Indian Economy Mock Test (UPSC/PSC): 100 Key Questions in English
Are you preparing for competitive exams like the UPSC Civil Services or Kerala PSC? Test your knowledge of the Indian Economy with our comprehensive mock test. This question bank features 100 high-quality, exam-level questions covering essential topics such as India's Five-Year Plans, National Income Accounting, foundational economic concepts, and post-independence policies. To help aspirants from all backgrounds, every question, option, and detailed explanation is provided in both English and Malayalam.
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1
Consider the following statements regarding the branches of economics:
1. Microeconomics adopts a "top-down" approach, focusing on aggregate phenomena like national income and inflation.
2. Macroeconomics is primarily concerned with the decisions of individual consumers and firms.
3. John Maynard Keynes is credited with the development of macroeconomics following the Great Depression.
Which of the above statements is/are correct?
1. Microeconomics adopts a "top-down" approach, focusing on aggregate phenomena like national income and inflation.
2. Macroeconomics is primarily concerned with the decisions of individual consumers and firms.
3. John Maynard Keynes is credited with the development of macroeconomics following the Great Depression.
Which of the above statements is/are correct?
1 and 2 only
3 only
2 and 3 only
1, 2 and 3
Explanation: Statements 1 and 2 are incorrect as they have interchanged the definitions of microeconomics and macroeconomics. Microeconomics is "bottom-up," focusing on individual agents, while macroeconomics is "top-down," focusing on the economy as a whole. Statement 3 is correct; macroeconomics as a distinct branch is attributed to John Maynard Keynes.
2
An economy where the services sector contributes at least half of the national income and livelihood is known as a 'service economy'. According to the provided text, when did India's economy transition to this status?
During the reforms of 1991
In the early 1980s
In the late 1990s
After the year 2002
Explanation: The text explicitly states, "India transitioned to a service economy in the late 1990s when the sector's contribution to its national income surpassed 50%."
3
Which of the following activities would fall under the Quaternary Sector of the economy?
High-level government policy-making
Manufacturing of steel
Banking and communication services
Research and Development (R&D) activities
Explanation: The Quaternary Sector is the 'knowledge' sector, which is a sub-sector of the tertiary sector. It includes activities like education, research, and development (R&D). High-level policy-making falls under the Quinary sector.
4
Assertion (A): A Market Economy is based on the principle of laissez-faire.
Reason (R): In a Market Economy, the state makes all major economic decisions regarding production and distribution.
Reason (R): In a Market Economy, the state makes all major economic decisions regarding production and distribution.
Both A and R are true and R is the correct explanation of A
Both A and R are true but R is not the correct explanation of A
A is true but R is false
A is false but R is true
Explanation: Assertion (A) is correct; market economies advocate for laissez-faire, or non-interference from the government. Reason (R) is false; it describes a Non-Market (State/Command) Economy, not a Market Economy where decisions are driven by market forces of demand and supply.
5
Why did India adopt a 'Mixed Economy' model post-independence?
To completely replicate the Soviet Union's command economy.
To balance the roles of the state and the private sector within a democratic framework.
To prioritize wealth creation for a few through a purely capitalist system.
Because it was the only model suggested by the World Bank.
Explanation: The text states that while India was inspired by Soviet planning, it chose a mixed economy to suit its democratic framework, allowing both the state and the private sector to play important economic roles.
6
Consider the following formula: National Income = GDP + 'X' - Depreciation. What does 'X' represent in this formula?
Gross Investment
Product Taxes
Net Factor Income from Abroad
Product Subsidies
Explanation: The formula for Net National Product (NNP), which is also called National Income (NI), is $NNP = GNP - Depreciation$. Since $GNP = GDP + Net \ Factor \ Income \ from \ Abroad$, substituting this into the first equation gives $NNP = GDP + Net \ Factor \ Income \ from \ Abroad - Depreciation$. Therefore, 'X' is Net Factor Income from Abroad.
7
Which of the following statements regarding India's National Income is correct?
India's GDP is consistently lower than its GNP.
Net Domestic Product (NDP) is used for international comparisons of economies.
India's Net Factor Income from Abroad (NFIA) has been negative.
Depreciation rates in India are set by the NITI Aayog.
Explanation: The text explicitly states that for India, the total 'Income from Abroad' is negative, primarily due to interest on external loans. This makes India's GNP lower than its GDP. It also states that NDP is not used for international comparisons due to varying depreciation rates, and these rates are set by the Ministry of Commerce and Industry, not NITI Aayog.
8
Following the methodological revision in January 2015, what is the relationship between Gross Value Added (GVA) at basic prices and Gross Domestic Product (GDP) at market prices?
$GDP = GVA \ at \ basic \ prices + Depreciation$
$GDP = GVA \ at \ basic \ prices - Product \ Taxes + Product \ Subsidies$
$GDP = GVA \ at \ basic \ prices + Income \ from \ Abroad$
$GDP = GVA \ at \ basic \ prices + Product \ Taxes - Product \ Subsidies$
Explanation: The text provides the exact formula for the relationship between the two aggregates after the 2015 revision: $GDP = GVA \ at \ basic \ prices + Product \ Taxes - Product \ Subsidies$.
9
What is the key difference between Economic Growth and Economic Development?
Growth is a quantitative measure of increase in economic variables, while Development is a qualitative measure of improvement in quality of life.
