Question 1

Assertion (A): Iron and steel qualifies as a heavy industry. Reason (R): It uses lightweight inputs such as cotton and rubber.

Accepted Answer

A true, R false. Iron and steel is a heavy industry because it uses bulky raw materials and produces heavy output. The reason is false because cotton and rubber are not its main inputs.

Question 2

The Human Development Index (HDI) measures progress in:

Accepted Answer

Income, health, and education. HDI is a composite index used to assess human development across countries. It focuses on three main dimensions: income, health, and education.

Question 3

Which of the following industries is classified as a heavy industry?

Accepted Answer

Steel production. Heavy industries are those that require large capital investment, heavy machinery, and produce goods used by other industries. Steel production fits this category.

Question 4

Which of the following is a consumer goods industry product?

Accepted Answer

Soap. Soap is a consumer good because it is directly purchased and used by households. Cement, steel, and aluminium are mainly industrial or intermediate goods.

Question 5

The terms ‘Bull’ and ‘Bear’ are associated with:

Accepted Answer

Stock Market. ‘Bull’ and ‘Bear’ are standard terms used in the stock market. A bull market indicates rising prices, while a bear market indicates falling prices.

Question 6

Assertion (A): GDP does not fully reflect income distribution. Reason (R): GDP measures total output, not equality.

Accepted Answer

Both A and R are true and R explains A. Both the assertion and reason are true. GDP measures total output of an economy, so it does not indicate how income is distributed among individuals, which is why the reason explains the assertion.

Question 7

Assertion (A): The Green Revolution increased wheat production. Reason (R): High-yield variety seeds and irrigation were introduced.

Accepted Answer

Both A and R are true and R explains A. The Green Revolution led to a sharp rise in wheat production in India. This happened because high-yield variety seeds, irrigation, fertilizers, and modern farming methods were introduced, so the reason correctly explains the assertion.

Question 8

A higher Human Development Index (HDI) indicates:

Accepted Answer

Higher life expectancy and education. HDI measures development using health, education, and standard of living indicators. A higher HDI generally means higher life expectancy, better education, and higher income levels.

Question 9

Statement 1: Inflation reduces purchasing power. Statement 2: Inflation always benefits savers.

Accepted Answer

Only Statement 1 is correct. Inflation reduces the purchasing power of money because the same amount buys fewer goods and services. It does not always benefit savers; in fact, inflation can hurt savers if returns on savings are lower than the inflation rate.

Question 10

Assertion (A): GST created a unified tax system. Reason (R): It replaced multiple indirect taxes. Which of the following is correct?

Accepted Answer

Both A and R are true and R explains A. GST unified the indirect tax structure by subsuming several central and state taxes into one system. Since replacing multiple indirect taxes is exactly why it created a unified tax system, both statements are true and the reason explains the assertion.

Question 11

Liberalisation refers to:

Accepted Answer

Reduction of trade barriers. Liberalisation means reducing restrictions and controls in the economy. In trade and business, it commonly refers to lowering trade barriers and easing regulations.

Question 12

The Human Development Index mainly considers:

Accepted Answer

Income, health, and education. The Human Development Index measures development using three main dimensions: income, health, and education. It is designed to reflect overall human well-being rather than only economic output.

Question 13

Assertion (A): In 1991, India undertook a two-step devaluation of the rupee. Reason (R): The objective was to improve export competitiveness and ease the balance-of-payments crisis.

Accepted Answer

Both A and R are true and R is the correct explanation of A. Both the assertion and the reason are true. In 1991, India devalued the rupee in two steps to make exports more competitive and to help address the balance-of-payments crisis, so the reason correctly explains the assertion.

Question 14

If price rises by 5% and demand falls by 5%, demand is:

Accepted Answer

Unitary elastic. Price elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price. Since both changes are 5%, elasticity equals 1, which is unitary elastic.

Question 15

Recent Human Development Reports suggest that the global Human Development Index (HDI) trend over the past few decades has generally shown:

Accepted Answer

Overall long-term improvement despite periodic setbacks. Human Development Reports show that global HDI has generally improved over the long term due to gains in health, education, and income. However, there have been periodic setbacks from events like economic crises and the pandemic.

Question 16

Core inflation declines when:

Accepted Answer

Commodity prices fall. Core inflation measures inflation after excluding volatile items like food and fuel. If commodity prices fall, the underlying price pressure eases, so core inflation declines.

Question 17

Energy transition investment depends greatly on:

Accepted Answer

Policy stability. Energy transition projects require long-term capital and confidence in the policy framework. Stable policies reduce risk and encourage investment.

Question 18

Among the BRICS nations, which country currently has the largest GDP (nominal)?

Accepted Answer

China. China has the largest nominal GDP among the BRICS nations. Nominal GDP compares economies at current market exchange rates, where China remains the largest in this group.

Question 19

According to recent Global Innovation Index reports, innovation performance is largely influenced by:

Accepted Answer

Institutional quality and research investment. The Global Innovation Index measures innovation capacity using factors such as institutions, human capital, infrastructure, and research and development. Hence, institutional quality and research investment are key drivers of innovation performance.

