[DAY 9] 60 DAY RAPID REVISION (RaRe) SERIES for UPSC Prelims 2023 – ECONOMY, CURRENT AFFAIRS & CSAT TEST SERIES!

Solution (d)

Explanation:

• Gross national product (GNP) refers to the total value of all the goods and services produced by the residents and net income from abroad at a given year. Here, the trans-boundary economic activities of an economy are also taken into account. The items which are counted in the segment from Abroad. (Hence, statement 2 is correct).
• It is the more exhaustive concept of national income than the GDP as it indicates towards the ‘quantitative’ as well as the ‘qualitative aspects of the economy, i.e., the internal’ as well as the ‘external’ strength of the economy. (Hence, statement 1 is correct).
• It enables us to learn several facts about the production behavior and pattern of an economy, such as, how much the outside world is dependent on its product and how much it depends on the world for the same (numerically shown by the size and net flow of its ‘balance of trade’); what is the standard of its human resource in international parlance (shown by the size and the net flow of its ‘private remittances’); what position it holds regarding financial support from and to the world economies (shown by the net flow of ‘interests’ on external lending/ borrowing).
• Gross national product (GNP) is an economic statistic that includes GDP, plus any income earned by residents from overseas investments, minus income earned within the domestic economy by foreign residents.
• So, the net factor income from abroad may either be positive or negative, depending on the production being carried out in the country. Hence, GNP might be greater than GDP, or lower than GDP. (Hence, statement 3 is incorrect).

Solution (b)

Explanation:

• There is no relation between the proportion of population of India living in Rural areas and Increase in India’s national income.

• As per WB estimates, PCI of Indians in 2021 stood at $ 2,256. (122/189).
• China -12,556 $ ,USA -70,248 $
• Bangladesh -2,457 $, Bhutan -3.266 $, Maldives-10,366 $, Nepal-1,208 $, Pakistan- 1,505 $, Afghanistan-368 $.

Solution (c)

Explanation:

• Law of Demand states that “When the other factors are constant, the price of the commodity increases, the demand for that commodity decreases and the price of a commodity decreases the demand for that commodity increases. There is an inverse relationship between the price and the quantity demanded.
• The amount of a good that buyers purchase at a higher price is less because as the price of a good goes up, so buyers will purchase less goods. (Hence, statement 1 is correct).
• The law of supply states that at higher prices, sellers will supply more of an economic goods.
• From the seller’s perspective, the opportunity cost of each additional unit that they sell tends to be higher and higher. Producers supply more at a higher price because the higher selling price justifies the higher opportunity cost of each additional unit sold. (Hence, statement 2 is correct).

Solution (a)

Explanation:

• Invisible hand: Scottish thinker Adam Smith introduced the concept of Invisible hand in several of his writings, but it found this economic interpretation in his book An Inquiry into the Nature and Causes of the Wealth of Nations published in 1776.
• The invisible hand is part of laissez-faire, meaning “let do/let go,” approach to the market. In other words, the approach holds that the market will find its equilibrium without government or other interventions forcing it into unnatural patterns.
• The invisible hand is a metaphor for the unseen forces that move the free market economy. Through individual self-interest and freedom of production as well as consumption, the best interest of society, as a whole, are fulfilled. The constant interplay of individual pressures on market supply and demand causes the natural movement of prices and the flow of trade.

Why Is the Invisible Hand Important?

• The invisible hand allows the market to reach equilibrium without government or other interventions forcing it into unnatural patterns. When supply and demand find equilibrium naturally, oversupply and shortages are avoided. The best interest of society is achieved via self-interest and freedom of production and consumption.

Solution (d)

Explanation:

Limitations of using GDP as a welfare index of the country are as follows:

(i) Non-monetary exchanges

GDP measures the goods and services produced in an economy during a particular period of time. However, it does not take into account those transactions that do not come under monetary terms. In less developed countries there are non-monetary exchanges, particularly in rural areas. Hence, these transactions remain outside the domain of GDP. The household sector and volunteer sectors get ignored in GDP.

(ii) Inflation

GDP does not take into account the level of prices in a country. Because of inflation, the cost of living increases leading to a decrease in the standard of living. The loss of welfare due to this decrease is not taken into consideration by GDP as an index of welfare.

