Free Practice Questions for Economics in General-studies

When the government resorts to borrowing only to meet the backlog of interest payments, it  is referred to as a zero primary deficit .

•  Zero primary deficit means the need to borrow to meet interest payments.
• If the primary deficit is zero, the loan amount is equal to the interest payment. 

Primary Loss:

• The primary deficit is the current year's fiscal deficit less interest payments on past borrowings. While fiscal deficit represents the total borrowing of the government including interest payments, primary deficit represents the amount of borrowing excluding interest payments.

Fiscal deficit:

• The excess of total expenditure over total receipts excluding borrowing is called fiscal deficit. Fiscal deficit gives the government the amount it needs to meet its expenses.  

According to the Economic Survey  2020-21, net FPI (foreign portfolio investment) has registered an all-time high of US$9.8 billion in November 2020.

Important Points

• In 2020, India was the only major economy to attract equity foreign institutional investment (FII), apart from net  FPI (foreign portfolio investment)  inflows reaching an all-time high of US$ 9.8 billion in November 2020.
• At the end of November 2021, it had increased by 24.4 percent to Rs 37.3 lakh crore. Which was Rs 30 lakh crore in November 2020. 

  Looking at the situation in November 2021, foreign portfolio investor (FPI) net investment increased by 9.2 percent to $ 288.4 billion, which was $ 264 billion at the end of November 2020.

The Central Bank is called the 'lender of last resort'.

When the commercial banks fail to meet their obligations towards the depositors. Then the central bank comes to the rescue of these banks

important point:

• When commercial banks are unable to meet customer demand with their own resources, they seek help from the Central Bank and the Reserve Bank of India essentially helps them as the lender of last resort.

Option Explanation:

World Bank:-

• The World Bank was established along with the International Monetary Fund (IMF) at the Bretton Woods Conference of 1944.

State Bank:-

• State Bank of India was established on 1 July 1955.

Dena Bank:-

• Dena Bank is a major public sector bank of India established on 26 May 1938.
• Dena Bank merged with Bank of Baroda and Vijaya Bank on 1 April 2019.

Neonatal mortality rate is defined as the number of deaths occurring during the first 28 completed days of life per 1000 live births in a given year or period.

Important Points

Neonatal Mortality Rate: – Neonatal Mortality Rate was 22 per 1000 live births in the year 2019 and it has reached 20 per 1000 live births in the year 2020 with a decline of 2 points (Annual Decline Rate: 9.1%) It is concentrated in urban areas It ranges from 12 in urban areas to 23 in rural areas.

• Infant Mortality Rate:- Infant mortality rate is the number of deaths of infants within one year per 1,000 live births in a geographical area.
• Crude Birth Rate:-  Crude Birth Rate is defined as the number of babies born per 1000 population in a particular community or area. 
• Age-specific death rate:-  Age-specific death rate is defined as the number of deaths in a specified age group per thousand of the population in the same age group in a given year.

According to the Economic Survey 2020-2021, during the first half of the financial year 2020-21, the services sector has contracted by about  16%  .

Important Points 

• The COVID-19 pandemic, the subsequent lockdown and social distancing measures have had a significant impact on the contact-intensive services sector. 
• The decline was mainly due to a sharp contraction in all sub-sectors 'trade, hotels, transport, communication and services related to broadcasting'.
• The gross value added (GVA) contracted in the first half of the financial year 2020-21 by 31.5 per cent as per the first advance estimates.
• The services sector was expected to contract by 8.8 per cent in 2020-21,  while it grew by  5.5 per cent .

Total expenditure of the following - total receipts excluding borrowings is fiscal deficit.

• Fiscal deficit or revenue deficit arises when the total expenditure of the government exceeds its estimated income. 
• The difference between revenue expenditure and revenue receipts of the government is called revenue deficit.
  

Important Points 

• Fiscal deficit is the difference between the total expenditure of the government and the total earnings excluding borrowings. 
• Fiscal deficit shows how much money the government needs to meet its expenses. In which the government will need more borrowing.  
• The following measures are taken to reduce the fiscal deficit. Reduction in public expenditure in the form of subsidy  , bonus, LTC, leave encashment  etc.

