Daily Updates Mock Test 58

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Daily Updates Mock Test 58 - Quiz

MOCK TEST 58
SYLLABUS :INDIAN ECONOMY
TIME : 20 MINUTES FULL MARKS : 50*5 = 250
EACH QUESTION CARRIES 5 MARKS , - VE MARKING = -1 / WRONG ANSWER
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Questions and Answers
  • 1. 

     In a mixed economy,

    • A.

      All economic decisions are taken by the central authority.

    • B.

      All economic decisions are taken by private entrepreneurs.

    • C.

      Economic decisions are partly taken by the state and partly by the private entrepreneurs

    • D.

      None of the above

    Correct Answer
    C. Economic decisions are partly taken by the state and partly by the private entrepreneurs
    Explanation
    In a mixed economy, economic decisions are partly taken by the state and partly by private entrepreneurs. This means that the government has some control over the economy and can make decisions that affect businesses and industries, such as regulations and taxes. At the same time, private entrepreneurs have the freedom to make their own economic decisions, such as what goods and services to produce and how to allocate resources. This combination of state and private control allows for a balance between government intervention and market forces in the economy.

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  • 2. 

    Which of the following is not a part of World Bank?

    • A.

      IMF

    • B.

      IBRD

    • C.

      MIGA

    • D.

      IDA

    Correct Answer
    A. IMF
    Explanation
    The International Monetary Fund (IMF) is not a part of the World Bank. While both the World Bank and the IMF were established at the Bretton Woods Conference in 1944, they serve different purposes. The World Bank focuses on providing financial and technical assistance to developing countries, while the IMF aims to promote global monetary cooperation and provide financial stability by monitoring the international monetary system and providing loans to countries experiencing balance of payments problems. Therefore, the IMF is not a part of the World Bank.

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  • 3. 

    Where is the headquarter of World Bank located?

    • A.

      Geneva

    • B.

      Rome

    • C.

      New York

    • D.

      Washington D.C.

    Correct Answer
    D. Washington D.C.
    Explanation
    The headquarters of the World Bank is located in Washington D.C. This is the correct answer because the World Bank is an international financial institution that provides loans and grants to the governments of poorer countries for the purpose of pursuing capital projects. Washington D.C. is the capital city of the United States and is home to many international organizations, including the World Bank.

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  • 4. 

    ‘Udyog Bandhu’ is a/an ?

    • A.

      Labour supplying agency

    • B.

      sick industry rehabilitation agency

    • C.

      Organisation to assist industrial units in solving time bound establishment and related problems

    • D.

      Agency for financing industrial development

    Correct Answer
    C. Organisation to assist industrial units in solving time bound establishment and related problems
    Explanation
    'Udyog Bandhu' is an organization that assists industrial units in solving time-bound establishment and related problems. This means that it provides support and guidance to industrial units in resolving any issues or challenges they may face during the process of setting up their businesses within a specified timeframe. The organization aims to facilitate the smooth establishment of industrial units and ensure that any obstacles or delays are addressed promptly and effectively.

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  • 5. 

    The central problem in economics is that of

    • A.

      Comparing the success of command versus market economies.

    • B.

      Guaranteering that production occurs in the most efficient manner.

    • C.

      guaranteering a minimum level of income for every citizen.

    • D.

      Allocating scarce resources in such a manner that society’s unlimited needs or wants are satisfied in the best possible manner.

    Correct Answer
    D. Allocating scarce resources in such a manner that society’s unlimited needs or wants are satisfied in the best possible manner.
    Explanation
    The correct answer is allocating scarce resources in such a manner that society’s unlimited needs or wants are satisfied in the best possible manner. This answer best captures the central problem in economics, which is the allocation of scarce resources to fulfill society's unlimited needs and wants. Economics is concerned with how to efficiently distribute resources to maximize societal welfare and satisfaction.

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  • 6. 

    Economic liberalization in India started with?

    • A.

      Substantial changes in industrial licensing policy

    • B.

      The convertibility of Indian rupees

    • C.

      Doing away with procedural formalities for foreign direct investment

    • D.

