UPSC Static Quiz – Economy : 20 March 2025
Kartavya Desk Staff
UPSC Static Quiz – Economy : 20 March 2025 We will post 5 questions daily on static topics mentioned in the UPSC civil services preliminary examination syllabus. Each week will focus on a specific topic from the syllabus, such as History of India and Indian National Movement, Indian and World Geography, and more.We are excited to bring you our daily UPSC Static Quiz, designed to help you prepare for the UPSC Civil Services Preliminary Examination. Each day, we will post 5 questions on static topics mentioned in the UPSC syllabus. This week, we are focusing on Indian and World Geography.
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• Question 1 of 5 1. Question India’s growth’s story from the eve of Independence to the liberalization phase is largely termed as ‘Hindu rate of growth’. It refers to a) Irrational developmental agenda driven by majoritarian society. b) Religious belief of the successive government right from the independence. c) The phenomenon of sluggishness in growth rate of Indian economy before 1990’s. d) Non inclusive growth story of India before 1990’s liberalization. Correct Solution: c) ‘Hindu’ rate of growth was coined to refer to the phenomenon of sluggishness in growth rate of Indian economy (3.5 per cent observed persistently during 1950s through 1980s). The term, which owes to Professor Raj Krishna, Member, Planning Commission, captured popular imagination and was used synonymously to describe inadequacy of India’s growth performance. Incorrect Solution: c) ‘Hindu’ rate of growth was coined to refer to the phenomenon of sluggishness in growth rate of Indian economy (3.5 per cent observed persistently during 1950s through 1980s). The term, which owes to Professor Raj Krishna, Member, Planning Commission, captured popular imagination and was used synonymously to describe inadequacy of India’s growth performance.
#### 1. Question
India’s growth’s story from the eve of Independence to the liberalization phase is largely termed as ‘Hindu rate of growth’. It refers to
• a) Irrational developmental agenda driven by majoritarian society.
• b) Religious belief of the successive government right from the independence.
• c) The phenomenon of sluggishness in growth rate of Indian economy before 1990’s.
• d) Non inclusive growth story of India before 1990’s liberalization.
Solution: c)
‘Hindu’ rate of growth was coined to refer to the phenomenon of sluggishness in growth rate of Indian economy (3.5 per cent observed persistently during 1950s through 1980s).
The term, which owes to Professor Raj Krishna, Member, Planning Commission, captured popular imagination and was used synonymously to describe inadequacy of India’s growth performance.
Solution: c)
‘Hindu’ rate of growth was coined to refer to the phenomenon of sluggishness in growth rate of Indian economy (3.5 per cent observed persistently during 1950s through 1980s).
The term, which owes to Professor Raj Krishna, Member, Planning Commission, captured popular imagination and was used synonymously to describe inadequacy of India’s growth performance.
• Question 2 of 5 2. Question Consider the following statements regarding Formalisation of economy. Formalisation of the economy means bringing companies under the regulatory regime of government and subject to laws related to manufacturing and income tax. It leads to more tax revenues with an increase in tax-to-GDP ratio. It establishes rule of law and provide benefits of labour laws to entrepreneurs and workers. How many of the above statements is/are correct? a) Only one b) Only two c) All three d) None Correct Solution: c) Formalisation of the economy means bringing companies under the regulatory regime of government and subject to laws related to manufacturing and income tax. Formalisation leads to more tax revenues with an increase in tax-to-GDP ratio. Formalisation provides a level-playing field for tax-compliant entities, expanding the tax base so that the burden falls more equitably on all the players rather than a select few. Transitioning economy towards formality brings benefits by establishing the rule of law and provide benefits of labour laws to entrepreneurs and workers. It enforces minimum wages and proper documentation of benefits by the employer. Formal jobs also end up ensuring the dignity of labour; enable productivity improvements, as well as access to formal training. Incorrect Solution: c) Formalisation of the economy means bringing companies under the regulatory regime of government and subject to laws related to manufacturing and income tax. Formalisation leads to more tax revenues with an increase in tax-to-GDP ratio. Formalisation provides a level-playing field for tax-compliant entities, expanding the tax base so that the burden falls more equitably on all the players rather than a select few. Transitioning economy towards formality brings benefits by establishing the rule of law and provide benefits of labour laws to entrepreneurs and workers. It enforces minimum wages and proper documentation of benefits by the employer. Formal jobs also end up ensuring the dignity of labour; enable productivity improvements, as well as access to formal training.
