Economic Development

201. The substitution of steel for wooden ploughs in agricultural productio

The substitution of steel for wooden ploughs in agricultural production is an example of

[amp_mcq option1=”labour-augmenting technological progress” option2=”capital-augmenting technological progress” option3=”capital-reducing technological progress” option4=”None of the above” correct=”option2″]

This question was previously asked in
UPSC IAS – 2015
Download PDFAttempt Online
The correct option is B (capital-augmenting technological progress). The substitution of a steel plough for a wooden plough is an example of capital-augmenting technological progress.
– A plough is a form of physical capital used in agricultural production.
– Replacing a wooden plough with a steel plough implies an improvement in the efficiency, durability, or effectiveness of the capital good.
– Capital-augmenting technological progress makes capital more productive, meaning more output can be produced with the same amount of capital, or the same output with less capital (relative to labour), or it increases the effective amount of capital available. A stronger, more efficient steel plough allows for better tilling, potentially faster, requiring less effort to achieve the same result, or enabling tilling of harder soil, thus increasing the productivity derived from the capital input.
– Labour-augmenting technological progress increases the productivity of labour. While a better plough *might* allow a farmer to work faster or more effectively, the direct technological improvement is in the tool (capital), making the capital itself more productive.
– Capital-reducing technological progress is not a standard term in this context; the change here is about making capital *more* productive or effective, not necessarily reducing the absolute amount of capital used (though fewer trips might be needed, it’s primarily about enhanced capital productivity).
Technological progress can be classified based on how it affects the marginal productivity of labour and capital. Hicks-neutral technology leaves the ratio of marginal productivities unchanged. Harrod-neutral technology is labour-augmenting. Solow-neutral technology is capital-augmenting. In this specific example, the improvement in the plough enhances the productivity of the capital good itself.

202. With reference to inflation in India, which of the following statement

With reference to inflation in India, which of the following statements is correct?

[amp_mcq option1=”Controlling the inflation in India is the responsibility of the Government of India only” option2=”The Reserve Bank of India has no role in controlling the inflation” option3=”Decreased money circulation helps in controlling the inflation” option4=”Increased money circulation helps in controlling the inflation” correct=”option3″]

This question was previously asked in
UPSC IAS – 2015
Download PDFAttempt Online
The correct option is C (Decreased money circulation helps in controlling the inflation).
– Inflation is generally caused by excessive demand or reduced supply, often fuelled by an increase in the money supply beyond the growth of output.
– Controlling inflation is a joint responsibility of the government and the central bank (RBI). The RBI is statutorily mandated to maintain price stability, often through monetary policy. Therefore, A and B are incorrect.
– Monetary policy tools aimed at controlling inflation typically involve reducing the money supply and credit availability or increasing interest rates, which leads to decreased money circulation (tight monetary policy). This curbs aggregate demand, helping to cool down inflationary pressures.
– Increased money circulation (loose or expansionary monetary policy) typically stimulates demand and can exacerbate inflation. Therefore, D is incorrect.
The Government sets an inflation target for the RBI (currently 4% with a band of +/- 2%). The RBI uses various instruments like Repo rate, Reverse Repo rate, CRR, SLR, and OMOs to manage liquidity and influence inflation. Fiscal measures like controlling government expenditure, taxation, and managing supply-side issues also play a role in controlling inflation.

203. With reference to Indian economy, consider the following: 1. Bank ra

With reference to Indian economy, consider the following:

  • 1. Bank rate
  • 2. Open market operations
  • 3. Public debt
  • 4. Public revenue

Which of the above is/are component/components of Monetary Policy?

[amp_mcq option1=”1 only” option2=”2, 3 and 4″ option3=”1 and 2″ option4=”1, 3 and 4″ correct=”option3″]

This question was previously asked in
UPSC IAS – 2015
Download PDFAttempt Online
The correct option is C (1 and 2). Bank rate and Open Market Operations are standard instruments of Monetary Policy.
– Monetary policy is the policy adopted by the central bank of a country to control the money supply and interest rates to promote macroeconomic stability.
– Instruments of monetary policy include quantitative measures like Bank Rate (discount rate), Open Market Operations (OMOs), Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR), Repo Rate, and Reverse Repo Rate.
– Bank rate (Statement 1) is the rate at which the central bank lends money to commercial banks without any security.
– Open market operations (Statement 2) involve the buying and selling of government securities by the central bank in the open market to control liquidity.
– Public debt (Statement 3) and public revenue (Statement 4) are components of Fiscal Policy, which relates to government spending and taxation. Fiscal policy is formulated and implemented by the government, not the central bank.
Monetary policy primarily targets inflation and growth by influencing the cost and availability of money and credit in the economy. Fiscal policy influences aggregate demand through government expenditure and revenue. In India, the Reserve Bank of India (RBI) is responsible for formulating and implementing monetary policy.

