IBPS PO General Awareness: Economics & Development Studies questions with solutions

Q1. The ratio between the nominal and real GDP is called:

1. Net national income
2. Value added GDP
3. Green GDP
4. GDP deflator

Answer: GDP deflator

GDP Deflator = (Nominal GDP / Real GDP) × 100. Nominal GDP is measured at current prices; Real GDP is measured at base-year prices. The ratio = GDP Deflator, which captures economy-wide price changes. Net National Income adjusts for depreciation; Green GDP adjusts for environmental costs; Value Added GDP is GVA-based.

Q2. What is India's rank in the IMD World Competitiveness Index 2021?

1. 25
2. 37
3. 43
4. रे

Answer: 43

In the IMD World Competitiveness Yearbook 2021, India ranked 43rd out of 64 economies, improving from 44th place in 2020. Switzerland topped the list. The ranking measures four competitiveness factors: economic performance, government efficiency, business efficiency, and infrastructure.

Q3. When federal funds rates are changed (increased), what is the consequent effect on employment and inflation?

1. employment decreases along with increase in inflation
2. employment decreases along with decrease in inflation
3. employment increases along with decrease in inflation
4. both (a) and (b)

Answer: employment decreases along with decrease in inflation

When the Federal Reserve raises the federal funds rate: (1) Borrowing becomes more expensive → reduced consumer spending and business investment. (2) Economic activity slows → unemployment rises (employment decreases). (3) Reduced demand reduces price pressure → inflation decreases. This is classic contractionary monetary policy: employment and inflation both fall.

Q4. Per Economic Survey 2023-24, India's Forex reserves = $653.7 billion (June 21, 2024). This covers more than _____ months of imports projected for FY25 and >98% of total external debt as of March 2024.

1. 9 months
2. 10 months
3. 11 months
4. 8 months

Answer: 10 months

Economic Survey 2023-24 highlighted that India's foreign exchange reserves of USD 653.7 billion (as of June 21, 2024) are sufficient to cover more than 10 months of projected imports for FY25 and over 98% of total external debt outstanding as of March 2024.

Q5. In October 2023, IMF raised India's 2023 GDP growth forecast to?

1. 6.30%
2. 6.10%
3. 6.50%
4. 6.70%

Answer: 6.30%

IMF's World Economic Outlook (October 2023) revised India's GDP growth forecast for 2023 upward to 6.3%, reflecting strong domestic demand and resilience despite global headwinds.

Q6. Which is the major determinant of Keynesian consumption function?

1. National income
2. Interest rates
3. Disposable income
4. Investment

Answer: Disposable income

In Keynesian economics, consumption (C) is primarily driven by disposable income (Yd=Y-T). C=a+bYd where b=marginal propensity to consume. Disposable income is the key determinant.

Q7. It is a systematic process that businesses use to evaluate potential decisions by comparing costs and benefits. What is this?

1. SWOT Analysis
2. Break-Even Analysis
3. Cost Benefit Analysis
4. Risk Analysis

Answer: Cost Benefit Analysis

Cost Benefit Analysis (CBA) is a systematic approach to estimating the strengths and weaknesses of alternatives by comparing total expected costs vs. benefits. It helps determine if a project/decision is worth pursuing.

Q8. I. New flavour note for specialty coffee. II. Everyone from planters to roasters promoting robusta, trying new extraction processes. Relationship?

1. Statement I is the cause and statement II is its effect
2. Both the statements I and II are effects of some common cause
3. Both the statements I and II are independent causes
4. Both the statements I and II are effects of independent causes

Answer: Both the statements I and II are effects of some common cause

Both statements I (new flavor notes) and II (industry promoting robusta) are effects of a common underlying cause — likely the shift in coffee consumer preferences or rising arabica prices driving the industry toward robusta beans.

Q9. Passage about Germany's economic forecast. What does the passage state about growth predictions?

1. An increase to 0.8% in 2024 and 1.2% in 2025, showing an optimistic revision from previous forecasts.
2. A decrease to 0.3% in 2024 from the Autumn Forecast's prediction of 0.8%, with a steady outlook of 1.2% for 2025.
3. A constant growth rate of 1.2% for both 2024 and 2025, matching previous forecasts exactly.
4. An unexpected surge to 2.8% in 2024, significantly higher than the Autumn Forecast, and a slight decrease to 2.4% in 2025.

Answer: A decrease to 0.3% in 2024 from the Autumn Forecast's prediction of 0.8%, with a steady outlook of 1.2% for 2025.

According to the passage about Germany's economic vigor, the Winter Forecast decreased the 2024 growth estimate to 0.3% from the Autumn Forecast's 0.8%, while the 2025 outlook remained steady at 1.2%.