UPSC Static Quiz – Economy : 21 January 2026

UPSC Static Quiz – Economy : 21 January 2026 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 Consider the following statements regarding the governance and quota system of the International Monetary Fund (IMF): A member country’s quota in the IMF determines its financial contribution, its voting power, and its access to IMF financing. The Executive Board of the IMF, which handles the daily business, consists of representatives from all member countries. Which of the above statements are correct? (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2 Correct Solution: A Statement 1 is correct. The quota is the foundational element of a member’s relationship with the IMF. It serves three main purposes: first, it determines the maximum financial contribution a member is obliged to provide to the Fund. Second, it is a key determinant of a member’s voting power in IMF decisions. Third, it determines a member’s access to financing from the IMF; the amount a country can borrow is typically expressed as a percentage of its quota. Statement 2 is incorrect. The Executive Board is responsible for conducting the day-to-day business of the IMF. However, it is composed of only 24 Executive Directors, not representatives from all member countries. These 24 directors represent constituencies of member countries. The five largest quota holders (USA, Japan, Germany, France, UK) appoint their own director, while the remaining directors are elected by groups of countries. This structure is a key aspect of the IMF’s governance and a source of debate regarding representation. Incorrect Solution: A Statement 1 is correct. The quota is the foundational element of a member’s relationship with the IMF. It serves three main purposes: first, it determines the maximum financial contribution a member is obliged to provide to the Fund. Second, it is a key determinant of a member’s voting power in IMF decisions. Third, it determines a member’s access to financing from the IMF; the amount a country can borrow is typically expressed as a percentage of its quota. Statement 2 is incorrect. The Executive Board is responsible for conducting the day-to-day business of the IMF. However, it is composed of only 24 Executive Directors, not representatives from all member countries. These 24 directors represent constituencies of member countries. The five largest quota holders (USA, Japan, Germany, France, UK) appoint their own director, while the remaining directors are elected by groups of countries. This structure is a key aspect of the IMF’s governance and a source of debate regarding representation.

#### 1. Question

Consider the following statements regarding the governance and quota system of the International Monetary Fund (IMF):

• A member country’s quota in the IMF determines its financial contribution, its voting power, and its access to IMF financing.

• The Executive Board of the IMF, which handles the daily business, consists of representatives from all member countries.

Which of the above statements are correct?

• (a) 1 only

• (b) 2 only

• (c) Both 1 and 2

• (d) Neither 1 nor 2

Solution: A

• Statement 1 is correct. The quota is the foundational element of a member’s relationship with the IMF. It serves three main purposes: first, it determines the maximum financial contribution a member is obliged to provide to the Fund. Second, it is a key determinant of a member’s voting power in IMF decisions. Third, it determines a member’s access to financing from the IMF; the amount a country can borrow is typically expressed as a percentage of its quota.

• Statement 2 is incorrect. The Executive Board is responsible for conducting the day-to-day business of the IMF. However, it is composed of only 24 Executive Directors, not representatives from all member countries. These 24 directors represent constituencies of member countries. The five largest quota holders (USA, Japan, Germany, France, UK) appoint their own director, while the remaining directors are elected by groups of countries. This structure is a key aspect of the IMF’s governance and a source of debate regarding representation.

