Indian Economy Mixed Quiz: Set 51

The correct answer is C, 1 and 3 only. Statements 1 and 3 give the standard definitions, but the Worker Population Ratio counts the employed, not the unemployed.

In India these measures come from the Periodic Labour Force Survey. The labour force is everyone who is working or seeking work, so the Labour Force Participation Rate is the employed plus the unemployed as a share of the population. The Worker Population Ratio is the share of the population that is actually employed. The usual status approach looks back over the 365 days before the survey, while the current weekly status looks at the last seven days.

A is wrong: statement 3 is also correct, so 1 alone is incomplete.

B is wrong: statement 2 is the incorrect one, since WPR measures employed persons.

D is wrong: all three cannot be correct when statement 2 describes the unemployed instead of workers.

Exam tip: LFPR = working + seeking work; WPR = working only; usual status = 365 days, current weekly status = 7 days.

The correct answer is B, the Ministry of Commerce and Industry. The Directorate General of Foreign Trade works under the Department of Commerce in that ministry; it issues the importer-exporter code without which no one can trade across the border, administers the Foreign Trade Policy, and exercises powers under the Foreign Trade (Development and Regulation) Act of 1992. A is wrong because the Ministry of Finance, through the Central Board of Indirect Taxes and Customs, collects the duties but does not license traders or frame the trade policy. C is wrong because the Ministry of External Affairs conducts relations with other countries and has no part in issuing trade licences. D is wrong because the ministry for small enterprises promotes that sector, including its exporters, without any power over foreign trade itself.

The correct answer is A, WTO affairs. Amber, blue and green boxes are the categories in which the WTO Agreement on Agriculture classifies farm subsidies.

The Agreement on Agriculture came out of the Uruguay Round and took effect with the WTO in 1995. Amber box subsidies, such as price support and input subsidies, distort production and trade, so they are capped; for developing countries like India the de minimis limit is 10% of the value of production. Blue box payments are tied to programmes that limit production and are allowed without a cap. Green box support, such as research, extension, environmental programmes and direct income support not linked to output, causes little or no distortion and is freely allowed. India's MSP and food stockholding debates turn on these rules.

B is wrong: SAARC deals with regional cooperation in South Asia, not farm subsidy boxes.

C is wrong: the UNFCCC deals with climate change.

D is wrong: the terms belong to the multilateral WTO framework, not a bilateral FTA.

Exam tip: amber = trade-distorting and capped; blue = production-limiting; green = minimal distortion; the de minimis limit for India is 10%.

The correct answer is C, Mahila Samriddhi Yojna. It is the micro-finance scheme under which women borrow small sums at a concessional rate of interest, so the rebate in interest is built into the scheme itself. It is run by the National Backward Classes Finance and Development Corporation under the Ministry of Social Justice and Empowerment, and the money reaches women through State Channelising Agencies and self-help groups, mostly for petty trade and self-employment. A parallel scheme is run for Scheduled Caste women by the National Scheduled Castes Finance and Development Corporation. Option A is wrong because the National Maternity Benefit Scheme paid a one-time cash grant to poor pregnant women and was later merged into Janani Suraksha Yojana. Option B is wrong because it is a pilot for social security cover, not a credit scheme for women. Option D is wrong because Raj Rajeshwari Mahila Kalyan Yojana is a personal accident insurance cover for women, not a loan. Exam tip: Mahila Samriddhi Yojana means micro-credit for women at a concessional interest rate, run by NBCFDC.

The correct answer is B. A monopoly's marginal revenue curve lies below its average revenue curve, not above it.

A monopolist faces the whole market's downward-sloping demand curve, which is its average revenue curve. To sell one more unit it must cut the price on every unit, so the extra revenue from that unit is less than the price. For a straight-line demand curve, the marginal revenue curve falls twice as steeply. The monopolist produces where marginal revenue equals marginal cost, and that equilibrium is possible whether marginal cost is rising, falling or flat, as long as it cuts MR from below.

A is correct: a competitive firm sells at a fixed market price, so AR and MR are the same horizontal line.

C is correct: free entry and exit wipe out supernormal profits in the long run, leaving only normal profit.

D is correct: unlike a competitive firm, a monopoly can be in equilibrium on a rising, falling or constant MC curve.

Exam tip: perfect competition AR = MR = price; monopoly MR below AR.

The correct answer is B, Stage 3. The law of variable proportions divides short run production into three stages. In stage one, increasing returns, both total and marginal product rise because the fixed factor is still under used. In stage two, diminishing returns, marginal product falls but stays positive, so total product keeps rising and reaches its maximum at the end of this stage, where marginal product is zero. In stage three, negative returns, extra units of the variable factor crowd the fixed factor, marginal product turns negative and total product actually falls. A sensible producer therefore works in stage two and never enters stage three. A is wrong because marginal product in stage two is falling but still positive. C is wrong because marginal product in stage one is rising. D is wrong because the law has only three stages, so there is no stage four. Exam tip: total product is highest exactly where marginal product is zero.

The correct answer is A, economic activities linked to creativity, culture and intellectual property. The orange economy is another name for the creative economy.