      Significant reduction in tax rates

    Correct Answer
    A. Substantial changes in industrial licensing policy
    Explanation
    The correct answer is "Substantial changes in industrial licensing policy". Economic liberalization in India began with the implementation of substantial changes in the industrial licensing policy. Prior to liberalization, the Indian government had a strict control over industries and required them to obtain licenses for various activities. However, in the 1980s and 1990s, the government initiated reforms to reduce the bureaucratic hurdles and restrictions on industrial licensing. This allowed for greater participation of private players and foreign investment in the Indian economy, leading to increased competition and economic growth.

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  • 7. 

     Quaternary sector implies

    • A.

      Activities related to mining and quarrying

    • B.

      Activities related to manufacturing

    • C.

      Fishing activities

    • D.

      Research and developmental activities

    Correct Answer
    D. Research and developmental activities
    Explanation
    The quaternary sector refers to activities that involve research and development. This sector focuses on the creation and application of knowledge, innovation, and technology. It includes activities such as scientific research, technological advancements, software development, and consulting services. These activities are crucial for the growth and advancement of industries and economies, as they contribute to the development of new products, processes, and services.

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  • 8. 

    Consider the following statements: I. Government disinvesting its share in various public sector undertakings II. Process of disinvestment is very fast III. Process of disinvestment is very slow and government always falls short of target Which of above statements is/ are true about government policy of disinvestment

    • A.

      Only I

    • B.

      I and III

    • C.

      I and II

    • D.

      I, II and III

    Correct Answer
    B. I and III
    Explanation
    The correct answer is "I and III". This means that statement I, which states that the government is disinvesting its share in various public sector undertakings, is true. Additionally, statement III, which states that the process of disinvestment is very slow and the government always falls short of its target, is also true.

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  • 9. 

    An economy achieves “productive efficiency” when:

    • A.

      Resources are employed in their most highly valued uses.

    • B.

      The best resources are employed.

    • C.

      The total number of goods produced is greatest.

    • D.

      Goods and services are produced at least cost and no resources are wasted.

    Correct Answer
    D. Goods and services are produced at least cost and no resources are wasted.
    Explanation
    When an economy achieves "productive efficiency," it means that goods and services are produced at the least cost possible and no resources are wasted. This implies that the economy is operating at its maximum potential, utilizing all available resources efficiently and effectively. By minimizing costs and avoiding any wastage of resources, the economy can produce the maximum output of goods and services. This ensures that resources are allocated optimally and the economy is functioning at its highest level of productivity.

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  • 10. 

    If the PPF is linear, i.e., a straight line, which of the following is true?

    • A.

      As the production of a good increases, the opportunity cost of that good rises.

    • B.

      As the production of a good increases, the opportunity cost of that good falls.

    • C.

      Opportunity costs are constant.

    • D.

      The economy is not at full employment when operating on the PPF.

    Correct Answer
    C. Opportunity costs are constant.
    Explanation
    In a linear PPF, the opportunity cost of producing one good in terms of the other remains constant. This means that as the production of a good increases, the opportunity cost of that good remains the same. This is because resources are perfectly substitutable between the two goods, and the trade-off between them remains constant. Therefore, the correct statement is that opportunity costs are constant.

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  • 11. 

    Gilt-edged market means : 1. bullion market 2. market of government securities 3. market of guns 4. market of pure metals Find out the correct option from the code:

    • A.

      2 only

    • B.

      4 and 3 only

    • C.

      1 and 3 only

    • D.

      3 only

    Correct Answer
    A. 2 only
    Explanation
    The correct answer is 2 only. Gilt-edged market refers to the market of government securities. This term is used to describe a market where high-quality, low-risk government bonds are traded. These bonds are considered to be very secure investments and are often used as a benchmark for other types of investments. The term "gilt-edged" comes from the historical practice of using gold leaf to edge the paper certificates of these bonds, symbolizing their high quality and reliability.

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  • 12. 

    Consider the following statements about ‘hidden price rise’ and select the correct code : 1. A situation of reduction in quality or amount of a product offered at an unchanged price 2. A situation of increase in indirect taxes on goods, which compromises on the quality of the goods offered for sale Code :

    • A.

      Only 1

    • B.

      Only 2

    • C.

      1 and 2 both

    • D.

      Neither 1 nor 2

    Correct Answer
    A. Only 1
    Explanation
    The correct answer is "Only 1". This is because statement 1 accurately describes the concept of "hidden price rise", which refers to a situation where the quality or quantity of a product is reduced while the price remains the same. Statement 2 does not accurately describe hidden price rise, as it refers to an increase in indirect taxes on goods compromising the quality of the goods offered for sale, which is not the same as a reduction in quality or amount of a product offered at an unchanged price.