Growth focuses on happiness and well-being, while Development focuses on GDP per capita.
Growth is measured by the Human Development Index (HDI), while Development is measured by the annual percentage change in GDP.
There is no significant difference; the terms are used interchangeably.
Explanation: The text clearly distinguishes the two: "Economic Growth: This is a purely quantitative concept... Economic Development: This is a broader, qualitative concept that refers to an improvement in the quality of life."
10
The Human Development Index (HDI) is a composite index based on three dimensions. Which of the following is NOT one of those dimensions?
Health, measured by life expectancy at birth.
Environmental Protection, measured by green cover.
Education, measured by mean and expected years of schooling.
Standard of Living, measured by GNI per capita (PPP $).
Explanation: The three dimensions of HDI are explicitly listed as Health, Education, and Standard of Living. Environmental protection is a pillar of Gross National Happiness (GNH), not HDI.
11
Consider the following reasons for post-independence India choosing Industry as its 'Prime Moving Force' (PMF) over Agriculture:
1. To build a strong defence-industrial base for national security.
2. The dominant global view at the time saw industrialization as the fastest path to growth.
3. To support the modernization of agriculture with indigenous industrial products.
4. India lacked fertile land and manpower for agriculture.
Which of the above reasons are correct?
1. To build a strong defence-industrial base for national security.
2. The dominant global view at the time saw industrialization as the fastest path to growth.
3. To support the modernization of agriculture with indigenous industrial products.
4. India lacked fertile land and manpower for agriculture.
Which of the above reasons are correct?
1 and 4 only
2 and 3 only
1, 2, and 3 only
1, 2, 3, and 4
Explanation: The text lists reasons 1, 2, and 3 as the key strategic rationales for choosing industry. Statement 4 is incorrect; the text explicitly mentions that "India had a strong resource base for agriculture (fertile land, manpower)."
12
Which of the following was NOT a stated reason for the heavy emphasis on Public Sector Undertakings (PSUs) in India's early economic policy?
To develop 'core' industries like steel and coal which required heavy investment.
To generate large-scale employment for poverty alleviation.
To compete with and eventually eliminate the private sector entirely.
To generate revenue to fund social sector development like education and healthcare.
Explanation: The text mentions that PSUs were intended to support the future growth of the private sector, not eliminate it. The First Five-Year Plan itself clarified the important role of the private sector in India's mixed economy.
13
Match the Five-Year Plan with its primary focus or model:
List I (Plan)
A. First Plan
B. Second Plan
C. Fourth Plan
D. Fifth Plan
List II (Focus/Model)
1. Garibi Hatao
2. P.C. Mahalanobis Model
3. Harrod-Domar Model
4. Gadgil Formula
List I (Plan)
A. First Plan
B. Second Plan
C. Fourth Plan
D. Fifth Plan
List II (Focus/Model)
1. Garibi Hatao
2. P.C. Mahalanobis Model
3. Harrod-Domar Model
4. Gadgil Formula
A-2, B-3, C-1, D-4
A-3, B-2, C-4, D-1
A-3, B-4, C-2, D-1
A-2, B-1, C-4, D-3
Explanation: First Plan (A) was based on the Harrod-Domar model (3). Second Plan (B) was based on the P.C. Mahalanobis model (2). Fourth Plan (C) was based on the Gadgil Formula (4). Fifth Plan (D) focused on 'Garibi Hatao' (1). Thus, A-3, B-2, C-4, D-1 is the correct match.
14
The Third Five-Year Plan (1961-66) is considered a 'miserable failure'. What were the primary reasons for this outcome?
Nationalization of banks and the Green Revolution.
A global economic recession.
The Sino-Indian War (1962) and the Indo-Pak War (1965).
The termination of the plan by a new government.
Explanation: The text explicitly states that the Third Plan was a failure "due to the Sino-Indian War (1962) and Indo-Pak War (1965)."
15
The period from 1966 to 1969 is referred to as the 'Plan Holidays'. Why was this period named so?
The Planning Commission was temporarily disbanded.
Three annual plans were implemented instead of a full Five-Year Plan due to the failure of the previous plan.
The government decided to take a break from economic planning altogether.
It was a period of exceptionally high economic growth, allowing for a 'holiday' from stringent planning.
Explanation: The 'Plan Holidays' refer to the period when, due to the failure of the Third Plan, the government opted for three separate annual plans rather than launching the Fourth Five-Year Plan immediately.
16
Which Five-Year Plan marked the beginning of economic liberalization by eliminating price controls and is often seen as the end of 'Nehruvian Socialism'?
Fifth Five-Year Plan
Sixth Five-Year Plan
Seventh Five-Year Plan
Eighth Five-Year Plan
Explanation: The description of the Sixth Five-Year Plan (1980-1985) clearly states it "Marked the beginning of economic liberalization by eliminating price controls; seen as the end of Nehruvian Socialism."
17
The introduction of Liberalisation, Privatisation, and Globalisation (LPG) reforms took place during which period?
During the Seventh Five-Year Plan (1985-90)
During the Annual Plans of 1990-1992
At the start of the Eighth Five-Year Plan (1992)
During the Rolling Plan (1978-80)
Explanation: The text specifies that the Eighth Plan was delayed due to an economic crisis and "This period [Annual Plans 1990-1992] saw the introduction of Liberalisation, Privatisation, and Globalisation (LPG) reforms under PM P.V. Narasimha Rao."