Question 20

Which is NOT a feature of globalization?

Accepted Answer

Strict import quotas. Globalization is associated with freer movement of goods, services, capital, and technology across borders. Strict import quotas are a trade barrier, so they are not a feature of globalization.

Question 21

Read the statements marked as Assertion (A) and Reason (R): Assertion (A): Regional trade agreements often include safeguard measures. Reason (R): Such measures allow temporary restrictions to protect domestic industries.

Accepted Answer

Both A and R are true, and R is the correct explanation of A.. Regional trade agreements commonly contain safeguard clauses to deal with sudden import surges or market disruptions. The reason correctly explains the assertion because these measures are meant to temporarily protect domestic industries.

Question 22

Assertion (A): Liberalisation reduced quantitative restrictions on imports. Reason (R): The aim was to integrate India with the global economy.

Accepted Answer

Both A and R are true and R is the correct explanation of A.. Liberalisation did reduce quantitative restrictions on imports. The reason is also true because one of the main aims of liberalisation was to integrate India with the global economy, which explains the policy change.

Question 23

The objective of import substitution industrialization was to:

Accepted Answer

Reduce dependency on imports. Import substitution industrialization is a development strategy designed to replace imported goods with domestically produced ones. Its main objective is to reduce dependency on imports.

Question 24

‘Marginal utility’ refers to:

Accepted Answer

Additional satisfaction from one more unit. Marginal utility is the additional satisfaction a consumer gets from consuming one more unit of a good or service. It is different from total utility, which is the overall satisfaction from all units consumed.

Question 25

Assertion (A): GDP includes the value of final goods and services only. Reason (R): Including intermediate goods would lead to double counting.

Accepted Answer

Both A and R are true, and R is the correct explanation of A.. GDP measures the market value of final goods and services produced in an economy. Intermediate goods are excluded because counting them would result in double counting. Therefore, both statements are true and the reason correctly explains the assertion.

Question 26

India approached which of the following international financial institutions for balance of payments assistance during the 1991 economic crisis?

Accepted Answer

International Monetary Fund and World Bank. During the 1991 balance of payments crisis, India sought assistance from the IMF and the World Bank. These institutions provided the needed external financial support. Hence, the correct answer is International Monetary Fund and World Bank.

Question 27

Which of the following is an example of a tertiary sector activity?

Accepted Answer

Banking services. The tertiary sector consists of service-based activities such as banking, transport, education, and healthcare. Mining is primary, manufacturing is secondary, and agriculture is primary.

Question 28

Assertion (A): Inflation reduces the purchasing power of money. Reason (R): During inflation, the general price level rises.

Accepted Answer

Both A and R are true, and R is the correct explanation of A.. Inflation means a rise in the general price level. When prices rise, the purchasing power of money falls, so both the assertion and reason are true, and the reason correctly explains the assertion.

Question 29

Under PM Jan Dhan Yojana, the maximum accidental insurance cover provided initially was:

Accepted Answer

₹ 1 lakh. When PM Jan Dhan Yojana was launched, the accidental insurance cover initially provided was ₹1 lakh. This was part of the financial inclusion benefits linked to the scheme.

Question 30

In economic planning, the term ‘rolling plan’ refers to:

Accepted Answer

A plan revised annually. A rolling plan is one that is revised every year, with new targets added as time passes. It is not a fixed five-year plan and allows flexibility in planning.

Question 31

Fiscal deficit is calculated as:

Accepted Answer

Total expenditure – Total receipts (excluding borrowings). Fiscal deficit is the excess of total expenditure over total receipts excluding borrowings. It indicates the borrowing requirement of the government.

Question 32

The Human Capital Index (HCI) is released by which organisation?

Accepted Answer

World Bank. The Human Capital Index is released by the World Bank. It measures the amount of human capital a child born today can expect to attain by age 18, given current health and education conditions.

Question 33

Assertion (A): Increase in government spending can raise aggregate demand in the economy. Reason (R): Government expenditure forms a component of aggregate demand.

Accepted Answer

Both A and R are true and R explains A. Both statements are true. Government expenditure is one of the components of aggregate demand, so an increase in government spending directly raises aggregate demand; hence R explains A.

Question 34

In the context of disinvestment policy in India, what does strategic sale refer to?

Accepted Answer

Complete sale with transfer of management control. A strategic sale means the government sells a substantial or complete stake in a PSU along with management control to a strategic partner. It is different from a simple minority stake sale.

Question 35

Assertion (A): The Global Competitiveness Index ranks countries based on productivity and competitiveness factors. Reason (R): It evaluates indicators such as infrastructure, innovation and macroeconomic stability.

Accepted Answer

Both A and R are true and R explains A. The Global Competitiveness Index assesses the competitiveness of countries using several economic and institutional indicators. Since infrastructure, innovation, and macroeconomic stability are part of those indicators, the reason correctly explains the assertion.

Question 36

Read the following statements marked as Assertion (A) and Reason (R): Assertion (A): Nominal GDP might increase even if the actual physical volume of production remains constant. Reason (R): This happens because nominal GDP is calculated at current market prices, which includes the effect

Accepted Answer

Both A and R are true, and R is the correct explanation of A.. Nominal GDP is valued at current market prices, so it can rise even when output does not change if prices increase. Therefore, both the assertion and reason are true, and the reason correctly explains the assertion.

