[solved] Economics questions with answers – CDS Exam Last 15 years Solved Questions

CDS Exam Economics questions with answers (including explanations) of the Last 15 years | CDS OTA Exam – Economics questions with solution | Latest CDS Exam Economics questions with answers | Multiple Choice Questions (MCQs) of Economics

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CDS Exam Solved Economics questions

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1. Consider the following statements

1. The current Economic Census is the seventh in the series so far conducted in India.
2. The Economic Census in India is undertaken by the Department of Economic Affairs (Union Ministry of Finance).
Which of the statements given above is/are correct?

(a) Only 1
(b) Only 2
(c) Both 1 and 2
(d) Neither 1 nor 2

Answer – (d) Neither 1 nor 2
In 1976, the Government of India launched a planning scheme called “Economic Census and Surveys”. In 1977 Central Statistical Organization conducted the First economic census in collaboration with the Directorate of Economics & Statistics (DES) in the States/Union Territories. The current Economic Census is Sixth Economic Census held in 2013.
The Central Statistics Office (CSO) in the Ministry of Statistics and Program Implementation (MOSPI) conducted the Sixth Economic Census from January 2013 to April 2014 in collaboration with Directorates of Economics and Statistics in all the States and Union Territories.

2. According to the provisions of the Fiscal Responsibility and Budget Management [FRBM].
Act., 2003 and FRBM Rules, 2004, the Government is under obligation to present three statements before the parliament along with the Annual Budget. Which one of the following is not one of them?

(a) Macroeconomic Framework Statement
(b) Fiscal Policy Strategy Statement
(c) Medium-term Fiscal Policy Statement
(d) Statement showing Short term Fiscal Policy

Answer – (d) Statement showing Short term Fiscal Policy
The Act requires the government to lay before the parliament three policy statements in each financial year namely Medium Term Fiscal Policy Statement; Fiscal Policy Strategy Statement and Macroeconomic Framework Policy Statement.

3. As per the Economic Survey 2007-2008, which one of the following is the largest source of revenue of the Government of India?

(a) Excise Duty
(b) Personal income tax
(c) Corporation Tax
(d) Customs Duties

Answer – (c) Corporation Tax
As per the economic survey 2007-2008 corporation tax is the largest source of revenue of the Government of India.

4. The acronym SRO, being used in the capital market for various market participants, stands for which one of the following?

(a) Self-regulatory Organisations
(b) Small Revenue Operators
(c) Securities Roll-back Operators
(d) Securities Regulatory Organisations

Answer – (a) Self-regulatory Organisations
A self-regulatory organization (SRO) is a non-governmental organization that has the power to create and enforce industry regulations and standards. The priority is to protect investors through the establishment of rules that promote ethics and equality.

5. Consider the following statements

1. Food for Work Programme was launched in India during the 10th Five Year Plan.
2. The Planning commission in India is a constitutional body.
Which of the statements given above is/are correct?

(a) Only 1
(b) Only 2
(c) Both 1 and 2
(d) Neither 1 nor 2

Answer – (a) Only 1
According to The National Food for Work Program, food subsidies should be better targeted through the targeted public distribution system and specific programs for the poor like the Food for Work Programme. The National Food for Work Programme was launched on 14 November 2004 in 150 of the most backward districts of India with the objective of generating supplementary wage employment. The Planning commission is not a constitutional body.

6. Which one of the following statements regarding the Monitorable Socio-Economic target of the 11th Five Year Plan, under the head Environment, is not correct?

(a) Treat all urban wastewater by 2011-2012 to clear river waters
(b) Increase energy efficiency by 20 percentage points by 2016-2017
(c) Attain WHO standards of air quality in all major cities by 2011-2012
(d) Increase forest and tree cover by 15 percentage points

Answer – (d) Increase forest and tree cover by 15 percentage points
The target of the 11th Five Year Plan is to increase forest and tree cover by 5 percentage points.

7. By which one of the following years does the 11th Five Year Plan aimed at achieving 10% rural teledensity in India from the present 1.9%?

(a) 2009
(b) 2010
(c) 2011
(d) 2012

Answer – (d) 2012
The aim of the 11th Five Year Plan is to connect every village by telephone and provide broadband connectivity to all villages by 2012.