204. With reference to Indian economy, consider the following statements:

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?

[amp_mcq option1=”1 only” option2=”2 only” option3=”Both 1 and 2″ option4=”Neither 1 nor 2″ correct=”option2″]

This question was previously asked in
UPSC IAS – 2015
Download PDFAttempt Online
Statement 1 is incorrect. The rate of growth of Real Gross Domestic Product (GDP) is subject to economic cycles and various domestic and global factors. It rarely increases steadily over a decade; there are typically fluctuations, periods of faster growth, and periods of slowdown. Statement 2 is correct. The Gross Domestic Product at market prices (Nominal GDP in rupees) reflects both the increase in the volume of goods and services produced (real growth) and the increase in prices (inflation). Over a decade, even with fluctuations in real growth, the combined effect of positive real growth (on average) and inflation almost guarantees a steady increase in nominal GDP in absolute rupee terms, year after year.
Nominal GDP (at market prices) in a growing economy like India typically increases every year due to real growth and inflation, while the rate of Real GDP growth is volatile and does not increase steadily over long periods.
Real GDP growth is a measure of the increase in the volume of production, adjusted for inflation. It indicates the actual expansion of the economy’s output capacity. Nominal GDP is the value of goods and services at current market prices. It reflects both volume changes and price changes. Over any typical decade in a developing economy with positive inflation and average positive real growth, nominal GDP tends to show a consistent upward trend, unlike the growth *rate* of real GDP.

205. ‘Basel III Accord’ or simply ‘Basel III’, often seen in the news, seek

‘Basel III Accord’ or simply ‘Basel III’, often seen in the news, seeks to

[amp_mcq option1=”develop national strategies for the conservation and sustainable use of biological diversity” option2=”improve banking sector’s ability to deal with financial and economic stress and improve risk management” option3=”reduce the greenhouse gas emissions but places a heavier burden on developed countries” option4=”transfer technology from developed countries to poor countries to enable them to replace the use of chlorofluorocarbons in refrigeration with harmless chemicals” correct=”option2″]

This question was previously asked in
UPSC IAS – 2015
Download PDFAttempt Online
The correct option is B.
The Basel III Accord is a set of international banking regulations developed by the Bank for International Settlements (BIS) through the Basel Committee on Banking Supervision (BCBS). It was developed in response to the global financial crisis of 2007-08. Basel III aims to improve the regulation, supervision, and risk management within the banking sector. Key objectives include strengthening bank capital requirements, enhancing liquidity standards, and controlling leverage, thereby improving the banking sector’s ability to absorb shocks arising from financial and economic stress.
Basel I and Basel II were earlier versions of these accords focusing primarily on capital requirements and risk management. Basel III builds upon these, introducing more stringent requirements and new measures related to liquidity and leverage to create a more resilient banking system.

206. In India, the steel production industry requires the import of

In India, the steel production industry requires the import of

[amp_mcq option1=”saltpetre” option2=”rock phosphate” option3=”coking coal” option4=”All of the above” correct=”option3″]

This question was previously asked in
UPSC IAS – 2015
Download PDFAttempt Online
The correct option is C.
Steel production primarily uses iron ore and coking coal in the blast furnace process. While India has abundant reserves of iron ore, it lacks sufficient reserves of high-quality coking coal required for metallurgical purposes. Consequently, India heavily imports coking coal to meet the demands of its steel industry. Saltpetre (potassium nitrate) is used in fertilisers and explosives, not directly in steel making. Rock phosphate is a source of phosphorus, mainly used for producing phosphate fertilisers.
India is one of the world’s largest producers of crude steel, but its dependence on imported coking coal remains a significant challenge for the domestic industry. Major sources of coking coal imports for India include Australia, the USA, Canada, and Indonesia. Efforts are being made to enhance domestic production and explore alternative technologies to reduce reliance on imported coking coal.

207. Which of the following brings out the ‘Consumer Price Index Number for

Which of the following brings out the ‘Consumer Price Index Number for Industrial Workers’?

