and give suggestion on the microfinance sector. It’s chairman was
(a)
(b)
(c)
(d)
Q-7) Shanta Kumar Committee has submitted its report on restructuring of Food Corporation of India (FCI) to Mr. Modi. Read the following recommendations and find the incorrect ones.- FCI procurement should focus on the western belt, where farmers get the minimum support price.
- FCI should hand over the procurement of wheat and rice to four states which include Punjab, Haryana, Andhra Pradesh and Chattisgarh.
- Proposed uniform tax of minimum 3% and maximum 4% on wheat and rice and the same to be included in the minimum support price.
(a)
(b)
(c)
(d)
Q-8) In domestic savings, generally which sector has the highest share?
(a)
(b)
(c)
(d)
Domestic savings consist of Household savings, Corporate (Private) savings and Government (Public) savings.
Household savings (17.2%), Private Corporate (11.6%), Public Sector (1.7%). Total domestic savings around 30.5% in FY 2017-18.
Investment also consists of household, Corporate (Private) and Government (Public). Here household investment includes unregistered/informal business and construction of houses etc.
Household investment (10.5%), Private Corporate (11.5%) and Government (Public) (7.3%). Total fixed capital formation (investment) is 29.3% in 2018-19. The maximum decline in investment in the last 8 years is in household sector from 16% to 10.5%.
Q-9) Since 1997-98 which statement is correct regarding Minimum Support Price (MSP)?
(a)
(b)
(c)
(d)
Q-10) The registered exporters, whose export performance in several years is of high quality, are known as
(a)
(b)
(c)
(d)
Q-11) The decrease in dependency ratio (ratio of dependent population to working-age population) of a country may lead to which of the following situation:
- Increase in the savings rate
- Decrease in the savings rate
- Increase in Capital Formation
- Decrease in Capital Formation
Select the correct answer using the code given below:
(a)
(b)
(c)
(d)
Whenever in any country, the working population increases and dependent population decreases, the savings in the economy increases. (This also happens at the family level.
If a family has more working members and fewer dependents then the savings of the family increases). The increased savings leads to an increase in investments.
So, (i) & (iii) statements are true.
Q-12) Which of the following are not counted in India’s GDP calculation?
- Informal sector activity
- Re-exports
Select the correct answer using the code given below:
(a)
(b)
(c)
(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
Q-13) Consider the following statements regarding India’s merchandise trade:
- India’s merchandise imports as a percentage of GDP has steadily decreased in the last decade
- 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:
(a)
(b)
(c)
(d)
Refer the Trends
Economic Survey 2019-20, Vol- 2, Page no. 76 and 79
Q-14) Small Scale and Cottage Industries are important because
(a)
(b)
(c)
(d)
Q-15) Consider the following statements
- Capital goods are final goods and are not used as an input
- 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:
(a)
(b)
(c)
(d)
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)
Q-16) Which of the following are included as part of India’s GDP?
- Activities in Indian embassies and consulates in other countries
- Air India services between two different countries
- Value addition in India’s economic territory
- Economic activities of residents of India in international waters
Select the correct answer using the code given below:
(a)
(b)
(c)
(d)
GDP is the total final value of goods and services produced within the domestic territory of a country in a specified time period (generally a financial year).
The concept of domestic territory (economic territory) is different from the geographical or political territory of a country.
The domestic territory of a country includes the following:
- Political frontiers of the country including its territorial waters.
- Ships, and aircrafts operated by the residents of the country between two or more countries, for example, Air India’s services between different countries.
- Fishing vessels, oil and natural gas rigs and floating platforms operated by the residents of the country in the international waters or engaged in extraction in areas where the country has exclusive rights of operation.
- Embassies, consulates and military establishments of the country located in other countries, for example, the Indian embassy in the U.S.A., Japan etc. It excludes all embassies, consulates and military establishments of other countries and offices of international organisations located in India.
Thus, the domestic territory may be defined as the political frontiers of the country including its territorial waters, ships, aircraft, fishing vessels operated by the residents of the country, embassies and consulates located abroad etc.
Q-17) The share of the tertiary sector in total GDP of India has
(a)
(b)
(c)
(d)
Q-18) Among the Indian States, Uttar Pradesh is the largest producer of which of the following crops?
(a)
(b)
(c)
(d)
Q-19) Which of the following agencies is not engaged in exporting agricultural goods from India?
(a)
(b)
(c)
(d)
Q-20) Despite being a high saving economy, capital formation may not result in significant increase in output due to:
(a)
(b)
(c)
(d)
First, let us develop the general concept of (average) productivity and marginal productivity.
- 1 Acre Land
- 5 Labourers
- 2 Tonne production
If one acre of land produces 2 Tonnes of food grains, then; Productivity of Land = $\text"Output"/\text"Input(land)"$ ${2\text"Tonne"}/{1 \text"acre"}$ = 2 Tonne/acre
Productivity of Labour =$\text"Output"/\text"Input(labour)" = {2\text"Tonne"}/{5\text"labourer"}$ = 0.4 Tonne/labour
The above two are basically average productivity.
If by adding one extra labour, production increases by 0.2 tonne, then
Marginal productivity of labour = $\text"change in output"/\text"Change in labour" = {0.2\text"tonne"}/{1 \text"labour"}$ = 0.2 tonne/labour
In the same way, productivity of capital = $\text"Output"/\text" Capital"$ Higher is the productivity of capital, it is good for the economy. The inverse of “productivity of capital” is Capital/Output ratio.
A higher capital/output ratio is bad for the economy. If the Capital/Output ratio is 3/1, that means Rs. 1 unit of output is produced from Rs. 3 units of capital. And if the Capital/Output ratio is 4/1, that means to produce Rs. 1 unit of output, Rs. 4 units of capital is required. So, 3/1 is better than 4/1 for the economy.
Generally, if an economy has higher savings, higher capital formation happens. But if the Capital/Output ratio in the economy is high, then that means the productivity of the capital is low, so output production may not increase much even if capital formation is high.
So, the answer is (d)