#### 2. Question
Consider the following statements regarding Formalisation of economy.
• Formalisation of the economy means bringing companies under the regulatory regime of government and subject to laws related to manufacturing and income tax.
• It leads to more tax revenues with an increase in tax-to-GDP ratio.
• It establishes rule of law and provide benefits of labour laws to entrepreneurs and workers.
How many of the above statements is/are correct?
• a) Only one
• b) Only two
• c) All three
Solution: c)
• Formalisation of the economy means bringing companies under the regulatory regime of government and subject to laws related to manufacturing and income tax.
• Formalisation leads to more tax revenues with an increase in tax-to-GDP ratio.
• Formalisation provides a level-playing field for tax-compliant entities, expanding the tax base so that the burden falls more equitably on all the players rather than a select few.
• Transitioning economy towards formality brings benefits by establishing the rule of law and provide benefits of labour laws to entrepreneurs and workers.
• It enforces minimum wages and proper documentation of benefits by the employer. Formal jobs also end up ensuring the dignity of labour; enable productivity improvements, as well as access to formal training.
Solution: c)
• Formalisation of the economy means bringing companies under the regulatory regime of government and subject to laws related to manufacturing and income tax.
• Formalisation leads to more tax revenues with an increase in tax-to-GDP ratio.
• Formalisation provides a level-playing field for tax-compliant entities, expanding the tax base so that the burden falls more equitably on all the players rather than a select few.
• Transitioning economy towards formality brings benefits by establishing the rule of law and provide benefits of labour laws to entrepreneurs and workers.
• It enforces minimum wages and proper documentation of benefits by the employer. Formal jobs also end up ensuring the dignity of labour; enable productivity improvements, as well as access to formal training.
• Question 3 of 5 3. Question Consider the following statements regarding consumer durables. Goods like food and clothing, and services like recreation that are consumed when purchased by their ultimate consumers are called consumer durables. They undergo wear and tear with gradual use and often need to be preserved, maintained and renewed. Which of the above statements is/are correct? a) 1 only b) 2 only c) Both 1 and 2 d) Neither 1 nor 2 Correct Solution: b) Of the final goods, we can distinguish between consumption goods and capital goods. Goods like food and clothing, and services like recreation that are consumed when purchased by their ultimate consumers are called consumption goods or consumer goods. We may note here that some commodities like television sets, automobiles or home computers, although they are for ultimate consumption, have one characteristic in common with capital goods – they are also durable. That is, they are not extinguished by immediate or even short period consumption; they have a relatively long life as compared to articles such as food or even clothing. They also undergo wear and tear with gradual use and often need repairs and replacements of parts, i.e., like machines they also need to be preserved, maintained and renewed. That is why we call these goods consumer durables. Incorrect Solution: b) Of the final goods, we can distinguish between consumption goods and capital goods. Goods like food and clothing, and services like recreation that are consumed when purchased by their ultimate consumers are called consumption goods or consumer goods. We may note here that some commodities like television sets, automobiles or home computers, although they are for ultimate consumption, have one characteristic in common with capital goods – they are also durable. That is, they are not extinguished by immediate or even short period consumption; they have a relatively long life as compared to articles such as food or even clothing. They also undergo wear and tear with gradual use and often need repairs and replacements of parts, i.e., like machines they also need to be preserved, maintained and renewed. That is why we call these goods consumer durables.
#### 3. Question
Consider the following statements regarding consumer durables.
• Goods like food and clothing, and services like recreation that are consumed when purchased by their ultimate consumers are called consumer durables.
• They undergo wear and tear with gradual use and often need to be preserved, maintained and renewed.
Which of the above statements is/are correct?
