macro fundamentals, GDP, investment & growth section 4 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) Rs. 5 crores to Rs. 10 crores
(b) Rs. 25 lakhs to Rs. 5 crores
(c) more than Rs. 10 crores
(d) less than Rs. 10 crores
The correct answers to the above question in:
Answer: (a)
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Question : 1
Consider the following statements:
- Investment in the economy increases with a decrease in the capital-output ratio
- Economic output increases with a decrease in capital-output ratio
a) Both (i) & (ii)
b) (ii) only
c) (i) only
d) Neither (i) nor (ii)
Answer »Answer: (b)
Capital/Output ratio represents (inverse of) productivity of capital. If the capital/output ratio is decreasing, that means capital is becoming more productive. But you cannot say that investment will increase.
But if capital is becoming more productive, then the economic output will increase.
Question : 2
Consider the following statements regarding Small-Scale industries,
Small-Scale industries are in most cases not as efficient and competitive as large-scale ones. Yet the Government provides preferential treatment and reservation in a range of products to the small firms because small scale-industries.
- Provide higher employment on a per-unit capital development basis.
- Promote a regional dispersion of industries and economic activities.
- Have performed better in the export of manufactured products than the large scale ones.
- Provide jobs to low skill workers who otherwise may not find employment avenues elsewhere.
a) 1 and 2
b) 1 and 4
c) 3 and 4
d) 2 and 3
Answer »Answer: (b)
Question : 3
India is planning to become a $5 Trillion economy by 2024-25. Consider the following statements.
- It is in nominal terms
- It is in PPP terms
- It will require compounded annual real growth of around 8%, with 4% inflation
a) (i) & (iii) only
b) (ii) only
c) (i) only
d) (ii) & (iii) only
Answer »Answer: (a)
2018-19 2024-25 USD 2.7 Trillion USD 5 Trillion (nominal GDP) (Nominal GDP)
So, it requires 85% growth in six years, which comes down to around 12% compounded annual growth. This 12% is nominal growth which can be achieved with real growth of around 8% and inflation of around 4%.
Question : 4
The licensing policy for the industries drew strength from
a) Industrial Policy Resolution, 1956
b) Industrial Policy Resolution, 1948
c) Industries Act 1951
d) Congress Party Resolution of establishing Socialistic pattern of society
Answer »Answer: (c)
Question : 5
Consider the following statements:
- Decrease in investments will lead to depletion of capital stock in the economy
- A decrease in investments will lead to an increase in the incremental capital-output ratio
- A decrease in investments will lead to a decrease in the production of goods and services
a) (i) & (iii) only
b) (ii) only
c) (i) only
d) None of the above
Answer »Answer: (d)
If investments are decreasing that means there is less production of capital goods in the economy but that does not mean that the existing capital stock will decrease. The existing capital stock will keep on increasing even if investments are decreasing. So, (i) statement is false.
And since existing capital stock will keep on increasing, therefore production of goods and services i.e. GDP will keep on increasing. So, (iii) statement is false.
If investments are decreasing, that means the production of capital goods is decreasing. Then you can’t say anything about the productivity of capital i.e. ICOR.
So, (ii) stamen is also false.
Question : 6
Consider the following statements regarding the services trade of India:
- Value of export of services is equal to merchandise exports
- India services trade is steadily in surplus in the last decade
a) Both (i) & (ii)
b) (ii) only
c) (i) only
d) Neither (i) nor (ii)
Answer »Answer: (b)
India’s services exports are around 7.7% of GDP in 2018-19, while merchandise exports are around 12.1% of GDP.
India’s services imports are around 4.6% of GDP in 2018-19. India’s services trade has been consistently in surplus for the last decade.
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