The term was popularised by a 2013 Inter-American Development Bank book, and orange was chosen because it is often linked with culture and creativity. It covers film, music, publishing, design, fashion, gaming, animation, advertising, crafts, heritage and the performing arts, where the main input is an idea protected by copyright, design rights or trademarks. Such work creates jobs and exports, and in India the animation, visual effects, gaming and comics sector is a growing part of it.

B is wrong: activity tied to desert ecosystems is not what the term means; colour labels like 'brown' or 'green' are used for other themes.

C is wrong: goods and services for older people are called the silver economy.

D is wrong: hidden, untaxed or illegal activity is the black, shadow or underground economy.

Exam tip: orange = creative, blue = oceans, green = environment, silver = elderly, black = untaxed.

The correct answer is A, Fertilisers, whose weight is only 2.63 per cent, the smallest of the eight. Fertiliser output is important for agriculture and is watched before every sowing season, but the value of the industry's production is small beside refining or steel, which is why its weight is light and a big percentage swing in fertilisers barely moves the combined index. Option B, cement, carries 5.37 per cent and is the second smallest. Option C, natural gas, carries 6.88 per cent, and option D, crude oil, carries 8.98 per cent, so the four options are exactly the bottom four of the list and the question is asking for their order. A useful check is that the three fossil fuel members, coal, crude oil and natural gas, all sit in the middle of the table, while the extremes are refining at the top and fertilisers at the bottom.

The correct answer is C, Both 1 and 2. Household savings reach the government through many channels, and dated securities sold in auctions make up the bulk of the Centre's internal debt.

Statement 1 is correct: households keep their financial savings in bank deposits, insurance, provident and pension funds, small savings schemes and so on. Banks, insurers and pension funds invest a large part of these funds in government securities, and small savings collections are lent to the government through the National Small Savings Fund. So a share of household savings ends up financing government borrowing.

Statement 2 is correct: dated securities are long-term government bonds with a fixed maturity, issued by the RBI on behalf of the government through auctions at market-related rates. They form the largest component of the Centre's internal debt, well ahead of treasury bills and other items.

A is wrong: it leaves out the correct statement 2.

B is wrong: it leaves out the correct statement 1.

D is wrong: both statements are correct.

Exam tip: dated securities = long-term G-secs and the main part of internal debt; treasury bills = short-term, with 91, 182 and 364 day maturities.

The correct answer is A, Australia. The India-Australia Economic Cooperation and Trade Agreement, abbreviated ECTA, was signed in April 2022 and came into force in December 2022 as an interim step towards a wider comprehensive agreement. Option B is wrong because India and Canada have held talks on an Early Progress Trade Agreement but have signed no trade agreement, so no abbreviation attaches to Canada. Option C is wrong because the agreement with the United Kingdom is the Comprehensive Economic and Trade Agreement, or CETA, signed on 24 July 2025. Option D is wrong because the agreement with Japan is the Comprehensive Economic Partnership Agreement, a CEPA, in force since 2011. Keeping ECTA with Australia and CETA with the United Kingdom apart is exactly what this question tests.

The correct answer is B, greenfield investment, the building of a new unit from the ground up, which adds fresh capacity and employment to the host economy. Option A is wrong because brownfield investment means acquiring, merging with or expanding an existing unit, so the capacity already exists and only ownership changes; a question on the two terms usually turns on that difference. Option C is wrong because portfolio investment buys financial paper and sets up nothing. Option D is wrong because round tripping describes money that leaves the country and comes back disguised as foreign investment to claim the benefit of a tax treaty, which is a route rather than a type of plant. Greenfield investment is what campaigns such as Make in India are designed to attract.

The correct answer is D, the average number of live births a woman would have by the end of her child-bearing age. Total fertility rate (TFR) adds up the age-specific fertility rates of women aged 15 to 49 to show how many children a woman would have if she lived through these years at current rates. A TFR of about 2.1 is called the replacement level, because at that rate each generation just replaces itself; the extra 0.1 allows for deaths in childhood. TFR guides India's population policy and is measured by surveys such as the National Family Health Survey and the Sample Registration System. Option A is wrong because the number of births per 1,000 people in a year is the crude birth rate. Option B is wrong because TFR is counted per woman, not per couple, and uses current age-wise rates. Option C is wrong because birth rate minus death rate gives the natural growth rate of population. Exam tip: TFR is per woman, ages 15 to 49, with replacement level 2.1.

The correct answer is C, three. The Industrial Policy Resolution of 1956 placed every industry in one of three schedules. Schedule A listed seventeen industries whose future development was the exclusive responsibility of the state, Schedule B listed twelve industries that the state would progressively own while private units continued, and Schedule C covered all the rest, left to private enterprise under licensing.

Option B, four, is the number of groups in the earlier Industrial Policy Resolution of 1948, and that is the trap in this question. Options A and D, five and two, correspond to no classification in either resolution. The resolution of 1956 is called the Economic Constitution of India because this three-fold division settled the shape of Indian industry until the New Industrial Policy of 1991 cut the reserved list from seventeen industries to eight.