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  • 13. 

     Periods of less than full employment correspond to

    • A.

      Points outside the PPF.

    • B.

      Points inside the PPF.

    • C.

      Points on the PPF.

    • D.

      Either points inside or outside the PPF.

    Correct Answer
    B. Points inside the PPF.
    Explanation
    Periods of less than full employment correspond to points inside the PPF. This is because when an economy is not operating at full employment, it is not utilizing all of its available resources efficiently. As a result, the economy is producing below its maximum potential, which is represented by points inside the PPF. Points outside the PPF would indicate an unattainable level of production given the available resources, while points on the PPF would represent full employment and efficient resource allocation.

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  • 14. 

    Disguised unemployment generally means: 1. large number of people remain unemployed 2. alternative employment is not available 3. marginal productivity of labour is zero 4. productivity of workers is low Find out the correct option from the code:

    • A.

      1 and 4 only

    • B.

      3 and 1 only

    • C.

      2 only

    • D.

      3 only

    Correct Answer
    D. 3 only
    Explanation
    Disguised unemployment refers to a situation where there are more people employed in a job or sector than is actually necessary for the work being done. This means that the marginal productivity of labor is zero, as additional workers do not contribute to any increase in output. It does not necessarily mean that a large number of people remain unemployed or that alternative employment is not available. It also does not imply that the productivity of workers is low, as the existing workers may be highly productive. Therefore, the correct option is 3 only.

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  • 15. 

    Deficit financing leads to inflation in general, but it can be checked if:

    • A.

      Government expenditure leads to increase in the aggregate supply in ratio of aggregate demand

    • B.

      Only aggregate demand is increased

    • C.

      all the expenditure is denoted national debt payment only

    • D.

      All of the above

    Correct Answer
    D. All of the above
    Explanation
    Deficit financing refers to a situation where a government spends more money than it receives in revenue, resulting in a budget deficit. This can lead to inflation because the increased government expenditure stimulates demand in the economy. However, if government expenditure leads to an increase in the aggregate supply in proportion to the aggregate demand, it can help prevent inflation. Similarly, if only aggregate demand is increased without a corresponding increase in aggregate supply, it can lead to inflation. Lastly, if all the expenditure is used for national debt payment, it can also help check inflation as it reduces the money supply in the economy. Therefore, all of the above options can help mitigate the inflationary effects of deficit financing.

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  • 16. 

    When we talk of smart money what are we referring to?

    • A.

      Internet banking

    • B.

      FDRs in banks

    • C.

      credit cards

    • D.

      demand drafts of banks

    Correct Answer
    C. credit cards
    Explanation
    Smart money refers to credit cards because credit cards offer various features and benefits that make them a convenient and efficient form of payment. Credit cards allow users to make purchases without carrying cash, earn rewards and cashback on their spending, and provide protection against fraud and unauthorized transactions. Additionally, credit cards offer flexibility in terms of repayment options and can help build a good credit history if used responsibly. Therefore, credit cards are considered as a smart choice for managing finances and making secure transactions.

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  • 17. 

    RTGS stands for............?

    • A.

      Real Time Gross Settlements

    • B.

      Reduced Time Gross Settlements

    • C.

      Relative Time Gross Settlements

    • D.

      Real Total Gross Securities

    Correct Answer
    A. Real Time Gross Settlements
    Explanation
    RTGS stands for Real Time Gross Settlements. This system is used for transferring funds between banks in real-time. It allows for immediate and irrevocable transfer of funds from one bank to another. The term "gross" refers to the fact that each transaction is settled individually, without any netting or offsetting against other transactions. This ensures that funds are settled on a one-to-one basis, without any delay or batching. Therefore, the correct answer is Real Time Gross Settlements.

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  • 18. 

    Many times we read about ‘Hawala’ transactions in newspapers. Hawala, in India, is prohibited under the provision of which of the following Acts?

    • A.

      Fiscal Responsibility and Budget Management Act

    • B.

      Banking Regulation Act

    • C.

      Financial Action Task Force Act

    • D.