Solution: A

• Question 2 of 5 2. Question Consider the following statements: Statement-I: A high rate of nominal GDP growth in a country does not necessarily translate to a corresponding improvement in the economic welfare of its citizens. Statement-II: The metric of Gross Domestic Product (GDP) does not account for the distribution of income, environmental degradation, or the value of non-marketed household services. Which one of the following is correct in respect of the above statements? (a) Both Statement I and Statement II are correct and Statement II is the correct explanation for Statement I (b) Both Statement I and Statement II are correct and Statement II is not the correct explanation for Statement I (c) Statement I is correct but Statement II is incorrect (d) Statement I is incorrect but Statement II is correct Correct Solution: A Statement-I is correct.A high nominal GDP growth rate can be misleading. It may be driven purely by high inflation (price rise) rather than an actual increase in the output of goods and services (real growth). Furthermore, even high real GDP growth does not automatically mean that the average citizen is better off. Economic welfare is a broader concept that includes factors like health, education, environmental quality, and equity. Statement-II is correct.This statement lists some of the most well-known limitations of GDP as a measure of welfare. GDP is a measure of production, not well-being. It is indifferent to income inequality; a rising GDP could be accompanied by widening disparities where the benefits accrue only to a small section of the population. It treats activities that degrade the environment (e.g., polluting industries) as positive contributions. It also ignores the substantial economic value of unpaid work, such as caregiving and household chores, which are crucial for social well-being. Statement-II provides the fundamental reasons why Statement-I is true. Incorrect Solution: A Statement-I is correct.A high nominal GDP growth rate can be misleading. It may be driven purely by high inflation (price rise) rather than an actual increase in the output of goods and services (real growth). Furthermore, even high real GDP growth does not automatically mean that the average citizen is better off. Economic welfare is a broader concept that includes factors like health, education, environmental quality, and equity. Statement-II is correct.This statement lists some of the most well-known limitations of GDP as a measure of welfare. GDP is a measure of production, not well-being. It is indifferent to income inequality; a rising GDP could be accompanied by widening disparities where the benefits accrue only to a small section of the population. It treats activities that degrade the environment (e.g., polluting industries) as positive contributions. It also ignores the substantial economic value of unpaid work, such as caregiving and household chores, which are crucial for social well-being. Statement-II provides the fundamental reasons why Statement-I is true.

#### 2. Question

Consider the following statements:

Statement-I: A high rate of nominal GDP growth in a country does not necessarily translate to a corresponding improvement in the economic welfare of its citizens.

Statement-II: The metric of Gross Domestic Product (GDP) does not account for the distribution of income, environmental degradation, or the value of non-marketed household services.

Which one of the following is correct in respect of the above statements?

• (a) Both Statement I and Statement II are correct and Statement II is the correct explanation for Statement I

• (b) Both Statement I and Statement II are correct and Statement II is not the correct explanation for Statement I

• (c) Statement I is correct but Statement II is incorrect

• (d) Statement I is incorrect but Statement II is correct

Solution: A

• Statement-I is correct.A high nominal GDP growth rate can be misleading. It may be driven purely by high inflation (price rise) rather than an actual increase in the output of goods and services (real growth). Furthermore, even high real GDP growth does not automatically mean that the average citizen is better off. Economic welfare is a broader concept that includes factors like health, education, environmental quality, and equity.

• Statement-II is correct.This statement lists some of the most well-known limitations of GDP as a measure of welfare. GDP is a measure of production, not well-being. It is indifferent to income inequality; a rising GDP could be accompanied by widening disparities where the benefits accrue only to a small section of the population. It treats activities that degrade the environment (e.g., polluting industries) as positive contributions. It also ignores the substantial economic value of unpaid work, such as caregiving and household chores, which are crucial for social well-being.

• Statement-II provides the fundamental reasons why Statement-I is true.

Solution: A

• Statement-II provides the fundamental reasons why Statement-I is true.