18
What was the theme of the Twelfth and final Five-Year Plan (2012-2017)?
"Rapid and More Inclusive Growth"
"Growth with Social Justice and Equality"
"Faster, More Inclusive and Sustainable Growth"
"Growth with stability and progress towards self-reliance"
Explanation: The theme of the Twelfth Five-Year Plan is explicitly stated as "Faster, More Inclusive and Sustainable Growth".
19
Why is Net Domestic Product (NDP) not used for international comparisons of economies?
Because it does not include income from abroad.
Because it is always higher than GDP.
Because the rates of depreciation are set by individual country governments and vary significantly.
Because it only measures the output of the primary sector.
Explanation: The text states that NDP "is not used for international comparisons because depreciation rates vary across countries."
20
Which institution was established during the Sixth Five-Year Plan to support rural development?
NABARD
NITI Aayog
Planning Commission
World Trade Organisation (WTO)
Explanation: Under the details of the Sixth Five-Year Plan (1980-1985), the text mentions that "NABARD was established."
21
The concept of an "invisible hand" guiding economic activities towards unintended social benefits is central to which economic system?
Non-Market Economy
Mixed Economy
Market Economy
Agrarian Economy
Explanation: This concept, traced to Adam Smith's "The Wealth of Nations," is a core principle of the Market Economy (Capitalism), where self-interest drives economic activity.
22
The 'Quinary Sector' of an economy includes:
All service-related activities.
Exploitation of natural resources.
The highest levels of decision-making in government and corporations.
Knowledge-based activities like research and development.
Explanation: The text defines the Quinary Sector as including "the highest levels of decision-making in government and the private corporate sector," considering them the 'brain' behind the economy.
23
The proposed shift from a fixed-base year method to a chain-base method for GDP calculation in India is significant because:
It allows for quicker capturing of structural changes in the economy by updating weights annually.
It simplifies calculations by removing the need for a base year altogether.
It is an indigenous method developed by the NITI Aayog.
It gives more weight to the agricultural sector over the services sector.
Explanation: The text explains that in a chain-base system, "weights are updated annually, which allows for quicker capturing of structural changes in the economy, making it a better international practice."
24
Which country pioneered the concept of Gross National Happiness (GNH) as a measure of progress?
India
United States
Bhutan
China
Explanation: The text clearly states, "Pioneered by Bhutan in 1972, GNH includes material and non-material aspects..."
25
At the time of Independence in 1947, India's economy was characterized by:
1. A high literacy rate of over 50%.
2. A vibrant industrial sector with strong indigenous firms.
3. A stagnant per capita income growth.
4. Infrastructure built primarily to serve British interests.
Which of the statements are correct?
1. A high literacy rate of over 50%.
2. A vibrant industrial sector with strong indigenous firms.
3. A stagnant per capita income growth.
4. Infrastructure built primarily to serve British interests.
Which of the statements are correct?
1 and 2 only
3 and 4 only
1, 3 and 4 only
2 and 4 only
Explanation: Statement 1 is incorrect (literacy was 17%). Statement 2 is incorrect (industrialization was neglected). Statements 3 and 4 are correct as the text mentions "per capita income growth was virtually non-existent" and "infrastructure was built only to exploit resources."
26
The official policy shift to make agriculture the 'prime moving force' of the Indian economy was announced in which year?
1951
1991
2002
2015
Explanation: The text states, "Recognizing the persistent challenges... the government officially declared in 2002 that agriculture would henceforth be the economy's prime moving force."
27
The 'Rolling Plan' (1978-1980) was introduced by which government?
The Congress government under Indira Gandhi
The Congress government under P.V. Narasimha Rao
The Janata Party government
The NDA government under Atal Bihari Vajpayee
Explanation: The text says, "The Janata Party government introduced this plan... It was rejected when the Congress government returned to power in 1980."
28
Which Five-Year Plan had the dual focus of "Growth with stability and progress towards self-reliance"?
Second Plan
Third Plan
Fourth Plan
Fifth Plan
Explanation: The focus of the Fourth Five-Year Plan (1969-1974) is explicitly mentioned as "Growth with stability and progress towards self-reliance."
29
India became a member of the World Trade Organisation (WTO) during the tenure of which Five-Year Plan?
Seventh Plan
Eighth Plan
Ninth Plan
Tenth Plan
Explanation: The text mentions under the Eighth Five-Year Plan (1992-1997): "Key Events: India became a member of the WTO on January 1, 1995."
30
The Right to Education Act (2009) was introduced during which Five-Year Plan, which also focused on increasing enrollment in higher education?
Ninth Plan
Tenth Plan
Eleventh Plan
Twelfth Plan
Explanation: The description for the Eleventh Five-Year Plan (2007-2012) states its focus on "Increasing enrollment in higher education" and notes, "The Right to Education Act (2009) was introduced."
31
What does 'Depreciation' in national income accounting refer to?
The decrease in the value of a currency.
The 'wear and tear' or loss in value of capital assets during production.
The fall in a country's exports.
The reduction in government subsidies.
Explanation: The text defines depreciation as "the 'wear and tear' of capital assets during production."
32
Per Capita Income (PCI) is calculated as:
$GDP / Total \ Population$
$GNP / Total \ Population$
$NDP / Total \ Population$
$NNP / Total \ Population$
Explanation: The formula provided is $Per \ Capita \ Income = NNP / Total \ Population$. NNP (Net National Product) is also referred to as National Income.
