Mock Test-1 (Paper-1) (Question 51-100)

Total Questions: 50

11. A closed economy is an economy in which

(a) the money supply is fully controlled
(b) deficit financing takes place
(c) only exports take place
(d) neither exports nor imports takes place

Correct Answer: (d) neither exports nor imports takes place

Solution:

A closed economy has no trade activity with outside economies. A closed economy is self-sufficient, which means no imports come into the country and no exports leave the country. The purpose of a closed economy is to provide domestic consemers with everything they need from within the country's borders.

12. In the Indian context, the studies of poverty were made by —

(i) Dandekar and Rath

(ii) P.K. Bardhan

(iii) B.S. Minhas

(iv) I.J. Ahluwalia

Select the correct answer from the codes given below:

(a) (i) and (ii)
(b) (ii) and (iii)
(c) (i), (ii) and (iii)
(d) (i), (ii), (iii) and (iv)

Correct Answer: (c) (i), (ii) and (iii)

Solution:

Dr. V. M. Dandekar and Mr. Nilkantha Rath, B. S. Minhas and Dr. P. K. Bardhan studied about poverty in India.

Poverty is a state or situation in which a household, individual or group lacks the economic capability and requirements even for the basic level of standards. Poverty is described as the circumstances in which an individual's salary from work is insufficient to meet the fundamental human requirements.

Households and individuals stricken by poverty may be deprived of healthy and nutritious metal, portable water, safe and appropriate shelter, and healthcare. Poverty has negative impacts on children, le. Children facing the situation of poverty have more chances to suffer from serious and recurring medical issues; children born into poverty are more likely to have a lower body mass, which can result in physical and psychological abnormalities.

Each country has its standards' set for measuring how many citizens of the nation are poor.

13. To obtain full benefits of demographic dividend, what should India do ?

1. Promoting skill development

2. Introducing more social security schemes

3. Reducing infant mortality rate

4. Privatisation of higher education

Which of the above statements is/are correct?

(a) 1 only
(b) 2 only
(c) None of the above
(d) 3 and 4 only

Correct Answer: (a) 1 only

Solution:

To rip maximum demographic dividend, India has to promote skill development.

Demographic dividend is "the economic growth potential that can result from shifts in a population’s age structure, mainly when the share of the working-age population is larger than the non-working-age
share of the population".

India stands at a demographic crossroads. With over 50% of its 1.4 billion population under 25, India has one of the world’s youngest populations. This demographic bulge represents both a historic opportunity and a formidable challenge.

Effectively leveraging this youthful demography could propel the economy into a higher growth trajectory. However, failure to productively utilise this human capital may result in socio-economic risks. As India transitions towards a knowledge economy, harnessing this‘ demographic dividend’ through appropriate investments and policy reforms will be critical.

14. The farmers are provided credit from a number of sources for their short and long term needs. The main sources of credit to the farmers include:

1. the Primary Agricultural Co-operative Societies, Commercial Banks, RRBs and Private money lenders.

2. the NABARD, RBI, Commercial banks and Private money lenders.

3. the District Central Co-operative Banks (DCCB), the lead banks, IRDP and JRY

4. the Large Scale Multi-purpose programme, DCCB, IFFCO and Commercial banks.

(a) All of the above
(b) 1 and 2 only
(c) 1 only
(d) 3 and 1 only

Correct Answer: (c) 1 only

Solution:

Statement I lists all the main and primary sources of agriculture credit institutions exclusively for farmers.

Agricultural credit sources can be broadly categorized into institutional and non- institutional channels.

Non-institutional sources encompass moneylenders,
traders, commission agents, as well as relatives and landlords.,
Institutional sources, on the other hand, comprise cooperatives,
commercial banks including the SBI Group, RBI, and NABARD,
Major institutional credit agencies in India include Commercial Banks (CBs) and Regional Rural Banks (RRBs), primarily sponsored by Scheduled Commercial Banks and state governments. Cooperative Banks are also significant players, further divided into rural and urban cooperatives.
Among these, Scheduled Commercial Banks are the largest credit providers, followed by Cooperatives and Regional Rural Banks. Notably, following the nationalization of commercial banks in India in 1969, their collective share in institutional credit to the agricultural sector has consistently increased.

