Concept Application and Fact for Prelims Day-25 Ind Eco

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This is the Day-25 questions of the CAF Revision plan for prelims. The questions are based on the syllabus as provided in the schedule. Aspirants are requested to go through the detailed CAF strategy to understand the need of the UPSC prelims and to prepare well for the same. Attempt the questions honestly. The link to key answers and explanations of this test is at the end of the questions. The maximum time to attempt the 18 questions is 25 minutes.


Q.1) Consider the following statements.

Assertion (A): India’s Gross National Product (GNP) is always lower than its Gross Domestic Product (GDP).

Reason (R): due to heavy outflows on account of trade deficits and interest payments on foreign loans.

In the context of the statements above, which of these is true?

(a) A and R both are true, and R is the correct explanation for A.

(b) A and R both are true, and R is the NOT the correct explanation for A.

(c) A is correct, R is incorrect.

(d) A and R both are incorrect


Q.2) Which of the following can be inferred from a country’s GNP?

  1. How much the outside world is dependent on its product and how much it depends on the world for the same.
  2. The standard of its human resource in international parlance.
  3. Position it holds regarding financial support from and to the world economies

Which of the above statements is/are correct?

(a) 1 and 2

(b) 1 and 3

(c) 2 and 3

(d) 1, 2 and 3


Q.3) Bhutan has been following the GNH since 1972 which has the following parameters to attain happiness/development

  1. Higher real per capita income
  2. Good governance
  3. Environmental protection
  4. Cultural promotion

Choose the correct answers from the codes given below

(a) 1, 2 and 3 only

(b) 2, 3, and 4 only

(c) 1, 2 and 4 only

(d) All the above


Q.4) Increase in absolute and per capita real GNP do not connote a higher level of economic development, if

(a) industrial output fails to keep pace with agricultural output.

(b) agricultural output fails to keep pace with industrial output.

(c) poverty and unemployment increase.

(d) imports grow faster than exports.


Q.5) With reference to Indian economy, consider the following statements:

  1. The rate of growth of Real Gross Domestic Product has steadily increased in the last decade.
  2. The Gross Domestic Product at market prices (in rupees) has steadily increased in the last decade.

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


Q.6) 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 code given below.

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2


Q.7) If the interest rate is decreased in an economy, it will

(a) decrease the consumption expenditure in the economy

(b) increase the tax collection of the Government

(c) increase the investment expenditure in the economy

(d) increase the total savings in the economy


Q.8) The national income of a country for a given period is equal to the

(a) total value of goods and services produced by the nationals

(b) sum of total consumption and investment expenditure

(c) sum of personal income of all individuals

(d) money value of final goods and services produced


Q.9) Economic growth in country X will necessarily have to occur if

(a) there is technical progress in the world economy

(c) there is population growth in X

(c) there is capital formation in X

(d) the volume of trade grows in the world economy


Q.10) Consider the following pairs.

Contribution Compensation
1. Human labour Wage
2. Capital Profit
3. Fixed natural resources/land Rent
4. Entrepreneurship Interest

Which of the pairs is/are correctly matched?

(a) 1 and 3

(b) 2 and 4

(c) 1 and 2

(d) 3 and 4


Q.11) To arrive at Personal Income from National Income, consider the following statements.

  1. Subtract undistributed profits, Net interest payments made by households and Corporate tax.
  2. Add Transfer payments to the households from the government and firms.

Which of the above statements is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) None


Q.12) The ratio of nominal GDP to real GDP gives us an idea of how the

(a) taxes have moved from base year to the current year.

(b) prices will move from current year to the next year.

(c) Prices have moved from the base year to the current year.

(d) taxes will move from present year to next year.


Q.13) Both CPI and GDP deflator indicates the change in prices. Consider the following statements about them

  1. GDP deflator takes into account all goods and services whereas CPI only a basket of goods and services.
  2. GDP deflator does not include prices of imported goods whereas CPI includes.

Which of the above statements is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) None


Q.14) Consider the following statements.

  1. Gorkhaland Territorial Administration (GTA) has administrative, executive and legislative powers.
  2. GTA had been created by a tripartite agreement signed by governments of centre and state (WB) and Gorkha Janmukti Morcha (GJM).

Chose the correct answer from the codes given below

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) None


Q.15) Consider the following statements about Gram Panchayat Development Plan (GPDP).

  1. It encourages participative governance.
  2. It aims to strengthen the role of elected Panchayat leaders and SHG Women under DAY-NRLM in effective gram Sabha.

Chose the correct answer from the codes given below

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) None


Q.16) Housing for All scheme, with the goal to provide housing to every Indian household by 2022. Consider the following statements about the scheme.

  1. In-situ Slum rehabilitation
  2. Public-Private Partnerships
  3. Affordable housing through the Credit Linked Interest Subsidy
  4. Beneficiary-led individual house construction or enhancement.

Which of the above is/are the components of Housing for All scheme?

(a) 1, 2 and 3 only

(b) 1, 3, and 4 only

(c) 1 and 2 only

(d) All the above


Q.17) Indian PM recently visited Tokyo for the 13th Indo – Japan annual bilateral summit and issued a joint vision statement. Arrange the following from north to south.

  1. La Perouse Strait
  2. Tsugaru Strait
  3. Osumi channel
  4. Cheju strait

Chose the correct answer from the codes given below

(a) 1-2-3-4

(b) 2-3-1-4

(c) 1-2-4-3

(d) 1-3-2-4


Q.18) Which of the following countries are part of the International North South Transport Corridor?

  1. India
  2. Iraq
  3. Afghanistan
  4. Armenia
  5. Azerbaijan

Chose the correct answer from the codes given below

(a) 1, 2 and 5 only

(b) 1, 3, 5 only

(c) 1, 3, 4 and 5 only

(d) All the above


Q.19) In case of a French-owned car assembly unit operating in India, consider the following statements:

  1. The profits from the factory would be counted as part of France’s GDP rather than Indian GDP.
  2. The wages of the Indian workers would be a part of Indian GDP.
  3. Wages of any French worker on the site would be a part of France’s GNP.

Which of the statement(s) given above is/are correct?

a) 1 and 3 only

b) 2 only

c) 2 and 3 only

d) 1, 2 and 3


Q.20) Which of the following are considered to be factors of production?

  1. Land
  2. Labour
  3. Robust Governance
  4. Capital
  5. Entrepreneurship

Select the correct answer using the code given below:

a) 2 and 3 only

b) 1 and 2 only

c) 1, 2, 4 and 5 only

d) 1, 2, 3, 4 and 5


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