33
Which of the following is NOT one of the four pillars of Bhutan's Gross National Happiness (GNH) index?
Rapid Industrialization
Good Governance
Environmental Protection
Cultural Promotion
Explanation: The four pillars of GNH are listed as: higher real per capita income, good governance, environmental protection, and cultural promotion. Rapid Industrialization is not one of them.
34
Assertion (A): In the initial decades after independence, India's GNP was lower than its GDP.
Reason (R): India was a net recipient of foreign grants, and private remittances were the highest in the world.
Reason (R): India was a net recipient of foreign grants, and private remittances were the highest in the world.
Both A and R are true and R is the correct explanation of A
A is true but R is false
Both A and R are true but R is not the correct explanation of A
A is false but R is true
Explanation: Assertion (A) is true; India's GNP has been consistently lower than its GDP. Reason (R) is false because it omits the most critical component. While remittances are high, the 'Net Factor Income from Abroad' is negative primarily because the interest paid on external loans (a negative component) outweighs the positive components like remittances and grants.
35
Which Five-Year plan, despite being terminated a year early, achieved a higher growth rate (4.8%) than its target (4.4%)?
Third Plan
Fourth Plan
Fifth Plan
Sixth Plan
Explanation: The Fifth Five-Year Plan (1974-1978) was terminated in 1978, but the text notes its success with an achieved growth rate of 4.8% against a target of 4.4%.
36
Arrange the following events in chronological order:
1. Nationalization of 14 major banks.
2. Establishment of NABARD.
3. Introduction of LPG reforms.
4. Setting up of the first five IITs.
1. Nationalization of 14 major banks.
2. Establishment of NABARD.
3. Introduction of LPG reforms.
4. Setting up of the first five IITs.
4-2-1-3
4-1-2-3
1-4-2-3
2-1-4-3
Explanation: 1. IITs were set up during the First Plan (1951-56). 2. Banks were nationalized during the Fourth Plan (1969-74). 3. NABARD was established during the Sixth Plan (1980-85). 4. LPG reforms were introduced during the Annual Plans (1990-92). The correct order is 4-1-2-3.
37
The theme "Growth with Social Justice and Equality" was associated with which Five-Year Plan?
Seventh Plan
Eighth Plan
Ninth Plan
Tenth Plan
Explanation: The focus of the Ninth Five-Year Plan (1997-2002) is explicitly stated as "Growth with social justice and equality".
38
Who was the first person to implement a Five-Year Plan, influencing India's own planning process?
John Maynard Keynes
Adam Smith
P.C. Mahalanobis
Joseph Stalin
Explanation: The text mentions, "Joseph Stalin in the Soviet Union (1928)" was the first person to implement a Five-Year Plan.
39
The Eighth Five-Year Plan (1992-97) is considered an "Incredible Success". What was a key reason for this?
It focused exclusively on agricultural development.
It successfully managed the post-LPG reform period, leading to a high growth rate of 6.8%.
It was the first plan formulated by the NITI Aayog.
It avoided industrial modernization to focus on social welfare.
Explanation: The Eighth Plan was the first to operate in the new liberalized environment post-1991 reforms. Its focus on modernization of industries and human resource development led to an achieved growth rate of 6.8% against a target of 5.6%.
40
The institution that replaced the Planning Commission in 2015 is:
National Development Council
Ministry of Finance
NITI Aayog
Central Statistics Office
Explanation: The text states, "In 2015, the Planning Commission was replaced by the NITI Aayog."
41
A Non-Market Economy, such as the one in the ex-USSR, was characterized by:
1. Private ownership of resources.
2. Economic decisions driven by market forces.
3. Absence of a profit motive.
4. State ownership of all resources.
Which of the statements are correct?
1. Private ownership of resources.
2. Economic decisions driven by market forces.
3. Absence of a profit motive.
4. State ownership of all resources.
Which of the statements are correct?
1 and 2 only
3 and 4 only
1 and 3 only
2 and 4 only
Explanation: A Non-Market economy is defined by state/community ownership of resources (4) where the state makes all decisions. The absence of private property and competition led to a lack of profit motive (3). Statements 1 and 2 describe a Market Economy.
42
What was the new base year for GDP calculation adopted in India in January 2015?
2004-05
2011-12
2014-15
2000-01
Explanation: The text clearly states, "The base year was changed from 2004-05 to 2011-12."
43
Post the 2015 revision, sector-wise estimates of economic activity in India are given as _________ instead of factor cost. Fill in the blank.
GDP at market prices
GNP at factor cost
Gross Value Added (GVA) at basic prices
Net National Product (NNP)
Explanation: The text specifies that "Sector-wise estimates are now given as Gross Value Added (GVA) at basic prices instead of factor cost."
44
The Green Revolution and the Drought Prone Area Programme were both launched during which Five-Year Plan?
Third Plan
Fourth Plan
Fifth Plan
Plan Holidays
Explanation: The text lists "the Green Revolution was launched" and "The Drought Prone Area Programme was also initiated" as key events of the Fourth Five-Year Plan (1969-1974).
45
Which Five-Year Plan focused on improving industrial productivity through technology and introduced anti-poverty programmes, providing a strong base for future reforms?
