macro fundamentals, GDP, investment & growth section 1 MCQ Questions & Answers Detailed Explanation
MOST IMPORTANT indian economy mcq - 4 EXERCISES
The following question based on Macro fundamentals, GDP, Investment, Growth topic of indian economy mcq
(a) Fish
(b) Food grains
(c) Milk
(d) Oil seeds
The correct answers to the above question in:
Answer: (d)
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Question : 1
If India is experiencing economic growth, then which of the following statements must hold true:
- Real GDP is increasing
- Nominal GDP is increasing
- Rate of growth of real GDP is increasing
- Rate of growth of nominal GDP is increasing
a) (i) & (iii) only
b) (i) & (ii) only
c) (i) only
d) (i) & (iv) only
Answer »Answer: (c)
Question : 2
Green revolution was the result of adaption of New Agricultural strategy which was introduced in 20th Century during decades of
a) Sixties
b) Fifties
c) Eighties
d) Seventies
Answer »Answer: (a)
Question : 3
Since 1997-98 which statement is correct regarding Minimum Support Price (MSP)?
a) MSP > C2 costs
b) MSP = C2 costs
c) MSP is independent to C2 cost
d) MSP < C2 costs
Answer »Answer: (a)
Question : 4
If a factory is running at peak production with certain number of labourers then the marginal productivity of labour will be:
a) Zero
b) Negative
c) Positive
d) One
Answer »Answer: (a)
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.
Question : 5
Consider the following statements regarding ‘GDP Deflator’:
- It is an index of the price which is calculated as the ratio of nominal GDP to real GDP
- The weights differ according to the production level of each good in the GDP deflator
a) Both (i) & (ii)
b) (ii) only
c) (i) only
d) Neither (i) nor (ii)
Answer »Answer: (a)
The GDP deflator is an index of price and measures the price changes quarterly.
GDP deflator = nominal GDP/real GDP
CPI and WPI indices are calculated by fixing the weights of different goods and services but in case of the GDP deflator, it varies as per actual production level.
(Its highly technical, if you don’t understand, leave it, will provide a video)
Question : 6
Consider the following statements:
- Real per capita GDP has steadily increased in the last five years
- Real per capita income has steadily increased in the last five years
a) Both (i) & (ii)
b) (ii) only
c) (i) only
d) Neither (i) nor (ii)
Answer »Answer: (a)
India's population growth rate is around 1 per cent annually. Real GDP and Real GNP growth have been more than 5 per cent in the last five years.
If GDP is represented by Y and population by P. Then per capita GDP is Y/P
suppose the growth in GDP is 5% i.e. Y to 1.05 Y
And the growth rate in the population is 1% P to 1.01 P So, the growth in per capita GDP (Y/P) will be 1.05Y/1.01P = 1.0396 Y/P
So, the growth in per capita GDP (Y/P) will be 3.96%
So, till the time growth in GDP (Y) is more than the growth in population (P), then per capita GDP will always increase. (In fact, our GDP/GNP has always increased more than 4% in the last 30 years). If the growth of population and growth of GDP is the same then per capita GDP growth will be zero.
Hence, Real per capita GDP and real per capita GNP has steadily increased in the last five years.
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