8. The 11th Five Year Plan strategy to raise agricultural output envisages which of the following?

1. Greater attention to land reforms.
2. Double the rate of growth of the irrigated area.
3. Promote animal husbandry and fishery.
4. Interest-free credit to the farmers.
Select the correct answer using the codes given below

(a) 1 and 3
(b) 2 and 3
(c) 1, 2 and 3
(d) 2 and 4

Answer – (c) 1, 2 and 3
11th Five Year Plan’s initiatives for agriculture were:
• Focusing on land reform issues
• Doubling the rate of growth of the irrigated area
• Promoting animal husbandry and fishery
• Providing easy access to credit at affordable rates

9. Consider the following statements

1. The current global economic crisis owes its genesis to the subprime crisis in the United States.
2. The Indian economy is showing a faster recovery from the economic crisis than its western counterparts.
Which of the statements given above is/are correct?

(a) Only 1
(b) Only 2
(c) Both 1 and 2
(d) Neither 1 nor 2

Answer – (c) Both 1 and 2
The U.S. subprime mortgage crisis was a nationwide banking emergency that coincided with the U.S. recession of December 2007 – June 2009. It was triggered by a large decline in home prices, leading to mortgage delinquencies and foreclosures and the devaluation of housing-related securities. India has not only shown greater resistance during financial crises but it was one of the countries showing the fastest recovery too. This financial crisis displayed the robustness of the Indian economy. It has also helped in further fine-tuning our economic policies and changing the vision of various corporate.

10. Which one of the following Public Sector Bank’s emblem figures a dog and the words ‘faithful friendly, in it?

(a) Punjab National Bank
(b) Syndicate Bank
(c) Oriental Bank of Commerce
(d) State Bank of India

Answer – (b) Syndicate Bank
The symbol of a dog implies that Bank is trustworthy and a friend. Its slogan is : Your faithful and friendly financial partner.

11. Consider the following statements with regard to Statutory Liquidity Ratio (SLR)

1. To meet SLR, Commercial banks can use cash only.
2. SLR is maintained by the banks themselves.
3. SLR restricts the banks’ leverage in pumping more money into the economy.
Which of the statements given above is/are correct?

(a) 1, 2 and 3
(b) 1 and 3
(c) 2 and 3
(d) Only 2

Answer – (c) 2 and 3
SLR used by bankers indicates the minimum percentage of deposits that the banks have to maintain in the form of gold, cash, or other approved securities.

12. Consider the following statements relating to the estimation of National Income.

1. Foreigners working in Indian Embassies are normal residents of India.
2. Foreigners working in the office of WHO, World Bank, UNO, etc. located in India are not normal residents of India.
3. Indians working in foreign embassies in India are not normal residents of India.
Which of the statements given above is/are not correct?

(a) Only 1
(b) 1 and 3
(c) Only 3
(d) All of these

Answer – (b) 1 and 3
Only statement 2 is correct. Statements 1 and 3 are wrong.

13. Brent index is associated with ___

(a) crude oil prices
(b) copper future prices
(c) gold future prices
(d) shipping rate index

Answer – (a) crude oil prices
Brent Crude is a major trading classification of sweet light crude oil that serves as a major benchmark price for purchases of oil worldwide. Brent Crude is extracted from the North Sea and comprises Brent Blend, Forties Blend, Oseberg, and Ekofisk crudes. The Brent Crude oil marker is also known as Brent Blend, London Brent, and Brent petroleum. The index represents the average price of trading in the 25 days Brent Blend, the Forties, Oseberg, Ekofisk (BFOE) market in the relevant delivery month as reported and confirmed by the industry media.

14. Match the following
List l
(Phase of Industrial Revolution)

A. First Phase
B. Third Phase
C. Second Phase
D. Fourth Phase
List ll
(Feature)

1. Rise of steel, chemical, electricity industries
2. Rise of cotton mill
3. Rise of steam engine
4. Rise of petrochemicals, jet aircraft, computers

(a) A 2, B 3, C 1, D 4
(b) A 2, B 1, C 3, D 4
(c) A 4, B 1, C 3, D 2
(d) A 4, B 3, C 1, D 2

Answer – (a) A 2, B 3, C 1, D 4
Phases of Industrial Revolution:
1. First phase – Rise of Cotton mill
2. Second phase – Rise of steel, chemicals, electricity industries.
3. Third phase – Rise of the steam engine
4. Fourth phase – Rise of petrochemicals, jet aircraft, computers

15. Consider the following statements

1. In India the minimum denomination coin acceptable for transaction is 50 paise.
2. Coins below 50 paise are not legal tender for payment.
Which of the statements given above is/are correct?

