IAS Economics Questions

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India has experienced persistent and high food inflation in the recent past. What could be the reasons?
Due to a gradual switchover to the cultivation of commercial crops, the area under the cultivation of food grains has steadily decreased in the last five years by about 30%.
As a consequence of increasing incomes, the consumption patterns of the% people have undergone a significant change.
The food supply chain has structural constraints.

Which of the statements given above1 are correct?
(a.) 1 and 2 only
(b.) 2 and 3 only
(c.) 1 and 3 only
(d.) 1, 2 and 3
Solution (b)

In terms of economy, the visit by foreign nationals to witness the XIX Common Wealth Games in India amounted to
(a.) Export
(b.) Import
(c.) Production
(d.)Consumption
Solution (a)

Which one of the following statements appropriately describes the “fiscal stimulus”?
(a.) It is a massive investment by the Government in manufacturing sector to ensure the supply of goods to meet the demand surge caused by rapid economic growth
(b.) It is an intense affirmative action of the Government to boost economic activity in the country
(c.) It is Government’s intensive action on financial institutions to ensure disbursement of loans to agriculture and allied sectors to promote greater food production and contain food inflation
(d.) It is an extreme affirmative action by the Government to pursue its policy of financial inclusion
Solution (b)

Consider the following actions which the Government can take:

Devaluing the domestic currency.
Reduction in the export subsidy.
Adopting suitable policies which attract greater FDI and more funds from FIIs.

Which of the above action/actions can help in reducing the current account deficit?
(a.) 1 and 2
(b.) 2 and 3
(c.) 3 only
(d.) 1 and 3
Solution (a)

A rapid increase in the rate of inflation is sometimes attributed to the “base effect”. What is “base effect”?
(a.) It is the impact of drastic deficiency in supply due to failure of crops
(b.) It is the impact of the surge in demand due to rapid economic growth
(c.) It is the impact of the price levels of previous year on the calculation of inflation rate
(d.)None of the statements (a), (b) and (c) ‘given above is correct in this context
Solution (c)

Why is the offering of “teaser loans” by commercial banks a cause of economic concern?
The teaser loans are considered to be an aspect of sub-prime lending and banks may be exposed to the risk of defaulters in future.
In India, the teaser loans are mostly given to inexperienced entrepreneurs to set up manufacturing or export units.
Which of the statements given above is/are correct?
(a.) 1 only
(b.) 2 only
(c.) Both 1 and 2
(d.) Neither 1 nor 2
Solution (c)

In the context of Indian economy, consider the following statements :
The growth rate of GDP has steadily increased in the last five years.
The growth rate in per capita income has steadily increased in the last five years.
Which of the statements given above is/are correct?
(a.) 1 only
(b.) 2 only
(c.) Both 1 and 2
(d.) Neither 1 nor 2
Solution (b)

In India, which of the following have the highest share in the disbursement of credit to agriculture and allied activities?
(a.) Commercial Banks
(b.) Cooperative Banks
(c.) Regional Rural Banks
(d.) Microfinance Institutions
Solution (a)

Economic growth is usually coupled with
(a.) Deflation
(b.) Inflation
(c.) Stagflation
(d.) Hyperinflation
Solution (b)


IAS Economics questions

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