15. Under the Kisan Credit Card scheme, short-term credit support is given to farmers for which of the following purposes ?

1. Working capital for maintenance of farm assets

2. Purchase of combine harvesters, tractors and mini trucks

3. Consumption requirements of farm households

4. Post-harvest expenses

5. Construction of family house and setting up of village cold storage facility

Select the correct answer using the code given below :

(a) 1, 2 and 5 only
(b) 1, 3 and 4 only
(c) 2, 3, 4 and 5 only
(d) 1, 2, 3, 4 and 5

Correct Answer: (b) 1, 3 and 4 only

Solution:

Kisan Credit Card primarily meant for buying farm inputs. So construction of 'family house' seems far-fetched. So, #5 wrong. Further, setting up a village up a village cold storage facilities cannot be done through a short-term credit (a given in the question premise) it will require a very long term loan. So, #5 is wrong. By elimination we are left with answer (b).

Interestingly no questions from the government schemes related to insurance and pension. Although in the last two years many initiatives were undertaken such a PM Shram Yogi Maan Dhan, Laghu Vyapari Maan Dhan, Kisan Maan Dhan etc. schemes

16. Economic liberalisation in India started with

(a) substantial changes in industrial licensing policy
(b) the convertibility of Indian rupee
(c) doing away with procedural formalities for foreign direct investment
(d) significant reduction in tax rates

Correct Answer: (a) substantial changes in industrial licensing policy

Solution:

Economic Liberalisation in India started with substantial changes in industrial licensing policy. The LPG Model (Liberalisation, Privatisation & Globalisation) was introduces by Dr. Manmohan Singh in 1991 as India was facing problems of depleting reserves.

17. With reference to the World Bank's Ease of Doing Business Report, which of the following statement(s) is/are correct?

1. In Ease of Doing Business Report 2020, India's rank is 63.

2. India ranking for Ease of Doing Business in the year 2019 was 77.

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

Correct Answer: (b) 2 only

Solution:

The ease of doing business index is an index created jointly by Simeon Djankov and Gerhard Pohl, two leading economists at the Central and Eastern Europe sector of the World Bank Group. India jumps to 63rd position in World Bank's Ease of Doing Business 2020 report. In the 2019 report, India had improved its rank on six out of the 10 parameters relating to starting and doing business in a country.

18. A country is said to be in a debt trap if :

(a) it has to abide by the conditionalities imposed by the International Monetary Fund.
(b) it has to borrow to make interest payments on outstanding loans.
(c) it has been refused loans or aid by creditors abroad.
(d) the World Bank charges a very high rate of interest on outstanding as well as new loans.

Correct Answer: (b) it has to borrow to make interest payments on outstanding loans.

Solution:

In debt trap fresh loans are taken forcibly to repay previous loans.

Debt Trap Diplomacy refers to a strategy where powerful creditor countries provide large loans to financially vulnerable nations with terms that may be difficult to meet, creating dependency and allowing the lender to gain strategic or political leverage.

The concept of Debt Trap Diplomacy gained prominence in the context of China’s Belt and Road Initiative (BRI), with countries like Sri Lanka, Pakistan, and Djibouti facing rising debt vulnerabilities.

Debt-trap diplomacy has become a key concern in South Asia, Africa, and the Indian Ocean Region, influencing geopolitical alignments, regional infrastructure projects, and India’s strategic and economic interests.

19. Which one of the following is not an adverse effect of population growth in an economy?

(a) Increase in the size of working population.
(b) Reduced size of holdings.
(c) Increasing unemployment.
(d) Reduced per capita availability of food grains.

Correct Answer: (a) Increase in the size of working population.

Solution:

Increase of size of working population is one of the positive effects of population growth in an economy. Human resources increases with increase in population.

India is the most populous country in the world with 1.44 billion people. Surpassing China recently. It will continue to rise until reaching 1.52 billion by 2036, according to India's National Commission on Population. India has a huge advantage as well as challenges to tap the potential benefits of its large population with religious and ethnic diversities.

The Government of India has taken several steps to directly control the population growth. India was the first country to launch a national programme of family planning in 1952, that emphasised the necessity of reducing birth rates to stabilize the population..