Note:-  There are three types of budget deficit:-  revenue deficit , primary deficit and fiscal deficit.

The GDP deflator is also called the implicit value deflator.

Important Points 

• The GDP deflator measures the effect of inflation on gross domestic product over a specified period of time, usually a year.
• GDP deflator is basically  the ratio between nominal GDP and real GDP .
• Its formula is: GDP Price Deflator = (Nominal GDP ÷ Real GDP) x 100
• The GDP deflator is the ratio of the value of goods and services that an economy produces in a given year at current prices to the prices prevailing during the base year.

According to the output method , GDP at constant prices is calculated  as GDP – Taxes + Subsidies  .

The GDP  output  method measures the monetary or market value of all goods and services produced within a country's borders.

Important Points 

• Gross Domestic Product or GDP refers to the total value of all goods and services produced in a country. 
• There are mainly 2 types of GDP: 
• Nominal GDP:  It measures the value of all goods and services expressed in current prices (price prevailing in the current year).
• Real GDP:  Unlike nominal GDP, it measures the value of all goods and services expressed at the prices of a base year.

Dena Bank and Vijaya Bank merged with  Bank of Baroda on 1 April 2019.

Important Points:

• Sanjeev Chadha is the CEO of Bank of Baroda.
• Under the announcement issued by the Reserve Bank of India (RBI), ten government banks of India have been merged into 4 big banks, which are as follows -

In Rabi Marketing Season 2021-22, the highest ever increase in Minimum Support Price (MSP) for Lentil was announced. Which includes -

• RMS - 5100
• Cost of Production - 2864
• Increase in MSP - 300
• Profit over cost - 78

important facts 

The MSP has been increased by the government for the marketing season 2023-24 of Rabi crops.

• Lentils - Rs.500/- per quintal 
• Mustard - Rs.400/- per quintal 
• Safflower - Rs.209 /- per quintal
• Wheat - Rs 110 /-  per quintal 
• Gram - Rs 110 /-  per quintal 
• Barley - Rs 100 /-  per quintal

India's first five-year plan The first five-year plan in India started from April 1, 1951 and lasted till 1956. The main priority of this plan was agriculture and irrigation, which was based on the economic model of 'Harrod-Domar model' to boost agricultural production and focus on agriculture and irrigation.

Important Point

• According to the Heckscher-Ohlin model, the pattern of international trade is determined by differences in factor endowments. According to this, countries will export goods that use locally abundant factors and import goods that use factors that are locally scarce.
• The Cobb-Douglas model shows constant returns to scale of the production function.
• The Mundell-Fleming model is a model of the economy that depicts the short-run relationship between the nominal exchange rate, the interest rate, and output.

• The draft of the first five-year plan was prepared by KN Raj, a young economist of India.

                                                                                                                                                                                                                                                 SSC CGL 16/08/21(Evening)

Important facts 

1. NABARD was established on 12 July 1982 through an Act of Parliament ' the National Bank for Agriculture and Rural Development Act, 1981' based on the recommendations of the Sivaraman Committee.
2. NABARD is a development bank. Prior to NABARD, the Reserve Bank of India was the apex body providing credit to the Indian rural economy. Apart from agriculture, NABARD is responsible for the development of small industries, cottage industries and other rural projects.

3. The Reserve Bank of India was established on 1 April 1935 under the Reserve Bank of India Act 1934. It currently functions as the Central Bank of India. Monetary policy is also issued by RBI.

SSC CGL 16/08/21(Morning)

Important facts 

1. John Maynard Keynes was a British economist who wrote the books 'The Theory of Employment Interest and Money' and 'How to Pay for the War'. John Maynard Keynes is considered the father of microeconomics.
2. The central hole of the donut model represents the proportion of people who do not have access to life's essentials (health care, education, fertility, etc.) and the crust represents the ecological ceiling (planetary boundaries) on which life depends and Should not overshoot.
3. Paul Samuelson was the first economist to make extensive use of mathematical and physical formulas in economic analysis, which he used to present a mathematical model for the conditions of real equilibrium with a combination of dynamic and static equilibria of the economy. He wrote a book called 'Foundation of Economic Analysis'.