• Question 3 of 5 3. Question With reference to agricultural marketing reforms in India, consider the following statements: The Agricultural Produce Market Committee (APMC) Acts of various states create a unified national market for agricultural commodities. The electronic National Agriculture Market (e-NAM) aims to integrate existing APMC mandis to create a common online trading platform. For a state to integrate its mandis with the e-NAM platform, it must provide for a single trading license valid across the entire state. How many of the above statements are correct? (a) Only one (b) Only two (c) All three (d) None Correct Solution: B Statement 1 is incorrect. The APMC Acts have historically led to the fragmentation, not unification, of agricultural markets. Under these state-level acts, each state is divided into multiple market areas, each governed by a separate APMC. This system restricts farmers from selling their produce outside their designated APMC mandi, imposes multiple levies, and creates barriers to inter-state trade. Instead of a unified national market, this has created thousands of fragmented and monopolistic markets, hindering free trade and efficient price discovery. Statement 2 is correct. The electronic National Agriculture Market (e-NAM) was launched precisely to overcome the fragmentation caused by the APMC system. It is a pan-India electronic trading portal that networks the existing APMC mandis to create a unified national market for agricultural commodities. It does not seek to replace APMCs but to integrate them through a common digital platform, allowing for transparent price discovery through online auctions and enabling farmers and traders to buy and sell produce across a wider geographical area. Statement 3 is correct. The integration of a state’s mandis with the e-NAM platform is not automatic. The central government has laid down certain pre-requisites that states must fulfill by amending their respective APMC Acts. These reforms are essential for the effective functioning of a unified market. The three key pre-requisites are: (i) permitting e-auction/electronic trading, (ii) issuing a single trading license that is valid across all mandis in the state, and (iii) implementing a single-point levy of the market fee. The single license is crucial to allow traders to operate seamlessly across different mandis within the state. Incorrect Solution: B Statement 1 is incorrect. The APMC Acts have historically led to the fragmentation, not unification, of agricultural markets. Under these state-level acts, each state is divided into multiple market areas, each governed by a separate APMC. This system restricts farmers from selling their produce outside their designated APMC mandi, imposes multiple levies, and creates barriers to inter-state trade. Instead of a unified national market, this has created thousands of fragmented and monopolistic markets, hindering free trade and efficient price discovery. Statement 2 is correct. The electronic National Agriculture Market (e-NAM) was launched precisely to overcome the fragmentation caused by the APMC system. It is a pan-India electronic trading portal that networks the existing APMC mandis to create a unified national market for agricultural commodities. It does not seek to replace APMCs but to integrate them through a common digital platform, allowing for transparent price discovery through online auctions and enabling farmers and traders to buy and sell produce across a wider geographical area. Statement 3 is correct. The integration of a state’s mandis with the e-NAM platform is not automatic. The central government has laid down certain pre-requisites that states must fulfill by amending their respective APMC Acts. These reforms are essential for the effective functioning of a unified market. The three key pre-requisites are: (i) permitting e-auction/electronic trading, (ii) issuing a single trading license that is valid across all mandis in the state, and (iii) implementing a single-point levy of the market fee. The single license is crucial to allow traders to operate seamlessly across different mandis within the state.

#### 3. Question

With reference to agricultural marketing reforms in India, consider the following statements:

• The Agricultural Produce Market Committee (APMC) Acts of various states create a unified national market for agricultural commodities.

• The electronic National Agriculture Market (e-NAM) aims to integrate existing APMC mandis to create a common online trading platform.

• For a state to integrate its mandis with the e-NAM platform, it must provide for a single trading license valid across the entire state.

How many of the above statements are correct?

• (a) Only one

• (b) Only two

• (c) All three

Solution: B

• Statement 1 is incorrect. The APMC Acts have historically led to the fragmentation, not unification, of agricultural markets. Under these state-level acts, each state is divided into multiple market areas, each governed by a separate APMC. This system restricts farmers from selling their produce outside their designated APMC mandi, imposes multiple levies, and creates barriers to inter-state trade. Instead of a unified national market, this has created thousands of fragmented and monopolistic markets, hindering free trade and efficient price discovery.

• Statement 2 is correct. The electronic National Agriculture Market (e-NAM) was launched precisely to overcome the fragmentation caused by the APMC system. It is a pan-India electronic trading portal that networks the existing APMC mandis to create a unified national market for agricultural commodities. It does not seek to replace APMCs but to integrate them through a common digital platform, allowing for transparent price discovery through online auctions and enabling farmers and traders to buy and sell produce across a wider geographical area.

• Statement 3 is correct. The integration of a state’s mandis with the e-NAM platform is not automatic. The central government has laid down certain pre-requisites that states must fulfill by amending their respective APMC Acts. These reforms are essential for the effective functioning of a unified market. The three key pre-requisites are: (i) permitting e-auction/electronic trading, (ii) issuing a single trading license that is valid across all mandis in the state, and (iii) implementing a single-point levy of the market fee. The single license is crucial to allow traders to operate seamlessly across different mandis within the state.