Question 37

Which of the following is typically excluded from the calculation of National Income using the Expenditure Method?

Accepted Answer

Transfer payments like old-age pensions. In the expenditure method, only spending on currently produced final goods and services is included. Transfer payments like pensions are excluded because they are not payments for current production.

Question 38

In the context of the Indian economy, disinvestment refers to:

Accepted Answer

Selling government equity in public enterprises to private parties. Disinvestment means the government sells part or all of its equity stake in public sector enterprises. It is a way to reduce government ownership and raise funds. It is not the same as shutting down units or merging banks.

Question 39

Choose the correct option regarding Statement 1 and Statement 2: Statement 1: Foreign Direct Investment (FDI) involves management control. Statement 2: Foreign Portfolio Investment (FPI) involves the purchase of securities.

Accepted Answer

Both Statement 1 and Statement 2 are correct. FDI generally gives the investor management control or a significant degree of influence in the enterprise. FPI refers to investment in financial securities such as shares and bonds, so both statements are correct.

Question 40

Which of the following is an example of revenue expenditure for the government?

Accepted Answer

Interest payments on debt. Interest payments on debt are treated as revenue expenditure because they are recurring payments and do not create assets. Construction of a highway and investment in shares are capital-related items.

Question 41

Assertion (A): Financial intermediaries are essential in transmitting monetary policy to the real economy. Reason (R): They adjust lending and deposit rates in response to policy rates set by the MPC.

Accepted Answer

Both A and R are true, and R is the correct explanation of A.. Financial intermediaries are a key transmission channel of monetary policy because they pass changes in policy rates to borrowers and savers. Since they adjust lending and deposit rates in response to MPC decisions, the reason correctly explains the assertion.

Question 42

What was the main objective of the Industrial Policy of 1956?

Accepted Answer

Growth with equity. The Industrial Policy Resolution of 1956 emphasized a socialist pattern of society, with the state playing a major role in industrial development. Its objective was growth along with equity and balanced regional development.

Question 43

Assertion (A): One objective of liberalisation was to remove barriers to entry and growth of firms. Reason (R): The license raj restricted entrepreneurial freedom and market competition.

Accepted Answer

Both A and R are true and R is the correct explanation of A. Both the assertion and reason are true. Liberalisation aimed to reduce controls and remove barriers to business entry and expansion. The license raj had indeed restricted entrepreneurship and competition, so the reason correctly explains the assertion.

Question 44

What was a key feature of the Industrial Policy Resolution of 1956?

Accepted Answer

Expansion of public sector. The Industrial Policy Resolution of 1956 gave a major role to the public sector, especially in strategic and heavy industries. It did not promote full privatization or abolition of licensing. Hence, expansion of the public sector is the correct feature.

Question 45

Which of the following statements about output markets in an open economy is correct?

Accepted Answer

Trade in goods and services allows wider consumer and producer choice. In an open economy, trade in goods and services increases the variety available to consumers and expands opportunities for producers. The other options describe a closed economy or incorrect assumptions about trade.

Question 46

Which of the following statements about factors affecting the money multiplier (MM) is/are correct? 1. Cash held by individuals acts as a leakage and reduces the money multiplier. 2. Higher reserves held by banks with the RBI increase the money multiplier. 3. A higher Cash Reserve Ratio (C

Accepted Answer

Only 1 and 3. Cash held by people outside banks is a leakage, so it reduces the money multiplier. A higher CRR forces banks to keep more deposits as reserves, reducing their ability to lend and create money. Therefore, statements 1 and 3 are correct, while 2 is incorrect.

Question 47

Which Five Year Plan laid the foundation of India's socialist pattern of society?

Accepted Answer

Second Plan. The Second Five Year Plan is known for laying the foundation of India's socialist pattern of society. It emphasized rapid industrialization, especially heavy industries, and expansion of the public sector. This approach was based on the Mahalanobis model.

Question 48

Read the following statements carefully and choose the correct option regarding Assertion (A) and Reason (R). Assertion (A): WTO encourages free and fair trade across nations. Reason (R): It allows countries to impose arbitrary restrictions to protect domestic industries.

Accepted Answer

A is true but R is false. The WTO is designed to promote free and fair trade by reducing trade barriers and setting rules for international commerce. The reason is false because arbitrary restrictions are not allowed under WTO principles.

Question 49

Which of the following refers to the extent to which demand for a particular commodity decreases because others are also consuming the same commodity?

Accepted Answer

Snob effect. The snob effect describes a fall in demand for a good when it becomes popular among many consumers. People with this preference avoid goods that are widely consumed by others.

Question 50

What does the 'P' in LPG reforms stand for?

Accepted Answer

Privatisation. In the LPG reforms, L stands for Liberalisation, P stands for Privatisation, and G stands for Globalisation. The 'P' specifically refers to the policy of transferring ownership or management from the public sector to the private sector.

SSC CGL (Prelims) General: Economics questions with solutions

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