CPO 25-11-2020 (Evening)

Important facts 

• Millicent Fawcett was a British feminist activist and writer who campaigned for women's suffrage through legal change and led Britain's largest women's rights association, the National Union of Women Suffrage Societies (NUWSS) from 1897–1919.
• A book named 'Principles of Economics' (1890) was written by Alfred Marshall, which was taught as an economics textbook in Britain for many years. Demand and supply, marginal utility and cost of production are well explained in this book.
• John Maynard Keynes was a British economist who wrote the books 'The Theory of Employment Interest and Money' and 'How to Pay for the War'. John Maynard Keynes is considered the father of microeconomics. He gave the theory of total income and effective demand to economics.

CPO 24-11-2020 (Evening)

Important facts 

1. Most of the land in the permanent grazing area is owned by the village panchayat or public authority. The private sector owns only a small part of this land. The land owned by the Gram Panchayat is called a common property resource.
2. At present, fallow land is that land which remains uncultivated or vacant for one agricultural year or less. It is a cultural custom to keep the land fallow to maintain the quality of the land. By this method, the deficient fertility or nutritiousness of the land comes back naturally. 
3. The forest area classified under forest land and the actual area under forests both are different. The forest area classified by the government is demarcated for the land where forests can grow.

'The Heritage Foundation' Washington D.C. is an American think tank, which, in association with The Wall Street Journal, releases the Index of Economic Freedom every year since 1995.

Important Points:

• The headquarters of the International Monetary Fund is in Washington D.C. is located in It was formed in July 1944 AD. Every year 'Global Competitive Index' report is issued by it.
• The World Bank was established in 1944, with its headquarters in Washington DC. is located in Every year the World Development Report is released by the 'World Bank'.

Important Points:

• The practice of growing mulberry for silkworms is called moriculture.
• The cultivation of vegetables is called Olericulture.
• The industry of cultivating flowers is called Floriculture.
• Sericulture or sericulture is the cultivation of silkworms for silk production, which is called 'sericulture'.
• Yellow Revolution is related to mustard production, Silver Revolution is related to egg production, Brown Revolution is related to fertilizer production, Red Revolution is related to tomato production and fisheries is related to fish farming.

CPO 24-11-2020 (Morning)

Important facts 

1. The Bhilai Steel Plant at Bhilai in the Durg district of Chhattisgarh was established in 1955 with the help of the Soviet Union.
2. Rourkela Steel Plant is India's first integrated steel plant in the public sector, built-in 1955 at Rourkela in Orissa with German collaboration and inaugurated in 1959.
3. Durgapur Iron-Steel Plant was established in Durgapur, West Bengal in 1957 AD with the help of the United Kingdom.
4. Bokaro Steel Plant was established in January 1964 in collaboration with the Soviet Union (Russia) on the 'Chota Nagpur Plateau' in Bokaro, Jharkhand.

The term 'Gross National Happiness' was first used in Bhutan in 1972 AD.

Importent Points:

• Jigme Singye Wangchuck, the fourth King of Bhutan, declared that 'Gross National Happiness' is more important than 'Gross Domestic Product'.
• Gross National Happiness (GNH), is an index that attempts to measure collective happiness.
• Globally, the 'Global Happiness Report' is released annually since 2012 by the United Nations Sustainable Development Solutions Network, which measures the level of happiness of the population in a country.
• The ranking uses six key factors to measure well-being – social cooperation, income, health, freedom, generosity and absence of corruption.
• India is ranked 125th out of 136 countries in the World Happiness Report 2023, which makes it appear as one of the least happy countries in the world.
• In the year 2022, India was ranked 136 out of 146 countries.

CPO 23-11-2020 (Evening)

Important facts 

1. Durgapur Iron-Steel Plant was established in Durgapur, West Bengal in 1957 AD with the help of the United Kingdom.
2. Bhilai Steel Plant was established in 1955 with the help of the Soviet Union at Bhilai in Durg district of Chhattisgarh.
3. With the help of France, Jaitapur nuclear power plant is being built in Ratnagiri district of Maharashtra in India, where a total of 6 nuclear power plants will be set up. The total installed capacity of this nuclear power plant is 9900 MW.
4. Steel Authority of India Limited was established on 24 January 1973 AD. It got the status of Maharatna Company in 2010 AD.