macro fundamentals, GDP, investment & growth section 4 Practice Questions Answers Test with Solutions & More Shortcuts

Question : 16 [UPPCS (Mains) 2008]

The second Green Revolution proposed by the Prime Minister does not include

a) minimisation of the post harvest wastage

b) help to Indian farmers to participate in global agricultural trade

c) encouragement to foreign direct investment in agriculture

d) improvement in storage of crops

Answer: (c)

Question : 17 [HPPSC (Pre) 2010]

Indian agriculture has the following features.

  1. Dependence of agriculture on the monsoons
  2. Abolition of zamindari
  3. Absence of trade unions in the agricultural sector
  4. Heavy pressure of population on land
Which of the above is responsible for disguised unemployment in agriculture?

a) Only 1 and 2

b) Only 1

c) Only 4

d) 1, 2 and 3

Answer: (c)

Question : 18 [UPSC (Pre) 2001]

Consider the following factors regarding industry.

  1. Capital investment
  2. Business turnover
  3. Labour force
  4. Power consumption
Which of these determine the nature and size of the industry?

a) 1, 2 and 4

b) 1, 3 and 4

c) 2 and 3

d) 2, 3 and 4

Answer: (b)

Question : 19

The decrease in dependency ratio (ratio of dependent population to working-age population) of a country may lead to which of the following situation:

  1. Increase in the savings rate
  2. Decrease in the savings rate
  3. Increase in Capital Formation
  4. Decrease in Capital Formation
Select the correct answer using the code given below:

a) (i) & (iv) only

b) (ii) & (iv) only

c) (i) & (iii) only

d) (ii) & (iii) only

Answer: (c)

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.

Question : 20

Consider the following statements regarding Capital formation:

  1. Gold and valuable metals are part of Fixed Capital Formation
  2. Intellectual properties are part of Fixed capital formation
  3. Construction of buildings and other structures are part of Capital Formation
Select the correct answer using the code given below:

a) (ii) & (iii) only

b) (i) & (iii) only

c) (i) only

d) (iii) only

Answer: (a)

Gross Capital Formation = Gross Fixed Capital Formation (machinery + equipment + building + cultivated biological resources + intellectual property) + Valuable Metals + Change in stock/inventory

Gross fixed capital formation is around 30% and valuable metals and change in the stock is one per cent each.

So Gross Capital Formation or Gross Investment is around 32%. Mostly we use the gross fixed investment for all calculations and growth purposes.

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