The Union Public Service Commission (UPSC) conducted the Combined Defence Services (CDS) (II) Examination 2017 on 19 November 2017. The Exam consisted of three papers – General Knowledge, English and Elementary Mathematics.
For the benefit CDS aspirants, we are providing Economy questions that were asked in the CDS (II) 2017 Exam along with answers and detailed explanations.
1. The phenomenon of ‘demographic dividend’ of a country relates to
(a) a sharp decline in total population
(b) an increase in working age population
(c) a decline in infant mortality rate
(d) an increase in sex ratio
Answer. (b) an increase in working age population
Demographic dividend refers to an opportunity before a country with a high share of population between the ages of 15 and 64, to boost economic growth. This stage is reached when the country experiences lower fertility rates, which means that the dependent population below the age of 15 years is low. The population above 64 years of age is also low due to the lower life expectancies of the older generations. On the other hand, the population between 15-64 is high, due to the higher birth rates in the previous generation. This reduces the dependency ratio (share of population not engaged in productive employment and dependent on others) and thus, boosts the economic growth.
A larger working population also means that the domestic savings rate is high (since the dependent population does not increase savings, but reduces them) and thus, investment and economic growth is higher. Many East Asian countries were able to achieve high economic growth rates by utilising their demographic dividend. Demographic dividend can only be useful, if it is accompanied by supportive national policies, which improve literacy, provide employment, health care etc. High share of young population in a country can also have negative consequences like social unrest, crime and high divorce rates etc.
As India has more than 60% of its total population between the ages of 15 and 59 years, the country should invest more on human resources development to reap the rich dividends offered.
2. Arrange the following events in sequential order as they happened in India :
1. Mahalanobis Model
2. Plan Holiday
3. Rolling Plan
Select the correct answer using the code given below.
(a) 1, 2, 3
(b) 3, 2, 1
(c) 2, 3, 1
(d) 1, 3, 2
Answer. (a) 1, 2, 3
Second Five Year Plan (1956-61) is based on the P.C. Mahalanobis Model. Its main focus was on the industrial development of the country. This plan was successful and achieved growth rate of 4.1%.
The duration of plan holiday was from 1966 to 1969. The main reason behind the plan holiday was the Indo-Pakistan war & failure of third plan. During this plan annual plans were made and equal priority was given to agriculture its allied sectors and the industry sector.
Rolling Plan was started with an annual plan for 1978-79 and as a continuation of the terminated fifth year plan.
3. The monetary policy in India uses which of the following tools?
1. Bank rate
2. Open market operations
3. Public debt
4. Public revenue
Select the correct answer using the code given below
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 4 only
(d) 1, 2 , 3 and 4
Ans. (a) 1 and 2 only
There are several direct and indirect instruments that are used for implementing monetary policy by the Reserve Bank of India (RBI). Important monetary policy tools are given below.
Repo Rate: The (fixed) interest rate at which the Reserve Bank provides overnight liquidity to banks against the collateral of government and other approved securities under the liquidity adjustment facility (LAF).
Reverse Repo Rate: The (fixed) interest rate at which the Reserve Bank absorbs liquidity, on an overnight basis, from banks against the collateral of eligible government securities under the LAF.
Liquidity Adjustment Facility (LAF): The LAF consists of overnight as well as term repo auctions. Progressively, the Reserve Bank has increased the proportion of liquidity injected under fine-tuning variable rate repo auctions of range of tenors. The aim of term repo is to help develop the inter-bank term money market, which in turn can set market based benchmarks for pricing of loans and deposits, and hence improve transmission of monetary policy. The Reserve Bank also conducts variable interest rate reverse repo auctions, as necessitated under the market conditions.
Marginal Standing Facility (MSF): A facility under which scheduled commercial banks can borrow additional amount of overnight money from the Reserve Bank by dipping into their Statutory Liquidity Ratio (SLR) portfolio up to a limit at a penal rate of interest. This provides a safety valve against unanticipated liquidity shocks to the banking system.
Bank Rate: It is the rate at which the Reserve Bank is ready to buy or rediscount bills of exchange or other commercial papers. The Bank Rate is published under Section 49 of the Reserve Bank of India Act, 1934. This rate has been aligned to the MSF rate and, therefore, changes automatically as and when the MSF rate changes alongside policy repo rate changes.
Cash Reserve Ratio (CRR): The average daily balance that a bank is required to maintain with the Reserve Bank as a share of such per cent of its Net demand and time liabilities (NDTL) that the Reserve Bank may notify from time to time in the Gazette of India.
Statutory Liquidity Ratio (SLR): The share of NDTL that a bank is required to maintain in safe and liquid assets, such as, unencumbered government securities, cash and gold. Changes in SLR often influence the availability of resources in the banking system for lending to the private sector.
Open Market Operations (OMOs): These include both, outright purchase and sale of government securities, for injection and absorption of durable liquidity, respectively.
Public debt and Public Revenue come under the fiscal policy and are decided by the Union Ministry of Finance.
4. In India, the base year of the new GDP series has been shifted from 2004-05 to
Answer. (d) 2011-12
In January 2015, the Ministry of Statistics & Programme Implementation has released the new series of national accounts, revising the base year from 2004-05 to 2011-12. The base year of national accounts was last revised in January 2010.
