BPSC 2018 — Economy Questions with Answers
All 22 Economy previous-year questions from BPSC 2018, each with the correct answer and a full explanation. Practise them as a free, timed mock test with instant scoring.
Practice Economy as a timed test →- Q1.Infrastructure
In India, the largest share of total installed power generation capacity is contributed by which source?
- a)Hydro-electric power
- b)Thermal power
- c)Nuclear power
- d)Renewable energy
Explanation: Thermal power (primarily coal-based) has historically contributed and continues to account for the highest share of both installed capacity and actual electricity generation in India.
- Q2.Human Development
Which of the following parameters is NOT used to calculate the Human Development Index (HDI) by UNDP?
- a)Infant Mortality Rate
- b)Life Expectancy at Birth
- c)Mean Years of Schooling
- d)Gross National Income per Capita
Explanation: The HDI tracks three core dimensions: long & healthy life (life expectancy), knowledge (mean & expected years of schooling), and decent standard of living (GNI per capita). Infant Mortality Rate is not a direct calculation indicator.
- Q3.Digital Currency
With reference to 'Bitcoins', sometimes seen in the news, which of the following statements is/are correct? 1. Bitcoins are tracked by the Reserve Bank of India. 2. Bitcoins are created by mining. 3. Bitcoins are managed through a decentralized digital ledger known as blockchain.
- a)1 and 2 only
- b)2 and 3 only
- c)1 and 3 only
- d)1, 2 and 3
Explanation: Bitcoins are decentralized cryptocurrency created through mining and managed on a blockchain ledger; they are NOT tracked or regulated by the RBI. Hence statements 2 and 3 are correct.
- Q4.Banking
Which one of the following best describes the term 'Merchant Discount Rate' sometimes seen in news?
- a)1 only
- b)2 and 3 only
- c)1 and 3 only
- d)1, 2 and 3
Explanation: Merchant Discount Rate (MDR) is the fee a bank charges a merchant for processing payments received through debit/credit cards, expressed as a percentage of the transaction value.
- Q5.Growth and Development
Increase in absolute and per capita real GNP do not connote a higher level of economic development, if:
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Explanation: Economic growth (rise in GNP) does not equal economic development if it is not accompanied by improvement in welfare indicators; rising poverty and unemployment signal that growth is not translating into development.
- Q6.Monetary Policy
When the Reserve Bank of India announces an increase of the Cash Reserve Ratio, what does it mean?
- a)Aurobindo Ghosh
- b)Bipin Chandra Pal
- c)Lala Lajpat Rai
- d)Motilal Nehru
Explanation: An increase in the Cash Reserve Ratio requires commercial banks to keep a larger fraction of deposits with the RBI, reducing the funds available with them for lending.
- Q7.Energy
The term 'Domestic Content Requirement' is sometimes seen in the news with reference to:
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Explanation: Domestic Content Requirement (DCR) under the National Solar Mission mandated use of domestically manufactured solar cells and modules, which became the subject of a WTO dispute with the USA.
- Q8.Money and Banking
Which one of the following statements correctly describes the meaning of legal tender money?
- a)Angola and Zambia
- b)Morocco and Tunisia
- c)Venezuela and Colombia
- d)Yemen and South Sudan
Explanation: Legal tender money is currency that cannot be legally refused by a creditor when offered in settlement of a debt; in India, banknotes and coins issued under the RBI Act are legal tender.
- Q9.Digital Payments
With reference to digital payments, the 'Unified Payments Interface (UPI)' is best described as:
- a)1 only
- b)1 and 2
- c)3 only
- d)2 and 3
Explanation: UPI, developed by NPCI, integrates multiple bank accounts into a single mobile application, enabling instant real-time peer-to-peer and merchant fund transfers.
- Q10.Banking
Consider the following statements regarding 'Capital Adequacy Ratio (CAR)': 1. CAR is the amount that banks have to maintain in the form of their own funds to offset any loss that banks incur if the account-holders fail to repay dues. 2. CAR is decided by each individual bank.
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Explanation: Statement 1 is correct. Statement 2 is wrong: CAR is prescribed by the RBI (in line with Basel norms), not decided by individual banks.
- Q11.Government Initiatives
Consider the following statements about the 'Atal Innovation Mission': 1. It is set up under the NITI Aayog. 2. It aims to promote a culture of innovation and entrepreneurship.
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Explanation: Both statements are correct: the Atal Innovation Mission operates under NITI Aayog and works to foster innovation and entrepreneurship through Atal Tinkering Labs and Atal Incubation Centres.
- Q12.Government Securities
Consider the following statements: 1. The Reserve Bank of India manages and services Government of India Securities but not any State Government Securities. 2. Treasury bills are issued by the Government of India and there are no treasury bills issued by the State Governments. 3. Treasury bills are issued at a discount from the par value.