      Foreign Exchange Management Act

    Correct Answer
    D. Foreign Exchange Management Act
    Explanation
    Hawala transactions are illegal money transfer systems that operate outside of traditional banking channels. In India, these transactions are prohibited under the Foreign Exchange Management Act (FEMA). FEMA regulates foreign exchange transactions and aims to prevent money laundering and illegal activities related to foreign exchange. It provides guidelines for the orderly development and maintenance of foreign exchange markets in India. By prohibiting Hawala transactions, FEMA helps to ensure transparency and accountability in financial transactions and prevents the misuse of foreign exchange for illegal purposes.

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  • 19. 

    The difference between visible exports and visible imports is defined as.........?

    • A.

      Balance of trade

    • B.

      Balance of payments

    • C.

      Balanced terms of trade

    • D.

      Gains from trade

    Correct Answer
    A. Balance of trade
    Explanation
    The difference between visible exports and visible imports is known as the balance of trade. It represents the monetary value of a country's exports minus its imports. A positive balance of trade indicates that a country is exporting more than it is importing, which is favorable for its economy. Conversely, a negative balance of trade suggests that a country is importing more than it is exporting, resulting in a trade deficit. The balance of trade is an important indicator of a country's economic performance and trade competitiveness.

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  • 20. 

     In which year was World Bank formed?

    • A.

      1945

    • B.

      1956

    • C.

      1960

    • D.

      1988

    Correct Answer
    A. 1945
    Explanation
    The correct answer is 1945. The World Bank was formed in 1945 with the aim of providing financial and technical assistance to developing countries for development projects. It was established as part of the Bretton Woods Conference, which took place in 1944 and aimed to create a post-war international monetary system. The World Bank has since played a crucial role in promoting economic development and reducing poverty in many countries around the world.

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  • 21. 

    PMJDY scheme of government has been recognized by Guiness Book of World Record for -

    • A.

      Most bank accounts opened

    • B.

      Most bank accounts opened in a single week

    • C.

      Most bank accounts opened in a month

    • D.

      All of the above

    Correct Answer
    B. Most bank accounts opened in a single week
    Explanation
    The PMJDY scheme of the government has been recognized by the Guinness Book of World Records for opening the most bank accounts in a single week. This achievement highlights the success and effectiveness of the scheme in bringing financial inclusion to a large number of people within a short span of time. The scheme aimed to provide banking services to the unbanked population of India and promote financial literacy. By opening a record number of bank accounts in just one week, the PMJDY scheme has made significant progress in achieving its objectives.

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  • 22. 

    How many banks were nationalised in the second phase in 1980?

    • A.

      5

    • B.

      6

    • C.

      7

    • D.

      4

    Correct Answer
    B. 6
    Explanation
    In the second phase of nationalization in 1980, a total of 6 banks were nationalized.

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  • 23. 

    What is the slogan of PMJDY?

    • A.

      Mera Khata Bhagya Vidhata

    • B.

      Sabke Saath Sabke Vikash

    • C.

      Aapka paisa, Aapke haath

    • D.

      Hum Appke, Saath hai

    Correct Answer
    A. Mera Khata Bhagya Vidhata
    Explanation
    The correct answer is "Mera Khata Bhagya Vidhata." This slogan is associated with the Pradhan Mantri Jan Dhan Yojana (PMJDY), a financial inclusion program launched by the Government of India. The slogan translates to "My Account, Fate's Creator" in English, emphasizing the program's aim to provide financial security and empowerment to all individuals. It highlights the idea that opening a bank account can bring positive changes and opportunities in people's lives.

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  • 24. 

    What is the full form of SARFAESI Act?

    • A.

      Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest

    • B.

      Securitization and Restructurization of Financial Assets and Enforcement of Security Interest

    • C.

      Securitization and Reconstruction of Financial Assets and Enforcement of Securitization Interest

    • D.

      All of the above

    Correct Answer
    A. Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest
    Explanation
    The correct answer is "Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest." This is the full form of the SARFAESI Act. The act was enacted in 2002 by the Indian Parliament to provide a legal framework for the securitization and reconstruction of financial assets and the enforcement of security interest by banks and financial institutions. It allows banks to take possession of collateral assets and sell them without the intervention of the court, in order to recover their dues from defaulting borrowers.

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  • 25. 

    Banks and other financial institutions in India are required to maintain a certain amount of liquid assets like cash, precious metals and other short-term securities as a reserve all the time in RBI. In Banking World this is known as?

    • A.

