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Prelims-IAS –ECONOMICS MCQ Ans-03

1..Consider the following statements:

1. Higher employment growth always leads to lower unemployment rate.
2. Higher GDP growth always leads to higher employment growth.
Which of the statement(s) given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
  • ANS-D
  • Higher employment growth may not lead to lower unemployment rate if the growth rate of job seekers is higher than employment growth rate. 
  • Similarly, higher GDP growth may not lead to higher employment growth. A jobless growth may result when a macro-economy experiences growth while maintaining or decreasing its level of employment.

2..Among the services sector, which of the following sub-sectors has the largest share in GDP of India?

(a)  Finance, insurance, real estate, and business services
(b)  Transport,storage,and communication
(c)  Trade, hotels, and restaurants
(d)  Community, social, and personal services
  • ANS-C
  • “Trade, hotels, and restaurants” sub-sector has been the consistent largest contributor to GDP over the last many years. It also includes tourism industry.

3..The term National Income represents:

(a)  Gross national product at market prices minus depreciation
(b)  Gross national product at market prices minus depreciation plus net factor income from abroad
(c)  Gross national product at market prices minus depreciation and indirect taxes plus subsidies
(d)  Gross national product at market prices minus net factor income from abroad
  • ANS-C
  • National Income represents GNP at market prices minus depreciation and indirect taxes plus subsidies.


4..The growth rate of per capita income at current prices is higher than that of per capita income at constant prices, because the latter takes into account the rate of

(a) Growth of population
(b) Increase in price level
(c) Growth of money supply
(d) Increase in the wage rate
  • ANS-B
  • The growth rate of per capita income at current prices is higher than that of PCI at constant prices because the latter takes into account the rate of increase in price level.

5..Consider the following statements regarding the recent changes done in methodology to calculate GDP(gross domestic product) of India:

1. The base year has been shifted to 2010- 11.
2. Under the new series, the estimate is based on GDP at constant market cost.
Which of the following is/are correct?
(a) 1 only
(b) 2 only
(c) 1 and 2 only
(d) None of the above
  • ANS-B
  • The Central Statistics Office has revised the base year on which comparisons are made to 2011-12 from 2004-05.
  • While the growth in the economy under the old series was gauged by the growth in GDP at factor cost, under the new series,calculation is based on GDP at constant market prices.

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