(a) Only 1
(b) Only 2
(c) Both 1 and 2
(d) Neither 1 nor 2

Answer – (c) Both 1 and 2
India has already banned the 25-paisa coins. Now, 50-paisa is the minimum denomination coin.

16. A recent survey (by Bloomberg) shows that the USA has fallen behind emerging markets in Brazil, China, and India as the preferred place to invest. Why is it so?

1. Unstable economic situation of the USA which the global investors feel not likely to improve in the near future.
2. Global investors are finding Brazil, China, and India to be actually more amenable to foreign investment.
Select the correct answer using the code given below

(a) Only 1
(b) Only 2
(c) Both 1 and 2
(d) Neither 1 nor 2

Answer – (c) Both 1 and 2
According to Bloomberg LP, an American company, the economy of the USA is fallen. Instead, Brazil, India, China have emerged as investor-friendly nations.

17. India’s market regulator SEBI is on course to relax investment norms for sovereign wealth funds, the investment vehicles which are directly controlled by the government of a country. The main reason behind this move is

(a) the desire of the Government of India to attract more foreign investment
(b) pressure by foreign Governments on India to execute specific mutual agreements on financial services.
(c) SEBI’s desire to create a more level playing field for foreign investors
(d) RBI’s relevant directives to SEBI

Answer – (a) the desire of the Government of India to attract more foreign investment
The main reason behind this move is the desire of the government of India to attract more foreign investment.

18. Which of the following statements are correct?

1. The global economy relied on oil for much of the 20th century as a portable and indispensable fuel.
2. The immense wealth associated with oil generates political struggles to control it.
3. History of petroleum is also the history of war and struggle.
4. Nowhere is this more obviously the case of war and struggle than in West Asia and Central America.
Select the correct answer using the codes given below

(a) 1, 2, 3 and 4
(b) 2 and 4
(c) 1 and 3
(d) 1, 2 and 3

Answer – (a) 1, 2, 3 and 4
All statements are correct.

19. Consider the following statements about Sinking Fund

1. It is a method of repayment of public debt.
2. It is created by the government out of budgetary revenues every year.
Which of the statements given above is/are correct?

(a) Only 1
(b) Only 2
(c) Both 1 and 2
(d) Neither 1 nor 2

Answer – (c) Both 1 and 2
A sinking fund is a fund created by the government and gradually accumulated every year by setting aside a part of current public revenue in such a way that it would be sufficient to pay off the funded debt at the time of maturity. Under this method, the aggregate burden of public debt is least felt, as the burden of taxing the people to repay the debt is spread evenly over the period of the accumulation of the fund. The preferable alternative for the government is to raise a new loan and credit the proceeds of the sinking fund. It is a separate fund established by a government.

20. Match the following
List l
(Five Year Plan)

A. First
B. Second
C. Fifth
D. Ninth
List ll
(Emphasis)

1. Food security and women empowerment
2. Heavy industries
3. Agriculture and community development
4. Removal of poverty

(a) A 1, B 2, C 4, D 3
(b) A 1, B 4, C 2, D 3
(c) A 3, B 2, C 4, D 1
(d) A 3, B 4, C 2, D 1

Answer – (c) A 3, B 2, C 4, D 1
1. First Five Year Plan (1951-56) – Agriculture and community development
2. Second Five Year Plan (1956-61) – Heavy Industry
3. Fifth Five Year Plan (1974-79) – Removal of Poverty
4. Ninth Five Year Plan (1997-2002) – Food Security and woman empowerment

21. Statement I: Deficit financing does not lead to inflation if adopted in small doses.
Statement ll: Deficit financing is an often used tool for financing budgetary deficits.

(a) Both the statements are individually true and Statement ll is the correct explanation of Statement l
(b) Both the statements are individually true, but Statement ll is not the correct explanation of Statement l
(c) Statement l is true, but Statement ll is false
(d) Statement l is false, but Statement ll is true

Answer – (b) Both the statements are individually true, but Statement ll is not the correct explanation of Statement l
Deficit Financing is an expansionist device of currency machine that is accompanied by inflation and has many adverse effects on the economy. It has also been compared to a drug market in red ‘Poison’ which is prescribed for a certain purpose and has to be administered in a small regulated dose. When the outlay of a government exceeds its tax revenues, the government budget is said to be in deficit; government spending in excess of tax receipts is known as deficit spending. Governments usually issue bonds to match their deficit.