Seventh Plan
Sixth Plan
Eighth Plan
Ninth Plan
Explanation: The description of the Seventh Five-Year Plan (1985-1990) states its focus was on "Improving industrial productivity through technology, anti-poverty programmes," and notes its success provided a strong base for the economy.
46
The economic term for a policy of non-interference by the government in economic activities is:
Socialism
Mercantilism
Laissez-faire
Protectionism
Explanation: The text defines Laissez-faire as a "policy of non-interference" from the government, which is a key principle of a Market Economy.
47
The 'Bombay Plan' of 1944 was a:
British proposal for post-war India's economy.
Proposal by Indian industrialists for a planned economy.
Gandhian plan for a village-based economy.
Soviet-inspired plan drafted by the Indian National Congress.
Explanation: The Q&A section mentions the "Bombay Plan," which was a plan drafted by Indian industrialists in 1944 advocating for a planned economy, showing a pre-independence consensus on state intervention.
48
Which plan introduced the Minimum Needs Programme and saw the amendment of the Electricity Supply Act?
Fourth Plan
Fifth Plan
Sixth Plan
Seventh Plan
Explanation: The text lists the amendment of the Electricity Supply Act and the introduction of the Minimum Needs Programme as key initiatives of the Fifth Five-Year Plan (1974-1978).
49
Which of the following is considered the 'purest form' of a nation's income?
Gross Domestic Product (GDP)
Gross National Product (GNP)
Net Domestic Product (NDP)
Net National Product (NNP)
Explanation: The text explicitly states that Net National Product (NNP) "is the purest form of a nation's income and is also called the 'National Income' (NI)."
50
According to the World Happiness Report methodology mentioned in the text, which of the following variables is NOT used to rank countries?
Social support
Freedom to make life choices
Generosity
Level of education
Explanation: The text lists six variables used by the World Happiness Report: GDP per capita, social support, healthy life expectancy, freedom, generosity, and perception of corruption. Level of education is a component of the HDI, not the World Happiness Report's variables.
51
The discipline of economics that applies statistical and mathematical methods to analyze economic data is known as:
Microeconomics
Macroeconomics
Econometrics
Agrarian Economics
Explanation: The text defines Econometrics as the "third core area, which applies statistical and mathematical methods to analyze economic data."
52
Which sector of the economy involves the processing of raw materials from the primary sector, with manufacturing as a major sub-sector?
Primary Sector
Secondary Sector
Tertiary Sector
Quinary Sector
Explanation: The Secondary Sector, also known as the industrial sector, "involves processing raw materials from the primary sector. Manufacturing is a major sub-sector."
53
A key limitation of the Non-Market (State) Economy model was:
Widening inequality between rich and poor.
Lack of innovation due to the absence of a profit motive.
Inability to provide welfare to the poor.
Excessive competition leading to market failure.
Explanation: The text lists as a limitation that "The absence of a profit motive and property rights led to a lack of innovation and motivation to work hard." Widening inequality was a limitation of the Market Economy.
54
Which US-based economist first proposed the concept of Gross Domestic Product (GDP) in 1934?
John Maynard Keynes
Adam Smith
Simon Kuznets
P.C. Mahalanobis
Explanation: The text states, "The concept of Gross Domestic Product (GDP) was first put forward by US economist Simon Kuznets in 1934."
55
Which of the following components is NOT part of 'Income from Abroad' used to calculate GNP?
Government spending on domestic infrastructure.
Private remittances.
Interest on external loans.
External grants.
Explanation: 'Income from Abroad' has three components: private remittances, interest on external loans, and external grants. Government spending is a component of GDP calculation, not 'Income from Abroad'.
56
"Higher growth is necessary for higher development, but it does not automatically guarantee it; a conscious public policy is required." This statement implies that:
Economic growth and development are the same.
High GDP growth always leads to better quality of life.
Economic development is a broader concept than economic growth and requires targeted policy intervention.
Public policy has no role in economic development.
Explanation: The statement highlights the distinction between quantitative growth and qualitative development, emphasizing that translating growth into development (improved quality of life) requires deliberate government action.
57
What was the literacy rate and life expectancy in India at the time of Independence?
Literacy: 32.5%, Life Expectancy: 17 years
Literacy: 17%, Life Expectancy: 32.5 years
Literacy: 50%, Life Expectancy: 50 years
Literacy: 10%, Life Expectancy: 25 years
Explanation: The text notes the poor social indicators at Independence: "a literacy rate of only 17% and a life expectancy of just 32.5 years."
58
The First Five-Year Plan (1951-56) was considered a success. What was its achieved growth rate against the target?
Target: 3.6%; Achieved: 2.1%
Target: 2.1%; Achieved: 3.6%
Target: 5.6%; Achieved: 2.4%
Target: 4.5%; Achieved: 4.27%
Explanation: The details for the First Plan show a "Target: 2.1%; Achieved: 3.6% (Success)."
59
The Second Five-Year Plan (1956-61) focused on "rapid industrialization". This plan was formulated under the leadership of:
K.N. Raj
Jawaharlal Nehru
P.C. Mahalanobis
Simon Kuznets
Explanation: The text states the Second Plan was "Planned under P.C. Mahalanobis." K.N. Raj advocated the "hasten slowly" approach of the First Plan.
60
The introduction of Panchayat elections and giving more development responsibilities to states were initiatives of which plan?
