macro fundamentals, GDP, investment & growth section 1 Practice Questions Answers Test with Solutions & More Shortcuts

Question : 1

Economic growth in India is measured by change in GDP at:

a) Factor Cost at constant prices

b) Current market prices

c) Constant market prices

d) Factor Cost at market prices

Answer: (c)

Question : 2 [HPPSC (Pre) 2010]

Which one of the following led the Malegam committee to recommend for interest rate cap for micro-finance institutions?

a) High interest rate

b) Promoters of micro-finance institution growing rich

c) Borrowers stopped repaying loans

d) Small loans offered to microenterprises

Answer: (a)

Question : 3

Which of the following is a common measure of degree of 'openness of an economy'?

a) Trade balance as a percentage of GDP

b) Balance of Payments as a percentage of GDP

c) Exports and imports share in world GDP

d) Exports and imports of goods and services as a percentage of GDP

Answer: (d)

Openness is measured as, Exports + Imports of goods and services of a country as a percentage of its GDP.

So, (d) is correct

Trade balance means Exports – Imports.

So, statement (c) is incorrect.

Question : 4 [UPSC (Pre) 2012]

What is/are the recent policy initiative(s) of government of India to promote the growth of manufacturing sector?

  1. Setting up of National Investment and manufacturing Zones.
  2. Providing the benefits of ‘single window clearance’.
  3. Establishing the technology acquisition and development fund.
Select the correct answer using the codes given below.

a) 2 and 3

b) Only 1

c) 1, 2 and 3

d) 1 and 3

Answer: (c)

Question : 5

Wholesale Price Inflation (WPI) index includes price change of which of the following sectors:

  1. Agriculture
  2. Mining
  3. Manufacturing
  4. Electricity
Select the correct answer using the code given below:

a) (i), (ii) & (iii) only

b) (iii) only

c) (ii) & (iii) only

d) All of the above

Answer: (d)

Wholesale Price Index (WPI) is released by the Office of Economic Advisor, Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry. The Base year has been revised to 2011-12 and includes 697 items.

WPI inflation measures the average change in prices of commodities for bulk sale at the level of the early stage of transactions pertaining to four sectors namely agriculture, mining, manufacturing and electricity. WPI does not cover services. WPI covers commodities falling under three Major Groups namely:

"Primary Articles" (weight 22.62%) like agricultural commodities and minerals

"Fuel and Power" (weight 13.15%) like coal and electricity and

"Manufactured Products" (weight 64.23%) like textiles, leather, machine tools

The prices tracked are agri-market (mandi) prices for agricultural commodities, ex-factory prices for manufactured products and ex-mines prices for minerals. The prices used for compilation do not include indirect taxes in order to remove the impact of fiscal policy. This is in consonance with best international practices and makes the new WPI conceptually closer to the "Produce Price Index" used internationally.

The weight given to each commodity covered in the WPI basked is based on the net traded value of the item in the year 2011-12. The net traded value is the value of output in the year 2011-12 adjusted for net imports. Thus, the net traded value represents the total transactions of each product in the economy during the base year.

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