      CRR

    • B.

      Fixed Asset

    • C.

      SLR

    • D.

      PLR

    Correct Answer
    A. CRR
    Explanation
    Banks and other financial institutions in India are required to maintain a certain amount of liquid assets as a reserve all the time in RBI. This is known as the Cash Reserve Ratio (CRR). The CRR is a monetary policy tool used by the Reserve Bank of India (RBI) to control inflation and stabilize the economy. It ensures that banks have enough funds to meet the withdrawal demands of their customers and helps in maintaining the stability of the banking system.

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  • 26. 

    What is the full form of the term ‘NPA’ as used in banking environment?

    • A.

      Not Profitable Assets

    • B.

      New Potential Accounts

    • C.

      Non Performing Assets

    • D.

      Net Performing Assets

    Correct Answer
    C. Non Performing Assets
    Explanation
    NPA stands for Non Performing Assets. In the banking environment, NPA refers to loans or advances that have stopped generating income for the bank. These assets are considered non-performing when the borrower fails to make interest or principal payments for a specified period of time. Non Performing Assets are a cause of concern for banks as they impact their profitability and financial stability.

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  • 27. 

    Mother mortality rate is defined as

    • A.

      No of death of maternal mother per one 10000 population

    • B.

      No of death of maternal mother per one lakhs population

    • C.

      No of death of maternal mother per one 1000 population

    • D.

      none of these

    Correct Answer
    B. No of death of maternal mother per one lakhs population
    Explanation
    The correct answer is "No of death of maternal mother per one lakhs population." This is because the mother mortality rate is a measure of the number of deaths of maternal mothers per one lakh (100,000) population. It is used to assess the risk of death during pregnancy, childbirth, or within 42 days after childbirth. By expressing the rate per one lakh population, it allows for better comparison and understanding of the magnitude of the issue across different regions or countries.

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  • 28. 

    Which one of the following factors is taken into account to calculate the Balance of Payment (BOP) of a country ?

    • A.

      Current Account

    • B.

      Changes in the Foreign Exchange Reserves

    • C.

      Errors and Omissions

    • D.

      All of the above

    Correct Answer
    D. All of the above
    Explanation
    The Balance of Payment (BOP) of a country is calculated by taking into account the Current Account, which includes the balance of trade, net income from abroad, and net current transfers. Changes in the Foreign Exchange Reserves are also considered, as they reflect the inflow or outflow of foreign currency. Errors and Omissions, which account for unrecorded transactions or statistical discrepancies, are also included in the calculation. Therefore, all of the factors mentioned in the options are taken into account when calculating the BOP of a country.

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  • 29. 

    Which one of the following is the proposed currency of the Gulf Cooperation Council (GCC) ?

    • A.

      Khaleeji

    • B.

      Sucre

    • C.

      Minar

    • D.

      None of these

    Correct Answer
    A. Khaleeji
    Explanation
    The proposed currency of the Gulf Cooperation Council (GCC) is Khaleeji.

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  • 30. 

    Which one among the following is the total amount of money available in an economy at a specific time ?

    • A.

      Near money

    • B.

      Narrow money

    • C.

      Money volume

    • D.

      Money stock

    Correct Answer
    D. Money stock
    Explanation
    Money stock refers to the total amount of money available in an economy at a specific time. It includes both physical currency (coins and banknotes) and demand deposits (money held in checking accounts). Money stock is an important indicator of the overall liquidity and financial health of an economy. It is used to measure the size and growth of the money supply, which in turn influences inflation, interest rates, and economic activity.

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  • 31. 

    In which form of the market structure is the degree of control over the price of its product by a firm very large?

    • A.

      Monopoly

    • B.

      Imperfect Competition

    • C.

      Oligopoly

    • D.

      Perfect competition

    Correct Answer
    A. Monopoly
    Explanation
    A monopoly is a market structure where there is only one firm that dominates the entire market and has complete control over the price of its product. This means that the firm can set the price at any level it desires, without any competition to drive prices down. As there are no close substitutes available in the market, consumers have no choice but to accept the price set by the monopolistic firm. Therefore, in a monopoly, the degree of control over the price of its product by a firm is very large.

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  • 32. 

    Average revenue curve is also known as:

    • A.

      Profit Curve

    • B.

      Demand Curve

    • C.

      Average Cost Curve

    • D.

