Economics

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1.Which of the following statements about the relationship between Gross Domestic Product (GDP) and Net Domestic Product (NDP) is correct?

AGDP is always lower than NDP because it excludes depreciation.
BGDP equals NDP plus net factor income from abroad.
CNDP is obtained by subtracting depreciation from GDP.
DNDP includes indirect taxes while GDP does not.

Explanation

NDP = GDP – depreciation (consumption of fixed capital). It measures the net amount of goods and services after accounting for capital wear and tear.

2.The ‘price‑to‑earnings (P/E) ratio’ of a listed company is primarily used to:

AMeasure the firm’s leverage
BAssess the relative valuation of its share price
CDetermine the dividend payout ratio
DCalculate the cost of capital

Explanation

P/E ratio compares the market price per share with earnings per share, serving as a valuation metric to gauge whether a stock is over‑ or undervalued relative to peers or its own history.

3.Which of the following schemes was launched in 2005-06 to promote the adoption of micro-irrigation technologies by cultivators?

APradhan Mantri Krishi Sinchayee Yojana
BNational Watershed Development Project
CNational Mission for Sustainable Agriculture
DAccelerated Irrigation Benefits Programme

Explanation

The Accelerated Irrigation Benefits Programme (AIBP) was launched in 2005-06 to promote micro-irrigation (drip and sprinkler) systems, especially among small and marginal farmers, by providing subsidies and financial assistance.

Following the visit of US Secretary of State Marco Rubio to India in May 2026, which of the following were identified as "indicators of betrayal" or friction in the bilateral trade relationship?

The imposition of a 25% tariff penalty on India specifically for the purchase of Russian oil.
US claims that India committed to a $500 billion purchase deal, which Indian officials have formally disputed.
The levying of "shock tariffs" of 50% on Indian exports.

Select the correct answer using the code given below:

A1 and 2 only
B1 and 3 only
C2 and 3 only
D1, 2 and 3

Explanation

All three are identified as defining indicators of deteriorating ties. Statement 2 refers to Rubio’s tweet claiming a $500 billion commitment, which experts like Muqtedar Khan describe as "gaslighting" given the lack of any such formal agreement. Statement 1 and 3 reflect the "America First" transactionalism where India is penalized for its strategic autonomy (Russian oil) and faces high protective barriers.
- Why others are incorrect: All statements are supported by the source text as factual points of contention raised during and after the Rubio visit.

The domestic economic landscape, while showing inherent strength, remains tethered to the unpredictability of international trade regimes and the tightening knot of India’s shifting global alignments.

5.The 'Capability Approach' advocated by Amartya Sen emphasizes which of the following as central to assessing inclusive development?

AAggregate national income levels.
BAccess to a set of basic capabilities and functionings that individuals value.
CRate of foreign direct investment.
DLevel of industrial output.

Explanation

Sen's capability approach focuses on what people are actually able to do and be – their real freedoms – rather than just income or output measures, aligning closely with inclusive growth objectives.

6.The "Gini coefficient" of digital access (measuring inequality in internet penetration) for a country is 0.45. Which policy combination would most effectively reduce this coefficient?

AIncreasing spectrum auction fees and reducing subsidies for broadband rollout
BImplementing universal service obligations, subsidising low‑cost devices, and expanding community Wi‑Fi hubs
CImposing higher import duties on smartphones and limiting foreign investment in telecom
DFocusing solely on urban 5G deployment while ignoring rural areas

Explanation

Policies that directly expand affordable access—universal service obligations, device subsidies, and community connectivity—address both the availability and affordability dimensions, thereby lowering the Gini coefficient of digital access.

7.The 'Mahalanobis distance' used in the NITI Aayog's Composite Development Index (CDI) helps to:

AMeasure the geographical distance between states.
BWeight different indicators based on their statistical variance and covariance.
CCalculate the Gini coefficient for income inequality.
DEstimate the fiscal deficit of a state.

Explanation

Mahalanobis distance provides a way to assign statistical weights to diverse indicators, accounting for correlations among them, which improves the robustness of composite indices like CDI.

8.The term ‘Strategic Trade Policy’ in the context of Indian industrial policy refers to:

AImposition of uniform tariffs on all imports
BSelective use of trade measures to protect or promote specific sectors
CComplete removal of all export subsidies
DAdoption of a fixed exchange rate regime

Explanation

Strategic Trade Policy involves selective tariffs, quotas, or subsidies aimed at nurturing sectors deemed vital for national security or economic development, rather than applying uniform trade measures.

9.What does the abbreviation "BoP" stand for in the context of a country's external sector?

ABalance of Payments
BBudget of Parliament
CBank of Punjab
DBase of Production

Explanation

BoP is universally used for Balance of Payments, which records all economic transactions between residents of a country and the rest of the world over a period.

10.What is the purpose of the WTO's Trade Policy Review Mechanism?

ATo monitor countries' trade policies and practices
BTo negotiate new trade agreements
CTo resolve trade disputes between countries
DTo provide technical assistance to developing countries

Explanation

The Trade Policy Review Mechanism is a process by which the WTO regularly reviews countries' trade policies and practices, aiming to promote transparency and accountability in trade policy-making.

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