Solution: B

• Question 4 of 5 4. Question Consider the following statements regarding the Public Distribution System (PDS) in India: The National Food Security Act (NFSA), 2013, transformed the PDS from a welfare-based scheme into a rights-based entitlement. The ‘One Nation One Ration Card’ (ONORC) scheme primarily aims to address the issue of inclusion errors by using biometric authentication. The Shanta Kumar Committee recommended shifting from in-kind food distribution to a Direct Benefit Transfer (DBT) system in large cities. How many of the above statements are correct? (a) Only one (b) Only two (c) All three (d) None Correct Solution: B Statement 1 is correct. The enactment of the National Food Security Act (NFSA) in 2013 was a paradigm shift for the PDS. It moved away from the earlier discretionary, welfare-based approach to providing food subsidies and established a legal entitlement for eligible households to receive specified quantities of foodgrains at highly subsidized prices. This made access to food a justiciable right for a large section of the population. Statement 2 is incorrect. The primary objective of the ‘One Nation One Ration Card’ (ONORC) scheme is to ensure portability of PDS benefits. It is designed to empower beneficiaries, especially migrant workers, to access their entitled foodgrains from any Fair Price Shop (FPS) in the country using their existing ration card with biometric authentication. While biometric authentication helps reduce leakages and duplication, the main goal of ONORC is to address the problem of migrants losing access to their food security entitlements when they move, not specifically to tackle inclusion errors (i.e., ineligible households being on the beneficiary list). Statement 3 is correct. The High-Level Committee on Restructuring of FCI, chaired by Shanta Kumar, submitted its report in 2015. One of its key recommendations was to reform the PDS. It suggested that the government should consider a gradual shift from the physical distribution of foodgrains to a Direct Benefit Transfer (DBT) or cash transfer system. It specifically recommended that this shift could begin in states with well-developed procurement systems and be rolled out in large cities with a population of over 1 million. Incorrect Solution: B Statement 1 is correct. The enactment of the National Food Security Act (NFSA) in 2013 was a paradigm shift for the PDS. It moved away from the earlier discretionary, welfare-based approach to providing food subsidies and established a legal entitlement for eligible households to receive specified quantities of foodgrains at highly subsidized prices. This made access to food a justiciable right for a large section of the population. Statement 2 is incorrect. The primary objective of the ‘One Nation One Ration Card’ (ONORC) scheme is to ensure portability of PDS benefits. It is designed to empower beneficiaries, especially migrant workers, to access their entitled foodgrains from any Fair Price Shop (FPS) in the country using their existing ration card with biometric authentication. While biometric authentication helps reduce leakages and duplication, the main goal of ONORC is to address the problem of migrants losing access to their food security entitlements when they move, not specifically to tackle inclusion errors (i.e., ineligible households being on the beneficiary list). Statement 3 is correct. The High-Level Committee on Restructuring of FCI, chaired by Shanta Kumar, submitted its report in 2015. One of its key recommendations was to reform the PDS. It suggested that the government should consider a gradual shift from the physical distribution of foodgrains to a Direct Benefit Transfer (DBT) or cash transfer system. It specifically recommended that this shift could begin in states with well-developed procurement systems and be rolled out in large cities with a population of over 1 million.

#### 4. Question

Consider the following statements regarding the Public Distribution System (PDS) in India:

• The National Food Security Act (NFSA), 2013, transformed the PDS from a welfare-based scheme into a rights-based entitlement.

• The ‘One Nation One Ration Card’ (ONORC) scheme primarily aims to address the issue of inclusion errors by using biometric authentication.

• The Shanta Kumar Committee recommended shifting from in-kind food distribution to a Direct Benefit Transfer (DBT) system in large cities.

How many of the above statements are correct?

• (a) Only one

• (b) Only two

• (c) All three

Solution: B

• Statement 1 is correct. The enactment of the National Food Security Act (NFSA) in 2013 was a paradigm shift for the PDS. It moved away from the earlier discretionary, welfare-based approach to providing food subsidies and established a legal entitlement for eligible households to receive specified quantities of foodgrains at highly subsidized prices. This made access to food a justiciable right for a large section of the population.

• Statement 2 is incorrect. The primary objective of the ‘One Nation One Ration Card’ (ONORC) scheme is to ensure portability of PDS benefits. It is designed to empower beneficiaries, especially migrant workers, to access their entitled foodgrains from any Fair Price Shop (FPS) in the country using their existing ration card with biometric authentication. While biometric authentication helps reduce leakages and duplication, the main goal of ONORC is to address the problem of migrants losing access to their food security entitlements when they move, not specifically to tackle inclusion errors (i.e., ineligible households being on the beneficiary list).

• Statement 3 is correct. The High-Level Committee on Restructuring of FCI, chaired by Shanta Kumar, submitted its report in 2015. One of its key recommendations was to reform the PDS. It suggested that the government should consider a gradual shift from the physical distribution of foodgrains to a Direct Benefit Transfer (DBT) or cash transfer system. It specifically recommended that this shift could begin in states with well-developed procurement systems and be rolled out in large cities with a population of over 1 million.