Second Plan
Third Plan
Fourth Plan
Fifth Plan
Explanation: Under the Third Five-Year Plan (1961-1966), it is mentioned that "States were given more development responsibilities; Panchayat elections were introduced."
61
Which plan aimed to reduce the poverty rate by half and create 80 million jobs?
Ninth Plan
Tenth Plan
Eleventh Plan
Twelfth Plan
Explanation: The objectives for the Tenth Five-Year Plan (2002-2007) included "to reduce the poverty rate by half, create 80 million jobs, and reduce gender gaps in education and wages."
62
The theme "Rapid and More Inclusive Growth" belonged to the:
Tenth Plan
Eleventh Plan
Twelfth Plan
Ninth Plan
Explanation: The theme of the Eleventh Five-Year Plan (2007-2012) is stated as "Rapid and More Inclusive Growth".
63
The economic crisis of 1991 that prompted the LPG reforms was primarily a:
Food grain shortage crisis.
Foreign exchange reserves crisis.
Banking sector collapse.
Hyperinflation crisis.
Explanation: The text mentions the delay of the Eighth Plan was due to "economic instability and a foreign exchange crisis," which led to the LPG reforms.
64
An economy where the agricultural sub-sector contributes at least half of the national income and livelihood is called a/an ________ economy. Fill in the blank.
Industrial
Service
Agrarian
Mixed
Explanation: The text defines an agrarian economy as one "where the agricultural sub-sector contributes at least half of the national income and livelihood."
65
What does 'Econometrics' signify in the study of economics?
A "bottoms-up" approach focusing on individual firms.
A "top-down" approach focusing on the economy as a whole.
The application of statistical and mathematical methods to economic data.
The study of non-market, command economies.
Explanation: As per the text, Econometrics is the third core area of economics which "applies statistical and mathematical methods to analyze economic data."
66
What is the significance of Gross National Product (GNP) compared to GDP?
GNP is easier to calculate.
GNP is a purely quantitative measure while GDP is qualitative.
GNP is a more exhaustive measure, reflecting both internal and external economic strength.
GNP does not account for depreciation.
Explanation: The text states that GNP is "a more exhaustive measure than GDP as it reflects both the internal and external strength of an economy."
67
Which plan had to deal with the immediate aftermath of the 1991 LPG reforms?
Seventh Plan
Eighth Plan
Ninth Plan
Tenth Plan
Explanation: The Eighth Five-Year Plan (1992-97) was the first plan implemented after the 1991 reforms and had to navigate the new economic environment.
68
The "Washington Consensus" refers to policy prescriptions advocated by which set of institutions?
BRICS nations
The European Union
The IMF, World Bank, and the US Treasury
The United Nations and its agencies
Explanation: The Q&A section explicitly mentions that the Washington Consensus refers to policy prescriptions from the IMF, World Bank, and the US Department of the Treasury.
69
In a mixed economy, the state typically provides 'public goods' because:
The state is more efficient at production than the private sector.
There is an absence of a profit motive in providing such goods, making them unattractive to the private sector.
The constitution mandates that only the state can produce these goods.
Private sector is legally barred from providing education and healthcare.
Explanation: The text explains that in a mixed economy, "the state provides 'public goods' where profit is absent," while the private sector handles 'private goods' where a profit motive exists.
70
Which of the following plans was a 'failure', achieving a growth rate of 3.3% against a target of 5.6%?
Third Plan
Fourth Plan
Ninth Plan
Second Plan
Explanation: The data for the Fourth Plan shows: "Target: 5.6%; Achieved: 3.3%." The Third Plan was a 'miserable failure' with 2.4% achieved against a 5.6% target. The Ninth Plan also fell short (5.6% achieved vs 7.1% target). However, the specific numbers (3.3% vs 5.6%) point directly to the Fourth Plan.
71
Which body in India is responsible for setting the depreciation rates used in national income accounting?
Reserve Bank of India
Ministry of Finance
Ministry of Commerce and Industry
NITI Aayog
Explanation: The text states, "Depreciation rates are set by the government (in India, by the Ministry of Commerce and Industry)."
72
Post-independence, a consensus on a planned economy had already emerged among nationalist leaders, influenced by:
1. The success of the laissez-faire policies in the US.
2. The perceived success of the Soviet Union's command economy.
3. The global trend favoring state intervention after the Great Depression.
Which of the statements is/are correct?
1. The success of the laissez-faire policies in the US.
2. The perceived success of the Soviet Union's command economy.
3. The global trend favoring state intervention after the Great Depression.
Which of the statements is/are correct?
1 only
1 and 3 only
2 and 3 only
1, 2 and 3
Explanation: The text says planning was seen as essential, influenced by "global trends favoring state intervention after the Great Depression and the perceived success of the Soviet Union's command economy." Laissez-faire (statement 1) is the opposite of state planning.
73
The economic model of the First Five-Year Plan, which emphasized increasing savings, was the:
Harrod-Domar model
Mahalanobis model
Gadgil Formula
Nehruvian model
Explanation: The text explicitly states the First Plan was "Based on the Harrod-Domar model, it emphasized increasing savings."
74
The "Beijing Consensus" is associated with the economic development model of which country?
India
China
USA
Ex-USSR
Explanation: The Q&A section provides this information directly: "The 'Beijing Consensus' is associated with the economic development model of which country? China."
75
Which of the following plans had a higher achieved growth rate than its target?