(iii) Externalities

Increase in the national income is associated with increased levels of pollution, accidents, disasters, shortage and depletion of natural resources, etc. These factors affect human health and lead to ecological degradation. GDP fails to consider the costs or valuations of such factors.

(iv)Unequal distribution of GDP

GDP disregards the income distribution pattern. The increase in aggregate national income may be a result of the increase in income of a few individuals. Thus, this may lead to false interpretation of social welfare.

(v) Welfare

GDP ignores the welfare component as the goods and services produced may or may not add to the welfare to a society. For example, the production of goods, like guns, narcotic drugs, high-end luxurious goods increase the monetary value of production, but they do not add to the welfare of the majority of population.

Solution (c)

Explanation:

We can say that economic development is quantitative as well as qualitative progress in an economy. It means, when we use the term growth we mean quantitative progress and when we use the term development we mean quantitative as well as qualitative progress.

• Economic Growth is the increase in the real output of the country in a particular span of time. Whereas, Economic Development is the increase in the level of production in an economy along with enrichment of living standards and the advancement of technology.
• Economic growth does not consider the Income from the Informal Economy. The Informal economy is unrecorded economic activity. Whereas, Economic Development takes consideration of all activities, whether formal or informal, and eases people with low standards of living a suitable shelter and with proper employment.
• Economic Growth does not reflect the depletion of natural resources. Depletion of resources such as pollution, congestion & disease. Governments are under pressure due to the environmental issues, majorly the problem is due to Global warming. However, Economic Development is concerned with Sustainability, which means meeting the needs of the present without compromising.
• Economic growth is the subset of economic development.
• Unlike economic development, Economic growth is an automatic process. Meanwhile, economic development is the outcome of planned and result-oriented activities.

Solution (c)

Explanation:

• The law of diminishing marginal utility holds that as we consume more of an item, the amount of satisfaction produced by each additional unit of that good declines. The change in utility gained from utilizing an additional unit of a product is known as marginal utility.
• The thinking of becoming happier by becoming richer is challenged by the law of diminishing marginal utility of income after a certain point, the gains are very small. This means that poor people benefit far more than rich people from an added of income. (Hence, statement 1 and statement 2 are correct).

Solution (a)

Explanation:

They are three sectors in the Indian economy, they are; primary economy, secondary economy, and tertiary economy.

Primary Sector

The primary sector in India is the sector which is largely dependent on the availability of natural resources in order to manufacture the goods and also to execute various processes. The services in this sector are entirely dependent on the availability of the natural resources in order to keep the day-to-day operations running.

As we have the clear idea of this sector is, the best example to discuss in this sector is the agriculture sector. The other examples in this sector include fishing and forestry, but agriculture accounts for the largest in this sector.

The primary sector provides employment to around 42 % of India’s workforce. (Hence, both statement 1 and statement 2 are correct).

Solution (a)

Explanation:

The Circular Flow of National Income refers to continuous circular flow of money income and flow of goods between different sectors of the economy.  A ‘leakage’ is the amount of money which is withdrawn from the flow of income, whereas ‘injections’ are the amount of money that is added to the flow of income in the economy.

Thus, Savings; Taxes by households and firms; and Import spending   constitute a leakage from the Circular Flow of Income.

On the other hand, Investment spending; Government spending; and Export earnings becomes ‘injections’ into the Circular Flow of Income.

Solution (b)

Explanation:

The GDP is calculated by taking into account 3 different prices –

• Factor Cost: Cost of factors of production, such as land, labour and capital.
• Basic Price: Factor Cost + Production Taxes- Production Subsidies.
• Market Price (Price expected to be paid by the consumer): Basic Price + Product Taxes- Product Subsidies.

Hence, GDP at Basic Price = GDP at Factor Cost + Production Taxes – Production Subsidies.

Solution (a)

Explanation:

• The Gross Domestic Product (GDP) refers to the market value of all final goods and services produced within an economy. It can be calculated into two ways:
• Nominal GDP: It refers to the GDP at the current market prices, i.e., the GDP is calculated as per the market prices for the year for which the GDP is calculated.
• Real GDP: It refers to the GDP at the base year prices, i.e., the GDP is calculated as per the market prices in the base year. Thus, the Real GDP negates the inflation in goods and services.