Solution: B

• Question 5 of 5 5. Question With reference to the valuation of goods and services in the Indian economy, consider the following statements: GVA at Basic Prices includes production taxes but excludes product taxes. GVA at Basic Prices is derived by subtracting production subsidies from GVA at Factor Cost. The Reserve Bank of India uses GVA at Basic Prices as the primary headline metric for its monetary policy inflation targeting. A change in the GST rate will affect the GDP at Market Price but will not directly alter the GVA at Basic Prices. Which of the statements given above are correct? a) 1 and 4 only b) 2 and 3 only c) 1, 3 and 4 only d) 1, 2, 3 and 4 Correct Solution: A Gross Value Added at Basic Prices is a production-side measure that reflects the value created by producers before accounting for product-specific taxes and subsidies. Statement 1 is correct because GVA at Basic Prices includes taxes linked to production processes (such as land revenue or professional tax) but excludes product taxes like GST and excise duties, which are levied per unit of output. Statement 2 is incorrect because GVA at Basic Prices is obtained from GVA at Factor Cost by adding production taxes and subtracting production subsidies; subtracting subsidies alone gives an incomplete and conceptually wrong transformation. Statement 3 is incorrect since India’s monetary policy framework is explicitly based on CPI inflation targeting, not GVA, regardless of the price base used in national accounts. Statement 4 is correct because GST is a product tax; changes in GST directly affect GDP at Market Prices but do not directly change GVA at Basic Prices, which excludes product taxes by definition. Incorrect Solution: A Gross Value Added at Basic Prices is a production-side measure that reflects the value created by producers before accounting for product-specific taxes and subsidies. Statement 1 is correct because GVA at Basic Prices includes taxes linked to production processes (such as land revenue or professional tax) but excludes product taxes like GST and excise duties, which are levied per unit of output. Statement 2 is incorrect because GVA at Basic Prices is obtained from GVA at Factor Cost by adding production taxes and subtracting production subsidies; subtracting subsidies alone gives an incomplete and conceptually wrong transformation. Statement 3 is incorrect since India’s monetary policy framework is explicitly based on CPI inflation targeting, not GVA, regardless of the price base used in national accounts. Statement 4 is correct because GST is a product tax; changes in GST directly affect GDP at Market Prices but do not directly change GVA at Basic Prices, which excludes product taxes by definition.

#### 5. Question

With reference to the valuation of goods and services in the Indian economy, consider the following statements:

• GVA at Basic Prices includes production taxes but excludes product taxes.

• GVA at Basic Prices is derived by subtracting production subsidies from GVA at Factor Cost.

• The Reserve Bank of India uses GVA at Basic Prices as the primary headline metric for its monetary policy inflation targeting.

• A change in the GST rate will affect the GDP at Market Price but will not directly alter the GVA at Basic Prices.

Which of the statements given above are correct?

• a) 1 and 4 only

• b) 2 and 3 only

• c) 1, 3 and 4 only

• d) 1, 2, 3 and 4

Solution: A

• Gross Value Added at Basic Prices is a production-side measure that reflects the value created by producers before accounting for product-specific taxes and subsidies.

• Statement 1 is correct because GVA at Basic Prices includes taxes linked to production processes (such as land revenue or professional tax) but excludes product taxes like GST and excise duties, which are levied per unit of output.

• Statement 2 is incorrect because GVA at Basic Prices is obtained from GVA at Factor Cost by adding production taxes and subtracting production subsidies; subtracting subsidies alone gives an incomplete and conceptually wrong transformation.

• Statement 3 is incorrect since India’s monetary policy framework is explicitly based on CPI inflation targeting, not GVA, regardless of the price base used in national accounts.

• Statement 4 is correct because GST is a product tax; changes in GST directly affect GDP at Market Prices but do not directly change GVA at Basic Prices, which excludes product taxes by definition.

Solution: A

• Gross Value Added at Basic Prices is a production-side measure that reflects the value created by producers before accounting for product-specific taxes and subsidies.

• Statement 3 is incorrect since India’s monetary policy framework is explicitly based on CPI inflation targeting, not GVA, regardless of the price base used in national accounts.

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