• c) Both 1 and 2
• d) Neither 1 nor 2
Solution: b)
Of the final goods, we can distinguish between consumption goods and capital goods. Goods like food and clothing, and services like recreation that are consumed when purchased by their ultimate consumers are called consumption goods or consumer goods.
We may note here that some commodities like television sets, automobiles or home computers, although they are for ultimate consumption, have one characteristic in common with capital goods – they are also durable. That is, they are not extinguished by immediate or even short period consumption; they have a relatively long life as compared to articles such as food or even clothing. They also undergo wear and tear with gradual use and often need repairs and replacements of parts, i.e., like machines they also need to be preserved, maintained and renewed. That is why we call these goods consumer durables.
Solution: b)
Of the final goods, we can distinguish between consumption goods and capital goods. Goods like food and clothing, and services like recreation that are consumed when purchased by their ultimate consumers are called consumption goods or consumer goods.
We may note here that some commodities like television sets, automobiles or home computers, although they are for ultimate consumption, have one characteristic in common with capital goods – they are also durable. That is, they are not extinguished by immediate or even short period consumption; they have a relatively long life as compared to articles such as food or even clothing. They also undergo wear and tear with gradual use and often need repairs and replacements of parts, i.e., like machines they also need to be preserved, maintained and renewed. That is why we call these goods consumer durables.
• Question 4 of 5 4. Question Consider the following statements. National income is the sum of all incomes earned by all citizens of India. Gross Value Added (GVA) is the sum of a country’s GDP and net of subsidies and taxes in the economy. GVA calculates the national income from the supply side by looking at the value added in each sector of the economy. How many of the above statements is/are correct? a) Only one b) Only two c) All three d) None Correct Solution: b) Statement 1 is incorrect. National income is not the sum of all incomes earned by all citizens, but only those incomes which accrue due to participation in the production process. Gross Value Added (GVA): GVA is the sum of a country’s GDP and net of subsidies and taxes in the economy. It calculates the national income from the supply side by looking at the value added in each sector of the economy. GVA is defined as the value of output minus the value of intermediate consumption and is a measure of the contribution to growth made by an individual producer, industry or sector. It provides the rupee value for the number of goods and services produced in an economy after deducting the cost of inputs and raw materials that have gone into the production of those goods and services. Gross Value Added = GDP + subsidies on products – taxes on products. Incorrect Solution: b) Statement 1 is incorrect. National income is not the sum of all incomes earned by all citizens, but only those incomes which accrue due to participation in the production process. Gross Value Added (GVA): GVA is the sum of a country’s GDP and net of subsidies and taxes in the economy. It calculates the national income from the supply side by looking at the value added in each sector of the economy. GVA is defined as the value of output minus the value of intermediate consumption and is a measure of the contribution to growth made by an individual producer, industry or sector. It provides the rupee value for the number of goods and services produced in an economy after deducting the cost of inputs and raw materials that have gone into the production of those goods and services. Gross Value Added = GDP + subsidies on products – taxes on products.
#### 4. Question
Consider the following statements.
• National income is the sum of all incomes earned by all citizens of India.
• Gross Value Added (GVA) is the sum of a country’s GDP and net of subsidies and taxes in the economy.
• GVA calculates the national income from the supply side by looking at the value added in each sector of the economy.
How many of the above statements is/are correct?
• a) Only one
• b) Only two
• c) All three
Solution: b)
Statement 1 is incorrect.
National income is not the sum of all incomes earned by all citizens, but only those incomes which accrue due to participation in the production process.
Gross Value Added (GVA):
GVA is the sum of a country’s GDP and net of subsidies and taxes in the economy.
It calculates the national income from the supply side by looking at the value added in each sector of the economy.
GVA is defined as the value of output minus the value of intermediate consumption and is a measure of the contribution to growth made by an individual producer, industry or sector.
It provides the rupee value for the number of goods and services produced in an economy after deducting the cost of inputs and raw materials that have gone into the production of those goods and services.
Gross Value Added = GDP + subsidies on products – taxes on products.
Solution: b)
Statement 1 is incorrect.
National income is not the sum of all incomes earned by all citizens, but only those incomes which accrue due to participation in the production process.