Solution (b)

Explanation:

• Human Development Index: Human Development Index is released by the United Nations Development Programme (UNDP) as part of the Human Development Report.
• Income, Longevity and Education have equal weights in the index.

Solution (c)

Explanation:

• Multi-Dimensional Poverty Index: The Index is released by the Oxford Poverty & Human Development Initiative at the University of Oxford and the Human Development Report Office of the United Nations Development Programme. The global Multidimensional Poverty Index (MPI) measures the complexities of poor people’s lives, individually and collectively, each year. This report focuses on how multidimensional poverty has declined.

Solution (a)

Explanation:

• Purchasing Power Parity (PPP) measure the total amount of goods and services that a single unit of a country’s currency can buy in another country.
• The PPP between countries A and B measures the amount of country A’s currency required to purchase a basket of goods and services in country A as compared to the amount of country B’s currency to purchase a similar basket of goods and services in country B.
• PPP can, thus, be used to convert the cost of a basket of goods and service into a common currency while eliminating price level differences across countries. In other words, PPPs equalize the purchasing power of currencies.
• The International Comparison Program (ICP), is a worldwide statistical initiative led by the World Bank under the auspices of the United Nations Statistical Commission, with the main objective of providing comparable price and volume measures of gross domestic product (GDP) and its expenditure aggregates among countries within and across regions.
• Due to large differences in price levels across economies, market exchange rate converted GDP does not accurately measure the relative sizes of economies and the levels of material well-being. PPPs make it possible to compare the output of economies and the welfare of their inhabitants in ‘real’ terms, thus controlling for price level differences across countries.

Solution (d)

Explanation:

• Measure of inflation calculated as the ratio of GDP at current prices to GDP at constant prices. The GDP Deflator takes into account all the goods and services in the economy (including exports). However, it excludes the price of imports.

Solution (b)

Explanation:

Mixed economy is a golden mixture of capitalism and socialism.

• Under this system there is freedom of economic activities and government interferences for the social welfare. Hence it is a blend of both the economies.
• The concept of mixed economy is of recent origin. The developing countries like India have adopted mixed economy to accelerate the pace of economic development.
• Even the developed countries like UK, USA, etc. have also adopted ‘Mixed Capitalist System’.

Mixed economy has following main features:

• Co-existence of Private and Public Sector
• Personal Freedom
• Private Property is allowed
• Economic Planning
• Price Mechanism and Controlled Price
• Profit Motive and Social Welfare

Solution (b)

Explanation:

• According to the Expenditure Method, GDP is calculated as C+G+I+ (X-M), where C denotes the Private Final Consumption Expenditure (PFCE), G denotes the Government Final Consumption Expenditure (GFCE), I denotes Investments, X denotes Exports and M denotes Imports. The PFCE, accounting for around 55% of India’s GDP is the major driver. The Net Exports (Exports- Imports), accounting for around -3% of India’s GDP, has the lowest share.

Solution (c)

Explanation:

• The Gross Domestic Product (GDP) measures the value of goods and services produced within a country’s borders, by both the citizens and the non- citizens. On the other hand, the Gross National Product (GNP) measures the value of goods and services produced by only a country’s citizens, but both domestically and abroad.
• GNP = GDP + Income earned by the Indians outside India – Income earned by the foreigners within India.
• GNP = GDP + Net Factor Income from Abroad (NFIA).
• Hence, if the Gross Domestic Product (GDP) of a particular country is equal to the Gross National Product (GNP), it necessarily denotes that the Net Factor Income from abroad is zero.

Solution (a)

Explanation:

• Opportunity Cost: are the benefits that are lost while choosing one alternative in place of others.
• If a particular person decides to engage in agricultural activities, he forgoes the benefit of being employed in the manufacturing sector. For example, his monthly income from agriculture could be around Rs. 10,000. But, a worker employed in the manufacturing sector earns almost 3 times higher – Rs. 30,000. So, the benefit which the farmer forgoes can be considered as ‘Opportunity Cost’.
• Hence, if a person decides to engage in agriculture, rather than manufacturing, then his opportunity cost is quite higher.
• Hence, if a person decides to engage in agriculture, rather than manufacturing, then his opportunity cost is quite higher.

