# Prelims-IAS –ECONOMICS MCQ Ans-06

1..Which of the following statements is/are correct?
1. Central Statistical Organisation (CSO) measures both Index of Industrial Production (IIP) and
Gross Domestic Product (GDP) in India.
2. From January 2015 GDP at market price is the headline GDP of India.
Select the correct answer using the code given below:
A. 1 only
B. 2 only
C. Both 1 and 2

D. Neither 1 nor 2

• ANS-C
• Central Statistical Organisation (CSO is a governmental agency in India under the Ministry of Statistics and Programme Implementation responsible for co-ordination of statistical activities in India, and evolving and maintaining statistical standards. It measures both GDP and IIP.
• IIP is an index which details out the growth of various sectors in an economy such as mineral mining, electricity and manufacturing.
In 2015 headline GDP i.e. GDP to be considered for policy making has been changed from GDP at factor cost to GDP at market price.

2..What is Net factor income from abroad?

A. All income of residents from abroad net of similar incomes of non residents and their transfers.

B. All income in terms of operating surplus and  compensation of employees earned by domestic  residents abroad minus similar income paid to non residents.
C. All income of Indian citizens abroad
D. All the above are correct.
• Exp: Net factor income earned from abroad which is used to differentiate between national income and domestic income.
• Also called as the net foreign factor income (NFFI) is the difference between a nation’s gross national product (GNP) and gross domestic product (GDP).
• NFFI = GNP – GDP.
• NFFI may assume increasing importance in a globalized economy, as people and companies move across international borders more easily.
• Factor income does not include transfers so it is only the income in terms of factor payments.
• According to System of National Accounts (SNA) 1992, it is only residents income and has no relation to citizenship.

3..Incremental Capital Output Ratio (ICOR) is:

A. Same in agriculture and industries in India

B. Lower when capital efficiency increases
C. Always a stock variable
D. Always more than 1
• Exp: Incremental Capital Output Ratio (ICOR) is the additional capital required to increase one unit of output.
• This ratio is used to measure the efficiency of an industrial unit or country as an economic unit. The lesser the ICOR, more efficient the organization.
• The measure is used predominantly in determining a country’s level of production efficiency.
• ICOR is calculated as:It is a ratio of 2 flow variables.
• It can take any value depending on efficiency of capital because it shows the extra capital needed for producing extra output.
• ICOR has differed across industry and agricultural sector in India, especially after 1991.

4..Which of the following statements is not true about investment in India?

A. Investment as a ratio of GDP has been declining in the last 4 quarters as a trend.

B. Investment as a ratio of GDP peaked in 2007-08 and has not reached that level ever again.

C. Investments are inversely affected by high government borrowing

D. Investment does not include change in stock.
Exp: Investment includes change in stock. It is the sum of gross fixed capital formation and change in stock or inventory investment. 2007-08 had highest investment to GDP ratio at 38% and then after subprime crisis it has never reached that level again.

5..Which institution replaced Disinvestment Commission in 2016?

A. Niti Aayog Investment Authority

B. NCLT
C. DIPAM
D. Department for Reorganisation and Planning Management of Public Asset.