      Indifference Curve

    Correct Answer
    B. Demand Curve
    Explanation
    The correct answer is "Demand Curve". The average revenue curve represents the average revenue earned by a firm per unit of output sold. It is derived by dividing total revenue by the quantity of output sold. Since average revenue is equal to the price of the product in perfect competition, the average revenue curve is also referred to as the demand curve. This is because in perfect competition, the firm is a price taker and has no control over the price, therefore the average revenue curve represents the demand for the firm's product.

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  • 33. 

    Disguised unemployment in India exists in

    • A.

      Transport sector

    • B.

      Agricultural sector

    • C.

      Banking

    • D.

      Service sector

    Correct Answer
    B. Agricultural sector
    Explanation
    Disguised unemployment in India exists in the agricultural sector. This means that there are more workers employed in agriculture than required for efficient production. It occurs when the productivity of additional workers is close to zero, indicating that some of the workers in the sector are not fully utilized. Disguised unemployment in the agricultural sector is often a result of limited job opportunities in other sectors, lack of alternative employment options, and the prevalence of small-scale farming practices.

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  • 34. 

    Intensive Agriculture District Programme (IADP) was started in

    • A.

      1959-60

    • B.

      1960-61

    • C.

      1961-62

    • D.

      1962-63

    Correct Answer
    B. 1960-61
    Explanation
    The correct answer is 1960-61. The Intensive Agriculture District Programme (IADP) was initiated in 1960-61. This program aimed to increase agricultural productivity in specific districts by providing them with improved infrastructure, modern farming techniques, and better access to credit and inputs. By focusing on selected districts, the program aimed to achieve concentrated development and serve as a model for replication in other areas.

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  • 35. 

    Suppose that the demand curve for the ABC Co. slopes downward and to the right. We can conclude that

    • A.

      the firm operates in a perfectly competitive market.

    • B.

      The firm can sell all that it wants to at the established market price.

    • C.

      the XYZ Co. is not a price taker in the market because it must lower price to sell additional units of output.

    • D.

      The XYZ Co. will not be able to maximize profits because price and revenue are subject to change.

    Correct Answer
    C. the XYZ Co. is not a price taker in the market because it must lower price to sell additional units of output.
    Explanation
    The given answer suggests that the XYZ Co. is not a price taker in the market because it must lower the price to sell additional units of output. This conclusion can be drawn because the demand curve for the ABC Co. slopes downward and to the right, indicating that as the XYZ Co. increases the quantity of output it wants to sell, it must lower the price to attract more buyers. In a perfectly competitive market, firms are price takers and can sell all that they want at the established market price, which is not the case here. Moreover, the answer does not mention anything about the firm's ability to maximize profits or the stability of price and revenue.

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  • 36. 

     If firms in the shoes  industry have the following market shares, which market structure would best describe the industry? Market share                                     (% of market) Adidas                                                          18.7 Puma                                                            14.3 Rebook                                                        11.6 sparx                                                             9.4 bata                                                               8.8 nike                                                               7.4 Others                                                          29.8

    • A.

      Perfect competition

    • B.

      Monopolistic competition

    • C.

      Oligopoly

    • D.

      Monopoly

    Correct Answer
    C. Oligopoly
    Explanation
    The given market shares indicate that there are a few dominant firms in the industry, with Adidas having the highest market share at 18.7%. This suggests that the industry is characterized by an oligopoly, which is a market structure where a small number of large firms dominate the market. In an oligopoly, firms have significant market power and there may be barriers to entry for new firms. The market shares of the other firms, such as Puma, Rebook, and Nike, further support the oligopolistic nature of the industry. The presence of "Others" category with a significant market share also indicates that there may be some smaller firms in the industry, but the dominance of a few large firms suggests an oligopoly.

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  • 37. 

    Which sector is the backbone of Indian economy?

    • A.

      Service Sector

    • B.

      Financial Sector

    • C.

      Tourism Sector

    • D.

      Agriculture Sector

    Correct Answer
    A. Service Sector
    Explanation
    The service sector is considered the backbone of the Indian economy because it contributes the most to the country's GDP and employment. It includes various industries such as banking, IT, telecommunications, healthcare, and hospitality. The service sector has experienced significant growth in recent years and has become a major driver of economic development. It not only generates revenue but also plays a crucial role in attracting foreign investment and promoting exports. Additionally, the service sector has a multiplier effect on other sectors, leading to overall economic growth and development.

