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UPSC IAS Prelims Exam 2016 Economic Survey 2015-16 Questions: STATE OF ECONOMY: AN OVERVIEW

May 6, 2016 16:07 IST

    In the Civil Services IAS Exam, the questions of GS Indian Economy play a crucial role for the aspirants to crack the IAS Exam. In the past few years the relevance of questions based on Indian Economy has been increased in IAS Prelims Exam while there is always a greater possibility of asking many more questions. So, an aspirant should have to be prepared for such questions based on Indian Economy.

    Here, we have provided Multiple Choice Questions based on the Economic Survey 2015-16: STATE OF ECONOMY: AN OVERVIEW

    1. Which of the following factors reduce global investment?

    1. Increasing price of commodities
    2. turbulent financial market
    3. Volatile exchange rate

    Select the correct answer from the following codes

    a. Only 1
    b. Only 1 and 2
    c. Only 2 and 3
    d. 1,2 and 3

    Answer: c

    Explanation: The global macroeconomic landscape is currently chartering a rough and uncertain
    terrain characterized by weak growth of world output. The situation has been exacerbated by; (i) declining prices of a number of commodities, with reduction in crude oil prices being the most visible of them, (ii) turbulent financial markets (more so equity markets), and (iii) volatile exchange rates.

    2. Consider the following statements regarding growth of international economy

    1. Since 2013 there is modest improvement in growth of advanced economies.
    2. Since 2010, growth of emerging economies declined.

    Select the correct answer from the following codes

    a. Only 1
    b. Only 2
    c. Both 1 and 2
    d. Neither 1 nor 2

    Answer: c

    Explanation: As per the estimates of the International Monetary Fund (IMF), global growth averaged 3.1 per cent in 2015, declining from 3.4 percent registered in 2014. While growth in advanced economies has improved modestly since 2013, the emerging economies have witnessed a consistently declining trend in growth rate since 2010.

    3. Consider the following statements regarding

    1. During 1990’s compared to U.S India’s contribution to global GDP in PPP terms was 50 percentage points less.
    2.  In 2013 and 2014 India’s contribution global GDP in PPP terms was 25 percentage points higher than U.S.

    Select the correct answer from the following codes

    a. Only 1
    b. Only 2
    c. Both 1 and 2
    d. Neither 1 nor 2

    Answer: d

    Explanation: During the 1990s, the US’s contribution to the global GDP growth in PPP terms was, on an average, around 16 percentage points higher than India’s. The picture changed dramatically in 2013 and 2014 when India’s contribution was higher than that of the US by 2.2 and 2.7 percentage points respectively.

    4. Which one among the following was major component of global growth between 1991 and 2013?

    a. Net exports
    b. Final consumption
    c. Investment
    d. Net savings

    Answer: b

    Explanation: Overall, final consumption was the major component of global growth, accounting for nearly 72 per cent of the growth between 1991 and 2013. About one-fourth was accounted for by investment. The average shares of consumption (private and public) and investment in global output during the period were 76.1 per cent and 23.2 per cent respectively.

    5. Consider the following statements

    1. Recent growth revival in India is consumption driven.
    2. Post 2008 crisis investment declined in India than lower middle income countries.

    Select the correct answer from the following codes

    a. Only 1
    b. Only 2
    c. Both 1 and 2
    d. Neither 1 nor 2

    Answer: c

    Explanation: China’s investment rate has plateaued at 48 per cent in recent years. India’s has been an exceptional case where economic growth in the post crisis period was propelled by strengthening of consumption growth, thus defying the secular trends of declining share of consumption. The investment share in India declined much more than the average decline in the lower middle income countries.

    6. Consider the following statements

    1. United Nations system of National accounts and Pronab sen committee recommended Gross Value Added for estimation national economic growth.
    2. In India GDP at factor cost at current price was used to measure economic growth.

    Select the correct answer from the following codes

    a. Only 1
    b. Only 2
    c. Both 1 and 2
    d. Neither 1 nor 2

    Answer: a

    Explanation: Economic growth was measured as the percent rate of increase in GDP ar Factor cost at Constant prices till Janauary 2015 in India. According to recommendation of Pronab sen committee and United Nations System of National Accounts GDP at Factor cost at constant price has been replaced by Gross value Added.

    7. Which of the following is/are about GVA?

    1. It gives whole picture of economy.
    2. It broadly reflects supply/production side of economy.
    3. Economic growth in India is measured using GVA.

    Select the correct answer from the following codes

    a. Only 1
    b. Only 1 and 2
    c. Only 2 and 3
    d. 1,2 and 3

    Answer: c

    Explanation: GVA gives estimates at enterprises, government and household levels. GDP is GVA of all enterprises, government and households. GVA broadly reflects supply/production side of economy.

    8. With reference to service sector, which of the following service sector is/are performing well?

    1. Health services
    2. Professional services
    3. Insurance

    Select the correct answer from the following codes

    a. Only 1
    b. Only 1 and 2
    c. Only 2 and 3
    d. 1,2 and 3

    Answer: c

    Explanation: Like in 2014-15, financial, insurance, real estate and professional services together are estimated to achieve double-digit growth this year. As per the advance estimates for 2015- 16, the growth rate of public administration, defence and other services has decelerated, but remains reasonably high. Public sector has a monopolistic presence in public administration and defence, while it accounts for about 44 per cent of the GVA of ‘other services’ that mainly include health, education, social work, arts and entertainment and personal services.

    9. Which of the following is/are reasons for imbalanced expansion of service sector in India?

    1. Growth of service sector is at cost of secondary sector.
    2. Growth in tertiary sector cannot thrive without growth in primary sector and secondary sector.
    3.  Service sector is more dependent on FDI.

    Select the correct answer from the following codes

    a. Only 1
    b. Only 1 and 2
    c. Only 2 and 3
    d. 1,2 and 3

    Answer: b

    Explanation: Service sector became dominating directly from primary sector while skipping secondary sector. Revivals of commodity producing sectors are essential for long term sustainability of service sector.

    10. Sector contributing largest fraction of GVA in India’s national accounts?

    a. Public sector
    b. Private corporate sector
    c. Household sector
    d. Agriculture sector

    Answer: c

    Explanation: the share of private corporate sector is around 1/3rd; public sector share is 1/5th while rest of the Indian economy is contributed by household sector.

    11. Gross domestic savings of which one of the following is highest?

    a. Public sector underakings
    b. Public sector banks
    c. Private Corporate sector
    d. Private Household sector

    Answer: d

    Explanation: Gross domestic savings = GDP – Final consumption. The largest GDS is household sector which is one of the segment of private sector, while other being private corporate sector. Most of the savings of households is in the form of physical assets. The increase in financial savings is still driven by private corporate sector.

    Click here for GS Economy Study Material

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