Gross Value Added (GVA):
GVA is the sum of a country’s GDP and net of subsidies and taxes in the economy.
It calculates the national income from the supply side by looking at the value added in each sector of the economy.
GVA is defined as the value of output minus the value of intermediate consumption and is a measure of the contribution to growth made by an individual producer, industry or sector.
It provides the rupee value for the number of goods and services produced in an economy after deducting the cost of inputs and raw materials that have gone into the production of those goods and services.
Gross Value Added = GDP + subsidies on products – taxes on products.
• Question 5 of 5 5. Question Gross domestic product (GDP) can be said as the aggregate of which of the following Private final consumption expenditure (PFCE) Gross Fixed Capital Formation (GFCF) Government Final Consumption Expenditure (GFCE) Net Export (NX) How many of the above options is/are correct? (a) Only one (b) Only two (c) Only three (d) All four Correct Solution: D What does new GDP data shows: The money spent by people in their private capacity. It typically accounts for 56 percent of all GDP and is called “private final consumption expenditure” (PFCE). Money spent by companies and government towards making investments such as building a new office, building a new road etc. It accounts for 32 percent of total GDP and is called Gross Fixed Capital Formation (GFCF). Money spent by the government in its day to day expenses such as paying salaries. It accounts for 11 percent and is called Government Final Consumption Expenditure (GFCE). Money spent by Indians on foreign goods(imports) subtracted from the money spent by foreigners on Indian goods(exports). As India imports more than it exports, Net Export (NX) is small and negative. GDP=PFCE+GFCF+GFCE+NX Incorrect Solution: D What does new GDP data shows: The money spent by people in their private capacity. It typically accounts for 56 percent of all GDP and is called “private final consumption expenditure” (PFCE). Money spent by companies and government towards making investments such as building a new office, building a new road etc. It accounts for 32 percent of total GDP and is called Gross Fixed Capital Formation (GFCF). Money spent by the government in its day to day expenses such as paying salaries. It accounts for 11 percent and is called Government Final Consumption Expenditure (GFCE). Money spent by Indians on foreign goods(imports) subtracted from the money spent by foreigners on Indian goods(exports). As India imports more than it exports, Net Export (NX) is small and negative. GDP=PFCE+GFCF+GFCE+NX
#### 5. Question
Gross domestic product (GDP) can be said as the aggregate of which of the following
• Private final consumption expenditure (PFCE)
• Gross Fixed Capital Formation (GFCF)
• Government Final Consumption Expenditure (GFCE)
• Net Export (NX)
How many of the above options is/are correct?
• (a) Only one
• (b) Only two
• (c) Only three
• (d) All four
Solution: D
What does new GDP data shows:
• The money spent by people in their private capacity. It typically accounts for 56 percent of all GDP and is called “private final consumption expenditure” (PFCE).
• Money spent by companies and government towards making investments such as building a new office, building a new road etc. It accounts for 32 percent of total GDP and is called Gross Fixed Capital Formation (GFCF).
• Money spent by the government in its day to day expenses such as paying salaries. It accounts for 11 percent and is called Government Final Consumption Expenditure (GFCE).
• Money spent by Indians on foreign goods(imports) subtracted from the money spent by foreigners on Indian goods(exports). As India imports more than it exports, Net Export (NX) is small and negative.
GDP=PFCE+GFCF+GFCE+NX
Solution: D
What does new GDP data shows:
• The money spent by people in their private capacity. It typically accounts for 56 percent of all GDP and is called “private final consumption expenditure” (PFCE).
• Money spent by companies and government towards making investments such as building a new office, building a new road etc. It accounts for 32 percent of total GDP and is called Gross Fixed Capital Formation (GFCF).
• Money spent by the government in its day to day expenses such as paying salaries. It accounts for 11 percent and is called Government Final Consumption Expenditure (GFCE).
• Money spent by Indians on foreign goods(imports) subtracted from the money spent by foreigners on Indian goods(exports). As India imports more than it exports, Net Export (NX) is small and negative.
GDP=PFCE+GFCF+GFCE+NX
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