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  • 38. 

    Which one do you like?

    • A.

      the response to a price increase is less than the response to a price decrease.

    • B.

      The response to a price increase is more than the response to a price decrease.

    • C.

      the elasticity of demand is constant regardless of whether price increases or decreases.

    • D.

      The elasticity of demand is perfectly elastic if price increases and perfectly inelastic if price decreases.

    Correct Answer
    A. the response to a price increase is less than the response to a price decrease.
    Explanation
    The given correct answer states that the response to a price increase is less than the response to a price decrease. This implies that when the price of a product increases, the demand for that product decreases, but not as significantly as when the price decreases. This suggests that consumers are more sensitive to price decreases and are more likely to respond by purchasing more of the product, while they are less likely to respond to price increases by reducing their purchases.

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  • 39. 

    In terms of economics, the total value of the output (goods and services) produced and income received in a year by a domestic resident of a country put together is called

    • A.

      Net National Product

    • B.

      Gross National Product

    • C.

      Gross National Income

    • D.

      National income

    Correct Answer
    B. Gross National Product
    Explanation
    Gross National Product (GNP) is the correct answer because it represents the total value of goods and services produced by the residents of a country, both domestically and abroad, in a given year. It includes income earned by domestic residents from their investments and employment overseas. GNP is an important measure of a country's economic performance and is used to compare the economic output of different countries.

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  • 40. 

    A firm encounters its “shutdown point” when:

    • A.

      Average total cost equals price at the profit-maximising level of output.

    • B.

      Average variable cost equals price at the profit-maximising level of output.

    • C.

      Average fixed cost equals price at the profit-maximising level of output.

    • D.

      Marginal cost equals price at the profit-maximising level of output.

    Correct Answer
    B. Average variable cost equals price at the profit-maximising level of output.
    Explanation
    The firm encounters its "shutdown point" when the average variable cost equals the price at the profit-maximizing level of output. This means that the firm is no longer able to cover its variable costs with the revenue it generates from selling its products. At this point, the firm would choose to shut down operations rather than continue operating at a loss.

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  • 41. 

    Suppose that, at the profit-maximizing level of output, a firm finds that market price is less than average total cost, but greater than average variable cost. Which of the following statements is correct?

    • A.

      The firm should shutdown in order to minimize its losses.

    • B.

      The firm should raise its price enough to cover its losses.

    • C.

      The firm should move its resources to another industry.

    • D.

      The firm should continue to operate in the short run in order to minimize its losses

    Correct Answer
    D. The firm should continue to operate in the short run in order to minimize its losses
    Explanation
    If the market price is less than average total cost but greater than average variable cost, the firm is experiencing losses in the short run. However, shutting down would result in even greater losses as the firm would still have to pay its fixed costs. Therefore, the best option for the firm is to continue operating in the short run to minimize its losses. By doing so, the firm can cover its variable costs and contribute towards its fixed costs, reducing the overall loss.

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  • 42. 

    Which of the following is definitely a major indication of the state of the economy of a country?

    • A.

      Rate of GDP growth

    • B.

      Rate of inflation

    • C.

      Number of banks in a country

    • D.

      None of these

    Correct Answer
    A. Rate of GDP growth
    Explanation
    The rate of GDP growth is definitely a major indication of the state of the economy of a country. GDP (Gross Domestic Product) measures the total value of all goods and services produced within a country's borders in a specific time period. A high rate of GDP growth indicates a strong and expanding economy, while a low or negative rate suggests economic contraction or stagnation. Therefore, monitoring the rate of GDP growth is crucial in assessing the overall health and performance of a country's economy.

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  • 43. 

    When price is less than average variable cost at the profit-maximising level of output, a firm should:

    • A.

      Produce where marginal revenue equals marginal cost if it is operating in the short run.

    • B.

      produce where marginal revenue equals marginal cost if it is operating is the long run.

    • C.

      shutdown, since it will lose nothing in that case.

    • D.

      Shutdown, since it cannot even cover its variable costs if it stays in business.

    Correct Answer
    D. Shutdown, since it cannot even cover its variable costs if it stays in business.
    Explanation
    When the price is less than the average variable cost at the profit-maximizing level of output, it means that the firm is not able to cover its variable costs. In this situation, the firm should shut down because continuing to operate would result in losses. By shutting down, the firm avoids further losses and minimizes its financial damage.

