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Prelims-IAS –ECONOMICS MCQ Ans-05

1..GDP of a country is measured by:

(a)  Taking into account all final expenditures in the economy
(b)  Sum of factor income
(c)  Sum of all the final goods and services produced by factors of production located in the country

(d)  All of the above

  • ANS-D
  • By all the measures we can count the GDP of a country.


2..A decrease in tax to GDP ratio of a country indicates which of the following?

1. Slowing economic growth rate
2. Less equitable distribution of national income
Select the correct answer using the codes given below.
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
  • ANS-D
  • For the tax/GDP ratio to decrease either the tax collection should decrease or GDP should increase.
  • Now considering the first statement if the GDP collection might or might not necessarily increase with a slow growth rate. Hence this option is ruled out.
  • Increase in indirect tax collection may lead to less equality in income distribution but the same cannot be said for increase in direct tax collection. Hence, even this option can be ruled out.

3..Which of the following components is/are used in calculating Human Development Index (HDI) by UNDP?

  1. Life expectancy at birth
  2. Mean years of schooling and expected years of schooling
  3. GNP per capita

Select the correct answer using the code given below.
(a) 1 only
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1, 2 and 3

  • ANS-B
  • The Human Development Index (HDI) by UNDP uses the following components:

  Life expectancy at birth

  Mean of years of schooling for adults aged 25 years
  Expected years of schooling for children of school entering age

 GNI per capita (PPP$)

4..With reference to Gender Inequality Index (GII), which among the following statements are correct?

  1. It was introduced in the 2010 Human Development Report.
  2. It is the ratio of male to female HDI values.
  3. The higher the GII value the more loss to human development.

Select the correct answer using the code given below.
(a) 1 and 2 only
(b) 1 and 3 only
(c) 2 and 3 only
(d) 1, 2 and 3

  • ANS-B
  • The Gender Inequality Index (GII) was introduced in the 2010 Human Development Report.
  • The Gender Development Index (GDI) is the ratio of male to female HDI values.
  • It measures gender gaps in human development achievements by accounting for disparities between women and men in three basic dimensions of human development – health, knowledge and living standards using the same component indicators as in the HDI.
  • The GDI is the ratio of the HDIs calculated separately for females and males using the same methodology as in the HDI.
  • It is a direct measure of gender gap showing the female HDI as a percentage of the male HDI.
  • The GII is an inequality index.
  • It measures gender inequalities in three important aspects of human development-reproductive health, measured by maternal mortality ratio and adolescent birth rates; empowerment, measured by proportion of parliamentary seats occupied by females and proportion of adult females and males aged 25 years and older with at least some secondary education; and economic status, expressed as labour market participation and measured by labour force participation rate of female and male populations aged 15 years and older.
  • The GII is built on the same framework as the Inequality-adjusted Human Development Index (IHDI) – to better expose differences in the distribution of achievements between women and men.
  • It measures the human development costs of gender inequality, thus the higher the GII value the more disparities between females and males and the more loss to human development.

5.With reference to newly released GDP figures, consider the following statements:

  1. GDP calculation is now based at Market prices.
  2. Base year of calculation is 2011-12.
  3. MCA 21 database is used to compile the data for manufacturing GDP.

Which of the above statements is/are correct?
(a) 1 only
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1, 2 and 3

  • ANS-D
  • The revision of GDP data by CSO was not only on account of a change in methodology and base year but also on inclusion of new data.
  • The CSO now measures GDP at market prices instead of factor costs.
  • The CSO has aligned the GDP calculations, including that of states, with the new series having base year 2011-12.
  • The new GDP series has incorporated MCA21 data to measure value added for the manufacturing sector.
  • Ministry of Corporate Affairs had launched MCA21 project in 2006, under its e-governance programme, enabling companies to electronically file their financial results.

Knowledge Base

The Central Statistics Office (CSO), which comes under Ministry of Statistics and Programme Implementation (MOSPI), will release the back-series of India’s gross domestic product (GDP) growth by mid-June 2016.

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