[amp_mcq option1=”The Reserve Bank of India” option2=”The Department of Economic Affairs” option3=”The Labour Bureau” option4=”The Department of Personnel and Training” correct=”option3″]

This question was previously asked in
UPSC IAS – 2015
Download PDFAttempt Online
The correct option is C. The Labour Bureau brings out the ‘Consumer Price Index Number for Industrial Workers’ (CPI-IW).
– In India, Consumer Price Indices (CPI) measure changes over time in the retail prices of goods and services which working-class families consume.
– The Labour Bureau, an attached office of the Ministry of Labour & Employment, compiles CPI for Industrial Workers (CPI-IW), Agricultural Labourers (CPI-AL), and Rural Labourers (CPI-RL).
– The National Statistical Office (NSO), Ministry of Statistics and Programme Implementation (MoSPI), compiles the All India CPI (Rural, Urban, and Combined).
CPI-IW is particularly important as it is used for determining dearness allowance for central government employees and workers in the organised industrial sector.

208. In India, markets in agricultural products are regulated under the

In India, markets in agricultural products are regulated under the

[amp_mcq option1=”Essential Commodities Act, 1955″ option2=”Agricultural Produce Market Committee Act enacted by States” option3=”Agricultural Produce (Grading and Marking) Act, 1937″ option4=”Food Products Order, 1956 and Meat and Food Products Order, 1973″ correct=”option2″]

This question was previously asked in
UPSC IAS – 2015
Download PDFAttempt Online
In India, markets in agricultural products are primarily regulated under the Agricultural Produce Market Committee (APMC) Act enacted by the respective State Governments.
The APMC Acts establish market areas (mandis) where agricultural produce can be bought and sold. The state governments have the authority to regulate the functioning of these markets, including market fees, licensing of traders, and market infrastructure.
While other acts listed are relevant to agriculture and food products, they regulate different aspects. The Essential Commodities Act deals with controlling the production, supply, and distribution of essential commodities. The Agricultural Produce (Grading and Marking) Act focuses on quality standards. The Food Products Order and Meat and Food Products Order relate to the processing and quality standards of processed food items. The direct regulation of market infrastructure and trade in primary agricultural produce within states falls under the purview of the state APMC Acts.

209. When the Reserve Bank of India reduces the Statutory Liquidity Ratio b

When the Reserve Bank of India reduces the Statutory Liquidity Ratio by 50 basis points, which of the following is likely to happen?

[amp_mcq option1=”India’s GDP growth rate increases drastically” option2=”Foreign Institutional Investors may bring more capital into our country” option3=”Scheduled Commercial Banks may cut their lending rates” option4=”It may drastically reduce the liquidity to the banking system” correct=”option3″]

This question was previously asked in
UPSC IAS – 2015
Download PDFAttempt Online
When the Reserve Bank of India reduces the Statutory Liquidity Ratio (SLR), scheduled commercial banks are likely to cut their lending rates.
SLR is the percentage of Net Demand and Time Liabilities (NDTL) that commercial banks must maintain as liquid assets (cash, gold, government securities). Reducing SLR means banks are required to hold a smaller proportion of their deposits in these prescribed liquid assets. This frees up a larger amount of funds that banks can use for lending to the public and businesses.
Increased availability of funds for lending typically leads to increased competition among banks to disburse loans. This increased supply of loanable funds, assuming demand remains constant or increases moderately, puts downward pressure on interest rates, making it more likely for scheduled commercial banks to cut their lending rates. Options A, B, and D are less direct or incorrect consequences. Drastic GDP growth is not guaranteed. FII capital inflows are complex and influenced by many factors. Reducing SLR increases, not reduces, the liquidity available for lending in the banking system.

210. Which one of the following issues the ‘Global Economic Prospects’ repo

Which one of the following issues the ‘Global Economic Prospects’ report periodically?

[amp_mcq option1=”The Asian Development Bank” option2=”The European Bank for Reconstruction and Development” option3=”The US Federal Reserve Bank” option4=”The World Bank” correct=”option4″]

This question was previously asked in
UPSC IAS – 2015
Download PDFAttempt Online
The ‘Global Economic Prospects’ report is a flagship publication of The World Bank.
This report provides a comprehensive analysis of the global economy, including forecasts for growth, trade, and financial flows. It is released periodically, typically twice a year (in January and June).
The report covers both advanced and developing economies, highlighting key risks and opportunities for global economic development. It is a widely cited source for understanding the current state and future outlook of the world economy. Other international financial institutions and development banks publish their own reports, but ‘Global Economic Prospects’ is specifically associated with The World Bank.
Page 1Page 2Page 3Page 4Page 5
Exit mobile version