Solution (d)

Explanation:

• Net national product at market price is the market value of the output of final goods and services produced at the current price in one year of a country. If we subtract the depreciation charges from the gross national product, we get the net national product at market price.
• Depreciation is equal to Gross National Product (GNP) minus Net National Product (NNP)
• Depreciation cost: The monetary value of an asset decreases over time due to use, wear and tear or obsolescence. This decrease is measured as depreciation.

Solution (d)

Explanation:

NIDAAN Platform

• A first-of-its kind database of arrested narcotics offenders has been made operational for use.
• The portal, NIDAAN or the National Integrated Database on Arrested Narco-offenders, has been developed by the Narcotics Control Bureau (NCB).
• It is part of the narcotics coordination mechanism (NCORD) portal that was launched by Union Home Minister. Hence statement 1 is correct.
• The NIDAAN platform sources its data from the ICJS (inter-operable criminal justice system) and the e-Prisons (a cloud-based application) repository. Hence statement 2 is correct
• It is planned to integrate it in the future with the crime and criminal tracking network system or CCTNS.
• The ICJS, an initiative of the Supreme Court e-committee, was created to enable seamless transfer of data and information among different pillars of the criminal justice system, like courts, police, jails and forensic science laboratories, from one platform. Hence statement 3 is correct.
• Any agency can search for the crime history, personal details, fingerprints, court cases and appeals made etc. with regard to a drug offender from any part of the country.
• A distinct feature called ‘criminal network’ on the portal can also be accessed by agencies, as part of which specific links of an accused to other crimes, linked police FIRs and those who visited them in jail can also be accessed.

Source: CLICK HERE

Solution (d)

Explanation:

• Bioplastics are plastic materials produced from renewable biomass sources, such as vegetable fats and oils, corn starch, straw, woodchips, sawdust, recycled food waste, etc.
• Polyhydroxyalkanoates or PHAs are an emerging class of bioplastics in the latter category, i.e. they are bio-based and biodegradable.
• Polyhydroxyalkanoates (PHA) are manufactured using microorganisms that ferment with canola oil.
• Polylactic acid or polylactide (PLA) is a polyester derived from renewable biomass, typically from fermented plant starch, such as corn, cassava, sugarcane, or sugar beet pulp.
• Bioplastics have long been used in medical applications.
• For example, stitches are often made of a bioplastic thread that harmlessly dissolved into the body.

Source: CLICK HERE

Solution (c)

Explanation:

• Nuclear Command Authority (NCA) is India’s nodal authority responsible for command, control and operational decisions regarding India’s nuclear weapons programme. Hence statement 1 is correct.
• It has Executive Council and Political Council.
• The Executive Council is chaired by the National Security Adviser (NSA).
• It gives inputs to the Political Council, which authorises a nuclear attack if need be.
• The Political Council is chaired by the Prime Minister and is advised by the Executive Council. Hence statement 2 is not correct.
• The NCA’s directives are executed by the Strategic Forces Command.
• The strategic forces command (SFC) would be in charge of the nuclear forces’ administration and would be in charge of firing nuclear weapons. Hence statement 3 is correct.

Source: CLICK HERE

Solution (c)

Explanation:

Aranmula mirror (rare metal alloy mirror)

• It literally means the mirror of Aranmula, a small town in Pathanamthitta district, Kerala.
• It was the first craft item from the state to receive a geographical indication tag in 2005.
• The alloy formula they use is a secret passed down through generations.
• The uniqueness of this mirror is its front reflection, unlike the back reflection in normal glass mirrors.
• This means the reflective surface is placed on a back support, as opposed to regular mirrors where the reflective surface is behind glass.
• A first-surface mirror or front-surface mirror is a mirror with the reflective surface being above a backing.
• First-surface mirrors are made for applications requiring a strict reflection without a ghosting effect.
• Reflecting telescopes, rear-projection televisions, periscopes, non-reversing mirrors, high-quality kaleidoscopes, and the animation process Spectrafocus use this type of mirror.
• These mirrors also have a cultural significance in Kerala, they are regarded as one of the eight auspicious objects (ashtamangalya) displayed during religious festivals or auspicious occasions and ceremonies.