The correct answer is B, foreign direct investment. The capital account records transactions that change the ownership of assets and liabilities between residents and non-residents, and foreign direct investment, along with portfolio investment, external commercial borrowings and deposits of non-resident Indians, falls squarely in that group. Option A is wrong because the export of software services is an invisible item of the current account, one of India's biggest earners. Option C is wrong because remittances are unilateral transfers and are also part of the invisibles in the current account; they help cover India's trade deficit. Option D is wrong because the import of crude oil is a visible merchandise item and the single largest entry on the import side of the trade balance. The rule to remember is simple: goods, services, income and transfers go to the current account, while assets and liabilities go to the capital account.

The correct answer is B, twenty-nine. The four codes subsume twenty-nine central labour enactments: four in the Code on Wages, three in the Industrial Relations Code, nine in the Code on Social Security and thirteen in the Occupational Safety, Health and Working Conditions Code. Option A is wrong because twelve is far short of the number and corresponds to no stage of the exercise. Option C is wrong, though it is a tempting figure, because forty-four was the number of central labour laws often quoted as existing on the statute book before the reform, not the number brought into the codes. Option D is wrong because fifty-two matches neither figure. The simplest way to hold this in memory is the series four, three, nine and thirteen, which adds to twenty-nine and also tells you how large each code is.

The correct answer is B, sixty-six per cent. The Committee of Creditors is made up of the financial creditors of the company, with voting shares in proportion to the debt owed to each, and a resolution plan is approved only when creditors holding at least sixty-six per cent of the voting share vote for it; the same majority is needed for important decisions such as extending the process or going into liquidation. Option A is wrong because fifty-one per cent is the threshold for routine decisions of the committee, not for a resolution plan, and this is the commonest error. Option C is wrong because seventy-five per cent was the original requirement in the Code of 2016, lowered by the amendment of 2018 because plans were failing for want of a few votes. Option D is not a threshold the Code uses anywhere.

The correct answer is C, 1 and 2 only. Necessities and luxuries are matched correctly, but an inferior good has a negative income elasticity, not a positive one.

Income elasticity of demand is the percentage change in quantity demanded divided by the percentage change in income. For a necessity such as salt or basic food grains, demand rises with income but more slowly, so the value lies between 0 and 1. For a luxury such as air travel or jewellery, demand rises faster than income, so the value is above 1. For an inferior good such as coarse grain, demand falls when income rises, so the value is below 0.

A is wrong: pair 3 is incorrect, because an inferior good has income elasticity less than zero.

B is wrong: it also includes the incorrect pair 3 and leaves out the correct pair 1.

D is wrong: all three cannot be right when pair 3 has the wrong sign.

Exam tip: inferior below 0, necessity 0 to 1, luxury above 1.

The correct answer is C, the marginal product will diminish. When one input is kept fixed and another is added again and again, each extra unit eventually adds less to output than the one before.

This is the law of variable proportions in the short run. Picture a farm of fixed size: the first few workers raise output sharply, but as more are added each one has less land to work with, so the extra output from each new worker, the marginal product, starts to fall. Total output still rises for a while but at a slower rate, and if workers keep being added it may even fall.

A is wrong: marginal revenue belongs to the theory of revenue and demand, not to the physical relation between inputs and output.

B is wrong: average revenue is the price per unit sold and is also a revenue idea, not a production one.

D is wrong: rising marginal product happens only in the first stage; the law is about the point after which it falls.

Exam tip: diminishing returns = falling marginal product when one factor is fixed (short run).

The correct answer is B, Baba Kalyani. The committee headed by the industrialist Baba Kalyani submitted its report on the special economic zone policy in 2018, arguing that the zones should be judged by the economic activity and employment they create rather than by exports alone, and recommending a new framework of employment and economic enclaves serving the domestic market as well. A is wrong because Bimal Jalan, a former Governor of the Reserve Bank, headed committees on other subjects, including one on the central bank's economic capital framework. C is wrong because Arvind Subramanian served as Chief Economic Adviser and is associated with reports on other questions of policy. D is wrong because Bibek Debroy is known for the committee on the restructuring of the Indian Railways, not for the review of the zones.

The correct answer is A, 1 only. Buying new technology creates a lasting asset, so it is capital expenditure; debt and equity are ways of raising money, not kinds of expenditure.

Capital expenditure is money spent to acquire or improve long-term assets such as land, buildings, machinery, patents and technology, which serve the business for many years. Revenue expenditure covers the running costs of a single period, such as wages, rent, repairs and interest. Debt financing (loans, bonds) and equity financing (issuing shares) are both sources of funds that appear on the liabilities side of the balance sheet. Either source can pay for capital or revenue spending, so calling one capital expenditure and the other revenue expenditure mixes up two different ideas.

B is wrong: statement 2 confuses sources of finance with types of expenditure.

C is wrong: it includes the false statement 2.

D is wrong: statement 1 is correct.

Exam tip: capital expenditure creates assets for years; revenue expenditure meets day-to-day costs; debt and equity are sources of funds.