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  • 44. 

    In which year ‘Bombay plan’ was launched by some industrialists?

    • A.

      1942

    • B.

      1943

    • C.

      1944

    • D.

      1945

    Correct Answer
    C. 1944
    Explanation
    The 'Bombay plan' was launched by some industrialists in the year 1944.

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  • 45. 

    The Economic Planning Committee was established in the chairmanship of

    • A.

      J.L. Nehru

    • B.

      Dr. Rajendra Prasad

    • C.

      Ramkrishna Mudaliyar

    • D.

      K.C. Niyogi

    Correct Answer
    A. J.L. Nehru
    Explanation
    The correct answer is J.L. Nehru. The Economic Planning Committee was established under the chairmanship of J.L. Nehru. This committee was formed in 1938 and was responsible for formulating and implementing economic plans for the development of India. Nehru, as the first Prime Minister of India, played a crucial role in shaping the country's economic policies and was actively involved in the planning process.

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  • 46. 

    The income tax in India is

    • A.

      Indirect and progressive

    • B.

      Direct and proportional

    • C.

      Direct and progressive

    • D.

      Indirect and proportional

    Correct Answer
    C. Direct and progressive
    Explanation
    The income tax in India is direct because it is levied on the income of individuals and entities directly, rather than being imposed on goods or services. It is also progressive because the tax rate increases as the income level increases. This means that individuals with higher incomes are subject to higher tax rates, while those with lower incomes are taxed at lower rates. This progressive tax system aims to redistribute wealth and promote social equality by ensuring that those who earn more contribute a larger proportion of their income towards taxes.

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  • 47. 

    The decentralisation system was recommended by

    • A.

      C. Rajagopalachari

    • B.

      )J.B. Kripalani

    • C.

      Balwant Rai Mehta

    • D.

      Ashok Mehta

    Correct Answer
    C. Balwant Rai Mehta
    Explanation
    Balwant Rai Mehta is the correct answer because he was a prominent Indian politician who played a crucial role in the decentralization of power in India. He chaired the Balwant Rai Mehta Committee, which recommended the establishment of a three-tier Panchayati Raj system in India. This system aimed to decentralize power and empower local self-governance at the village, block, and district levels. The recommendations of the Balwant Rai Mehta Committee were instrumental in the implementation of Panchayati Raj institutions across the country, making Balwant Rai Mehta the correct answer.

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  • 48. 

    The principal sources of revenue to the State Government in India is

    • A.

      Income Tax

    • B.

      Sales Tax

    • C.

      State Excise Duties

    • D.

      Land Revenue

    Correct Answer
    B. Sales Tax
    Explanation
    Sales tax is a principal source of revenue for the State Government in India. This is because sales tax is levied on the sale of goods within a state and is collected by the state government. It is a consumption-based tax and is imposed on the final consumer. The revenue generated from sales tax is used by the state government to fund various developmental activities, infrastructure projects, and public services. Income tax, state excise duties, and land revenue also contribute to the state government's revenue, but sales tax is considered one of the main sources.

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  • 49. 

    Open market operations of a Central Bank are sale and purchase of:

    • A.

      Foreign currencies

    • B.

      Corporate securities

    • C.

      Trade bills

    • D.

      Government securities

    Correct Answer
    D. Government securities
    Explanation
    Open market operations of a Central Bank refer to the buying and selling of government securities in the open market. These operations are used to control the money supply and interest rates in the economy. By purchasing government securities, the Central Bank injects money into the economy, increasing the money supply and lowering interest rates. Conversely, by selling government securities, the Central Bank reduces the money supply and increases interest rates. Therefore, the correct answer is government securities.

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  • 50. 

    Which of the following is not a function of the RBI ?

    • A.

      Bankers Bank

    • B.

      Bank of Issue

    • C.

      Bankers to the Public

    • D.

      Custodian of foreign exchange

    Correct Answer
    C. Bankers to the Public
    Explanation
    The RBI, or Reserve Bank of India, performs various functions such as being the Bankers Bank, Bank of Issue, and Custodian of foreign exchange. However, being Bankers to the Public is not a function of the RBI. This means that the RBI does not directly act as a bank for the general public, but rather focuses on regulating and supervising the banking system in India.

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