Source: CLICK HERE

Solution (a)

Explanation:

• The Vice President is the second highest constitutional office in India. The Vice President is the ex-officio Chairperson of the Council of States/Rajya Sabha. Hence statement 1 is correct.
• As per Article 66 of the Constitution of India, the Vice-President is elected by the members of the Electoral College.
• He is elected in accordance with the system of proportional representation by means of the single transferable vote and the voting at such election shall be by secret ballot

Electoral College consists of:

• Elected and nominated members from Lok Sabha and Rajya Sabha only. Hence statement 2 is correct.

Removal of Vice-president

• A formal impeachment like in the case of the President of India is not required for the removal of Vice-President
• VP can be removed from his office by a resolution raised only in Rajya sabha, passed by effective majority & agreed upon by simple majority in Lok sabha.
• Prior to passing the resolution in Rajya sabha, a 14 days notice should be served to the Vice President.

Source: CLICK HERE

Solution (c)

Explanation:

Let the two digit number be 10a + b and the number formed by reversing its digits be 10b + a.

10a+b/10b+a = 4/7

70a + 7b = 40b + 4a

66a = 33b

Therefore, a/b = 1/2

So, let us list down all possible values for a and b

Hence, the sum of all the numbers would be,

12 + 21 + 24 + 42 + 36 + 63 + 48 + 84 = 330.

Solution (a)

Explanation:

Ratio of profit = capital of Sudarma *time/ capital of Divya *time

Let Divya’s investment be for x months.

Then, 8/3 = (36,000*12) / (27,000*x)

On solving x = 6 months

Solution (d)

Explanation:

Let average in class Z = a.

Average of class Y = a +16.

Average of class X = b

b = 2 + (20b+30(a+16)+50a)/100

(b – 2) * 10 = 2b + 3a + 48 + 5a

10b – 20 = 2b + 8a + 48

8b – 8a = 68

b – a = 8.5.

This is the difference between average of class X and class Z.

Solution (c)

Explanation:

Let track length be equal to ‘t’. When Usain Bolt completes a lap, let us assume Justin Gatlin has run a distance of (t – d). At this time, Carl Lewis should have run a distance of (t – 2d).

After 3 laps Carl Lewis is in the same position as Justin Gatlin was at the end of one lap. So, the position after 3t – 6d should be the same as t – d. Or, Carl Lewis should be at a distance of d from the end of the lap.

Carl Lewis will have completed less than 3 laps (as he is slower than Usain Bolt), so he could have travelled a distance of either t – d or 2t – d.

=> 3t – 6d = t – d

=> 2t = 5d

=> d = 0.4t

The distances covered by Usain Bolt, Justin Gatlin and Carl Lewis when Usain Bolt completes a lap will be t, 0.6t and 0.2t respectively. Or, the ratio of their speeds is 5 : 3 : 1.

In the second scenario, 3t – 6d = 2t – d => t = 5d => d = 0.2t.

The distances covered by Usain Bolt, Justin Gatlin and Carl Lewis when Usain Bolt completes a lap will be t, 0.8t and 0.6t respectively. Or, the ratio of their speeds is 5 : 4 : 3.

Solution (d)

Explanation:

Now let us look at the options given to see which one sums up the paragraph best:

Option a: We can rule this option out straight away, as this is not what the paragraph says. The paragraph does not talk about lawgivers in liberal democracies as better equipped to interpret the will of the people as compared to those in illiberal democracies.

Option b: Again, this is not what the paragraph states. Nineteenth-century liberals only dreaded the version of democracy where the lawgiver declares himself to be the interpreter and implementer of the will of the people. They did not equate democracy to the tyranny of the majority.

Option c: The paragraph does declare that constitutional rights are fragile and not effective in protecting freedom of individuals and minorities. But this is in the specific context where “when large sections of society are indifferent or actively hostile to liberal values. That is, in illiberal democracies constitutional rights provide little by way of support to minorities. However, option c generalizes this to say that constitutional rights are fragile and infective in any democracy. This is not what the paragraph says.

Option d: This option sums up the main idea of the paragraph best. In illiberal democracies, where the majority is indifferent or actively hostile to liberal values, popular governments use the power of majority to clamp down on the freedom of minorities.