5. Which one of the following statements about the Global Environment Facility Grant Agreement, signed by India in August 2017 with the World Bank for ‘Ecosystems Service Improvement Project’, is not correct ?
(a) The size of the project is about USD 25 million.
(b) The duration of the project is 15 years
(c) The project will entirely be financed by the World Bank out of its GEF Trust Fund.
(d) The Ministry of Environment, Forest and Climate Change will implement the project.
Ans. (b) The duration of the project is 15 years
A Grant Agreement from the Global Environment Facility (GEF) of the World Bank of USD 24.64 million for “Ecosystem Service Improvement Project” was signed on 16 August 2017. The size of Project is USD 24.64 million which entirely will be financed by the World Bank out of its GEF Trust Fund. The project’s duration is 05 years.
Ministry of Environment, Forest and Climate Change (MoEF&CC) will implement the Project in the States of Chhattisgarh and Madhya Pradesh through Indian Council of Forestry Research & Education under the National Mission for Green India. The objective of the Project is to strengthen the institutional capacity of the Departments of Forestry and Community Organisations to enhance forest ecosystem services and improve the livelihoods of forest dependent communities in Central Indian Highlands.
6. UBI, as an alternative for substance in poverty alleviation, stands for
(a) Union Basic Income
(b) Undefined Basic Income
(c) Unconditional Basic Income
(d) Universal Basic Income
Ans. (d) Universal Basic Income
The concept of a Universal Basic Income (UBI) is not new. One of the earliest known ideas on an unconditional universal basic income for all adults irrespective of other income sources came from Thomas More. After this, the idea of universal basic income was explored by many other Philosophers. Thomas Paine, one of the United State’s founding fathers, advocated that every person had basic right to an equal basic funding because “the earth, in its natural, uncultivated state was... the common property of the human race”.
The Economic Survey 2016-17 has dwelt upon the implementation of the UBI in India.
7. Which one of the following authorities has recently launched the mobile apps ‘MyFASTag’ and FASTag Partner’ ?
(a) Telecom Regulatory Authority
(b) National Highways Authority
(c) Airports Economic Regulatory Authority
(d) National Disaster Management Authority
Ans. (b) National Highways Authority
The National Highways Authority of India (NHAI) on 17 August 2017 launched two mobile apps MyFASTag and FASTag Partner to facilitate the availability of FASTags for Electronic Toll Collection. The mobile apps will ease the process of purchase and recharge of FASTags just at the click of a mobile button.
• MyFASTag is a consumer app that can be downloaded from the App Store for both Android and iOS systems.
• Through this app, a consumer can purchase or recharge FASTags.
• The App also helps to keep track of transactions and also provides for online grievance redressal.
FASTag Partner App
• FASTag Partner is a merchant app that will help agencies like Common Services Centre, banking partners and vehicle dealers to sell and enroll FASTag through this App.
• It can also be used to activate the RFID tags that came built in with around 74 lakh cars in the country.
• These RFID tags are already fixed on the cars but are dormant. This App will convert these RFID tags into FASTag.
Moreover, NHAI has also started Online sale of FASTags and offline sale through Common Services Centre (CSC) near toll plazas. So, FASTag can now be purchased online from Issuer Banks websites or NHAI website or from IHMCL website and will be delivered by courier at the door step.
8. Who among the following scholars argued that ‘capital created underdevelopment not because it exploited the underdeveloped world, but because it did not exploit it enough ?
(a) Bill Warren
(b) Paul Baran
(c) Geoffrey Kay
Answer. (c) Geoffrey Kay
The statement was given by Geoffrey Kay.
9) Match List-I with List-II and select the correct answer using the code given below the Lists :
(Industrial Region) (Country)
A. Leipzig 1. USA
B. Detroit 2. UK
C. Lorraine 3. France
D. Cumberland 4. Germany
(a) A B C D
2 1 3 4
(b) A B C D
4 3 1 2
(c) A B C D
4 1 3 2
(d) A B C D
2 3 1 4
Answer. A-4, B-1, C-3, D-2
Leipzig is a city in Germany. It is a automobile manufacturing hub and is home to renewed brands such as - BMW and Porsche.
Several major corporations are based in Detroit, including three Fortune 500 companies. The most heavily represented sectors are manufacturing (particularly automotive), finance, technology, and health care. The most significant companies based in Detroit include: General Motors, Quicken Loans, Ally Financial, Compuware, Shinola, American Axle, Little Caesars, DTE Energy, Lowe Campbell Ewald, Blue Cross Blue Shield of Michigan, and Rossetti Architects.
Lorraine is a cultural and historical region in north-eastern France. The extensive iron ore and coal deposits of Lorraine led to rapid industrialization in the latter part of the 19th century. Though Lorraine is one of key industrialized areas in France, certain traditional activities have lost their former significance. Iron ore, once mined on a large scale, is no longer extracted. Much of the steel industry that depended on this raw material has declined.
10) Which one of the following criteria got the highest weight for determination of shares of States in the formula given by the 14th Finance Commission?
(b) Income distance
(d) Tax effort
Answer. (b) Income distance
In the formula given by the Fourteen Finance Commission, income inequality in the states got 50% weightage in the tax distribution and population got 17.5% weightage. 'Forest cover' was assigned 7.5% weightage, 'area' 15 per cent weightage and tax effort got 10% weightage.