1. First Plan
2. Fifth Plan
3. Seventh Plan
4. Eighth Plan
1. First Plan
2. Fifth Plan
3. Seventh Plan
4. Eighth Plan
1 and 2 only
3 and 4 only
1, 2 and 3 only
1, 2, 3 and 4
Explanation: According to the text:
First Plan: Achieved 3.6% (Target 2.1%) - Success.
Fifth Plan: Achieved 4.8% (Target 4.4%) - Success.
Seventh Plan: Achieved 6.01% (Target 5.0%) - Success.
Eighth Plan: Achieved 6.8% (Target 5.6%) - Success.
All four plans listed were successful in exceeding their growth targets.
First Plan: Achieved 3.6% (Target 2.1%) - Success.
Fifth Plan: Achieved 4.8% (Target 4.4%) - Success.
Seventh Plan: Achieved 6.01% (Target 5.0%) - Success.
Eighth Plan: Achieved 6.8% (Target 5.6%) - Success.
All four plans listed were successful in exceeding their growth targets.
76
What is the primary reason GVA is considered better for comparing different sectors within an economy?
It includes data from the unorganized sector.
It represents the supply side and measures the value added by economic actors, free from distortions of product taxes and subsidies.
It is always a larger number than GDP.
It is calculated on a monthly basis.
Explanation: The text states "GVA is considered better for comparing different sectors within the economy" because it measures value added by all actors and represents the supply side. GDP includes product taxes and subsidies, which can distort comparisons between sectors with different tax/subsidy structures.
77
What was the revised growth target for the Twelfth Five-Year Plan as set by the National Development Council?
9%
9.5%
8%
7.6%
Explanation: For the Twelfth Plan, the text notes: "Original Target: 9%; Revised Target: 8% by the National Development Council."
78
NITI Aayog has replaced the Five-Year Plans with a new planning framework. This framework includes:
A single 20-year vision document.
A series of annual budgets only.
A 3-year action agenda, a 7-year strategy paper, and a 15-year vision document.
A rolling plan system identical to the one in 1978.
Explanation: The Q&A section mentions the new documents from NITI Aayog: "A 3-year action agenda, a 7-year medium-term strategy paper, and a 15-year vision document."
79
The core principle of a market economy, as described by Adam Smith, relies on ______ to achieve broader social benefits. Fill in the blank.
Government regulation
Self-interest
Community ownership
Central planning
Explanation: The text says that in a market economy, "Economic activities are driven by self-interest (the 'invisible hand'), which results in unintended social benefits."
80
Which plan's failure led to the 'Plan Holidays' from 1966-1969?
First Plan
Second Plan
Third Plan
Fourth Plan
Explanation: The text explicitly states: "Due to the failure of the Third Plan, three annual plans were implemented instead of a full FYP."
81
The calculation for GDP is: Private Consumption + Gross Investment + Government Spending + 'X'. What is 'X'?
Depreciation
(Exports - Imports)
Income from Abroad
(Imports - Exports)
Explanation: The formula for GDP calculation given in the text is: GDP = Private Consumption + Gross Investment + Government Spending + (Exports - Imports).
82
The 'drain of wealth' theory describes the economic situation of India under which regime?
Mughal Empire
Post-independence Nehruvian era
British Colonial rule
Post-reform era
Explanation: The text describes the "distressed and stagnant colonial economy" and notes that it "served British interests, leading to a 'drain of wealth'."
83
Tariffs were imposed on imports to protect domestic industries as a key policy during the:
First Plan
Second Plan
Eighth Plan
Eleventh Plan
Explanation: Under the Second Five-Year Plan, which focused on industrialization, the text mentions: "Policies: Tariffs were imposed on imports to protect domestic industries."
84
A key difference between Capitalism and a Free Market Economy, as per the text, is that:
Capitalism involves government control, while a free market does not.
Capitalism focuses on wealth creation and asset ownership, while a free market focuses on the exchange of wealth with minimal regulation.
There is no difference mentioned; they are identical concepts.
Capitalism applies to goods, while a free market applies to services.
Explanation: The text makes a distinction: "While related, capitalism focuses on wealth creation and ownership of assets, whereas a free market economy focuses on the exchange of wealth with minimal government regulation."
85
If a country's GDP is $100 billion and its depreciation is $10 billion, what is its Net Domestic Product (NDP)?
$110 billion
$100 billion
$90 billion
Cannot be determined
Explanation: The formula is $NDP = GDP - Depreciation$. Therefore, $NDP = $100 \ billion - $10 \ billion = $90 \ billion$.
86
The approach to "hasten slowly" was advocated by economist K.N. Raj for which Five-Year Plan?
First Plan
Second Plan
Third Plan
Fourth Plan
Explanation: The text mentions for the First Plan: "Approach: Advocated by economist K.N. Raj to 'hasten slowly'."
87
Which of these is NOT considered one of the 'core industries' in the Indian economy as per the provided text?
Steel
Coal
Information Technology
Cement
Explanation: The Q&A section lists the core industries as: Refinery products, Electricity, Steel, Coal, Crude Oil, Natural Gas, Cement, and Fertilisers. Information Technology is a major part of the services sector but is not listed as a 'core industry' in this context.
88
Which plan fell short of its growth target, achieving 5.6% against a target of 7.1%, and focused on empowering socially disadvantaged classes?