- a)1 and 2 only
- b)2 and 3 only
- c)3 only
- d)1, 2 and 3
Explanation: Statement 1 is wrong — the RBI manages both Central and State Government securities. Statements 2 and 3 are correct: only the Centre issues treasury bills, and they are issued at a discount to par.
- Q13.Taxation
The term 'Base Erosion and Profit Shifting' is sometimes seen in the news in the context of:
- a)Federal Legislature
- b)Governor General
- c)Provincial Legislature
- d)Provincial Governors
Explanation: Base Erosion and Profit Shifting (BEPS) refers to tax-planning strategies by multinationals that shift profits to low/no-tax jurisdictions; the OECD/G20 BEPS project aims to curb such tax avoidance.
- Q14.Agriculture Economy
Consider the following: 1. Areca nut 2. Barley 3. Coffee 4. Finger millet 5. Groundnut 6. Sesame 7. Turmeric. The Cabinet Committee on Economic Affairs has announced the Minimum Support Price for which of the above?
- a)1, 2, 3 and 7 only
- b)2, 4, 5 and 6 only
- c)1, 3, 4, 5 and 6 only
- d)1, 2, 3, 4, 5, 6 and 7
Explanation: MSP is announced for notified crops including barley, finger millet (ragi), groundnut and sesame. Areca nut, coffee and turmeric are not in the MSP list. Hence 2, 4, 5 and 6.
- Q15.Agriculture
With reference to organic farming in India, the National Programme for Organic Production (NPOP) is implemented by which of the following?
- a)industrial output fails to keep pace with agricultural output.
- b)agricultural output fails to keep pace with industrial output.
- c)poverty and unemployment increase.
- d)imports grow faster than exports.
Explanation: The National Programme for Organic Production (NPOP) is implemented by APEDA under the Ministry of Commerce and Industry; it provides accreditation and certification standards for organic exports.
- Q16.Capital Formation
Despite being a high saving economy, capital formation may not result in significant increase in output due to:
- a)weak administrative machinery
- b)illiteracy
- c)high population density
- d)high capital-output ratio
Explanation: A high capital-output ratio means more capital is required to produce one extra unit of output, so even high investment yields a smaller rise in output — the most precise economic reason.
- Q17.Money & Banking
Consider the following statements: 1. The Reserve Bank of India manages and services Government of India Securities but not any State Government Securities. 2. Treasury bills are issued by the Government of India and there are no treasury bills issued by the State Governments. 3. Treasury bills offer are issued at a discount from the par value. Which of the statements given above is/are correct?
- a)1 and 2 only
- b)3 only
- c)2 and 3 only
- d)1, 2 and 3
- Q18.Energy
With reference to solar power production in India, consider the following statements: 1. India is the third largest in the world in the manufacture of silicon wafers used in photovoltaic units. 2. The solar power tariffs are determined by the Solar Energy Corporation of India. Which of the statements given above is/are correct?
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
- Q19.Agriculture
Consider the following: 1. Areca nut 2. Barley 3. Coffee 4. Finger millet 5. Groundnut 6. Sesamum 7. Turmeric The Cabinet Committee on Economic Affairs has announced the Minimum Support Price for which of the above?
- a)1, 2, 3 and 7 only
- b)2, 4, 5 and 6 only
- c)1, 3, 4, 5 and 6 only
- d)1, 2, 3, 4, 5, 6 and 7
- Q20.Banking
With reference to the governance of public sector banking in India, consider the following statements: 1. Capital infusion into public sector banks by the Government of India has steadily increased in the last decade. 2. To put the public sector banks in order, the merger of associate banks with the parent State Bank of India has been affected. Which of the statements given above is/are correct?
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
- Q21.Taxation
Consider the following items: 1. Cereal grains hulled 2. Chicken eggs cooked 3. Fish processed and canned 4. Newspapers containing advertising material Which of the above items is/are exempted under GST (Goods and Services Tax)?
- a)1 only
- b)2 and 3 only
- c)1, 2 and 4 only
- d)1, 2, 3 and 4
- Q22.Agriculture
With reference to organic farming in India, consider the following statements: 1. 'The National Programme for Organic Production' (NPOP) is operated under the guidelines and directions of the Union Ministry of Rural Development. 2. 'The Agricultural and Processed Food Products Export Development Authority' (APEDA) functions as the Secretariat for the implementation of NPOP. 3. Sikkim has become India's first fully organic State. Which of the statements given above is/are correct?
- a)1 and 2 only
- b)2 and 3 only
- c)3 only
- d)1, 2 and 3
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