22. Fiscal Policy in India is formulated by

(a) the Reserve Bank of India
(b) the Planning Commission
(c) the Finance Ministry
(d) the Securities and Exchange Board of India

Answer – (c) the Finance Ministry
The Department of Economic Affairs (DEA) under the Ministry of Finance is the nodal agency of the Union Government to formulate and monitor the country’s economic policies and programs having a bearing on domestic and international aspects of economic management.

23. Which of the following statements is/are correct?

1. If a country is experiencing an increase in its per capita GDP, its GDP must necessarily be growing.
2. If a country is experiencing negative inflation its GDP must be decreasing.
Select the correct answer using the codes given below

(a) Only 1
(b) Only 2
(c) Both 1 and 2
(d) Neither 1 nor 2

Answer – (c) Both 1 and 2
Negative inflation is the decrease in price level and economic growth is defined as GDP. A decrease in inflation means the prices have fallen. So, there is an increase in purchasing power of money. It increases consumption, therefore GDP increases.

24. National income ignores

(a) sales of a firm
(b) salary of employees
(c) exports of the IT sector
(d) sale of land

Answer – (d) sale of land
National Income ignores the sale of land.

25. When the productive capacity of the economic systems of a state is inadequate to create a sufficient number of jobs, it is called

(a) seasonal unemployment
(b) structural unemployment
(c) disguised unemployment
(d) cyclical unemployment

Answer – (b) structural unemployment
Cyclical unemployment is unemployment that results when the overall demand for goods and services in an economy cannot support full employment. It occurs during periods of slow economic growth or during periods of economic contraction.

26. Which of the following statements is/are correct?

1. NIFTY is based upon 50 firms in India.
2. NIFTY is governed and regulated by the Reserve Bank of India.
3. NIFTY does not trade in mutual funds.
Select the correct answer using the codes given below

(a) Only 1
(b) Only 2
(c) Only 3
(d) 1 and 3

Answer – (d) 1 and 3
NIFTY is an index computed from the performance of top stocks from different sectors listed on the NSE (National stock exchange). NIFTY consists of 50 companies from 24 different sectors. Indian Capital Markets are regulated and monitored by the Ministry of Finance, The Securities and Exchange Board of India, and The Reserve Bank of India. It does not trade in mutual funds.

27. Which of the following measures should be taken when an economy is going through inflationary pressures?

1. The direct taxes should be increased.
2. The interest rate should be reduced.
3. Public spending should be increased.
Select the correct answer using the codes given below

(a) Only 1
(b) Only 2
(c) 2 and 3
(d) 1 and 2

Answer – (a) Only 1
Cost-push inflation occurs when businesses respond to rising costs, by increasing their prices to protect profit margins. There are many reasons why costs might rise: Component costs, Rising labor costs, and higher indirect taxes imposed by the government. So, direct taxes should be increased when an economy is going through inflationary pressures.

28. Consider the following statements

1. High growth will lead to inflation.
2. High growth will lead to deflation.
Which of the statements given above is/are correct?

(a) Only 1
(b) Only 2
(c) Both 1 and 2
(d) Neither 1 nor 2

Answer – (a) Only 1
Typically, higher inflation is caused by strong economic growth. If Aggregate demand in an economy expanded faster than aggregate supply, we would expect to see a higher inflation rate. If demand is rising faster than supply, then this suggests that economic growth is higher than the long-run sustainable rate of growth.
Note: A sustained rise in prices is known as inflation. A large rise in prices is often caused by economic growth.

29. Which of the following are responsible for the decrease of per capita holding of cultivated land in India?

1. Low per capita income.
2. Rapid rate of increase of population.
3. Practice of dividing land equally among the heirs.
4. Use of traditional techniques of plowing.
Select the correct answer using the codes given below

(a) 1 and 2
(b) 2 and3
(c) 1 and 4
(d) 2, 3 and 4

Answer – (b) 2 and3
The rapid rate of increase of population and the practice of dividing land equally among the heirs are responsible for the decrease of per capita holding of cultivated land in India.

30. In the parlance of financial investment, the term bear denotes

(a) an investor, who feels that the price of a particular security is going to fall
(b) an investor, who expects the price of a particular share to rising
(c) a shareholder, who has an interest in a company, financially or otherwise
(d) any lender, whether by making a loan or buying a bond

Answer – (a) an investor, who feels that the price of a particular security is going to fall
The term bear denotes an investor who believes that a particular security or market is headed downward. Bears attempt to profit from a decline in prices. Bears are generally pessimistic about the state of a given market. Bearish sentiment can be applied to all types of markets including commodity markets, stock markets, and the bond market.

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