Eighth Plan
Ninth Plan
Tenth Plan
Eleventh Plan
Explanation: The data for the Ninth Five-Year Plan (1997-2002) fits this description: "Focus: Growth with social justice and equality... Objective: To empower socially disadvantaged classes... Growth Rate: Target: 7.1%; Achieved: 5.6% (Fell short)."
89
The economic ideas of which thinker formed the basis for the Non-Market (State/Command) Economy?
Adam Smith
John Maynard Keynes
Karl Marx
Simon Kuznets
Explanation: The text traces the origin of the Non-Market Economy "to the ideas of Karl Marx, with socialist (ex-USSR) and communist (China, 1949-85) variants."
90
Family planning was introduced as a national program and price controls were eliminated during which plan?
Fifth Plan
Sixth Plan
Seventh Plan
Eighth Plan
Explanation: The Sixth Five-Year Plan (1980-1985) is noted for marking the beginning of liberalization by "eliminating price controls" and for the introduction of "Family planning."
91
An improved database from the Ministry of Corporate Affairs (MCA21) was incorporated into national accounts during which event?
The formulation of the Twelfth Plan.
The 2015 methodological revision of national accounts.
The creation of the NITI Aayog.
The LPG reforms of 1991.
Explanation: Under the section 'Recent Methodological Changes in India', the text mentions "Improved Data Coverage: The revision incorporates a more comprehensive database from the Ministry of Corporate Affairs (MCA21)".
92
Which French innovation was adopted by many market economies to recover from the 1929 Depression, leading to the evolution of the mixed economy model?
The adoption of Laissez-faire policy.
The creation of the European Union.
The official adoption of a mixed economy with indicative planning.
The nationalization of all industries.
Explanation: The text mentions under Mixed Economy: "France was the first to officially announce its adoption in 1944-45." This model, incorporating state intervention as advised by Keynes, was adopted by market economies to recover from the Depression.
93
Match the plan's achieved growth rate with the plan itself:
List I (Plan)
A. Second Plan
B. Third Plan
C. Sixth Plan
D. Eleventh Plan
List II (Achieved Growth Rate)
1. 8.0%
2. 5.7%
3. 2.4%
4. 4.27%
List I (Plan)
A. Second Plan
B. Third Plan
C. Sixth Plan
D. Eleventh Plan
List II (Achieved Growth Rate)
1. 8.0%
2. 5.7%
3. 2.4%
4. 4.27%
A-1, B-2, C-3, D-4
A-4, B-3, C-2, D-1
A-4, B-2, C-3, D-1
A-1, B-3, C-2, D-4
Explanation: Second Plan (A) achieved 4.27% (4). Third Plan (B) achieved 2.4% (3). Sixth Plan (C) achieved 5.7% (2). Eleventh Plan (D) achieved 8% (1). The correct match is A-4, B-3, C-2, D-1.
94
In the context of economic sectors, mining and oil exploration are classified under the:
Primary Sector
Secondary Sector
Tertiary Sector
Quaternary Sector
Explanation: The Primary Sector is defined as involving "the exploitation of natural resources. Key activities include agriculture, mining, and oil exploration."
95
The concept of a 'Rolling Plan', where performance is evaluated annually, was in effect during which period?
1966-1969
1990-1992
1978-1980
2012-2017
Explanation: The text describes the Rolling Plan as existing from 1978 to 1980, introduced by the Janata Party government.
96
Assertion (A): After independence, the Indian leadership chose Industry as the Prime Moving Force (PMF).
Reason (R): The dominant global view at the time, supported by institutions like the World Bank, perceived industrialization as the fastest path to growth.
Reason (R): The dominant global view at the time, supported by institutions like the World Bank, perceived industrialization as the fastest path to growth.
Both A and R are true and R is the correct explanation of A
Both A and R are true but R is not the correct explanation of A
A is true but R is false
A is false but R is true
Explanation: Assertion (A) is correct. Reason (R) is also correct and is one of the key rationales provided in the text for the choice mentioned in (A). The text states that this global view was a significant factor in India's decision.
97
What is the annual percentage change in a country's GDP commonly known as?
The development rate
The economy's 'growth rate'
The inflation rate
The per capita income
Explanation: The text states under the significance of GDP: "The annual percentage change in GDP is the economy's 'growth rate'."
98
Which plan's objectives included strengthening infrastructure, improving access to schools, and enhancing the green cover?
Tenth Plan
Eleventh Plan
Twelfth Plan
Ninth Plan
Explanation: The focus of the Twelfth Five-Year Plan (2012-2017) is listed as "Strengthening infrastructure, improving access to schools, and enhancing the green cover."
99
The heavy investment in Public Sector Undertakings (PSUs) was meant to create the necessary infrastructure and industrial base to support the future growth of which sector?
The agricultural sector
The private sector
The foreign sector
The unorganized sector
Explanation: One of the key reasons listed for PSU expansion was "Supporting the Private Sector: By creating the necessary infrastructure and industrial base, PSUs were meant to lay the foundation for the future growth of the private sector."
100
According to the text, which of the following best describes 'Economic Development'?
A positive increase in economic variables like production.
A value-neutral concept that can be positive or negative.
A qualitative concept encompassing improvements in nutrition, healthcare, and education access.
An increase in the GNI per capita of a country.
Explanation: The text defines Economic Development as a "broader, qualitative concept that refers to an improvement in the quality of life. It encompasses factors like nutrition levels, healthcare and education access, and safe drinking water."
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