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UPSC IAS Prelims 2021: Important Questions on Economics - Topic 1 (Composition & Structure of Indian Economy)

Sakshi Saroha

Indian Economy is one of the fastest-growing economies in the world. A clear understanding of the Indian Economy can help you in more than one way. As almost every problem has an economic angle, knowledge on the performance of various sectors of the Indian Economy gives you always an opportunity to see things in a wider perspective. Every many questions from different topics of the economy are asked in the Prelims exam. Hence, a clear understanding of each topic is required to solve such questions. To help the aspirants in their preparation, we have provided the 10 most important questions from the Composition Structure of Indian Economy topic of Economics for UPSC Prelims 2021.

Also Check: Important Topics to study from Economics Syllabus

Ques 1: People engaged in which sector of the economy are called red-collar workers?

(a) Primary

(b) Secondary

(c) Tertiary

(d) Quinary

Ans: a

Explanation:

People engaged in primary activities are called red-collar workers due to the outdoor nature of their work.

Ques 2: Which of the following are included in the Index of Eight Core Industries?

  1. Crude Oil
  2. Cement
  3. Iron
  4. Coal
  5. Automobile

Select the correct code:

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(a) 2 and 5 only

(b) 1, 3 and 4 only

(c) 2, 3 and 5 only

(d) 1, 2 and 4 only

Ans: d

Explanation:

Eight Core Industries are Electricity, steel, refinery products, crude oil, coal, cement, natural gas and fertilizers. The Index of Eight Core Industries is a monthly production index, which is also considered as a lead indicator of the monthly industrial performance.

Ques 3: What do you understand by the term “Sunrise Industry”?

(a) It is an industry where a worker need not require as much professional training as white-collar professions. 

(b) A term used for a sector that is just in its infancy but shows promise of a rapid boom.

(c) These are specialized tertiary industry in the ‘Knowledge Sector’ which demands a separate classification.

(d) An industry of home-based worker or a self-employed worker or a wage worker.

Ans: b

Explanation:

Sunrise Industry is a term used for a sector that is just in its infancy but shows promise of a rapid boom.

The industry is typically characterized by high growth rates, high degree of innovation and generally has plenty of public awareness about the sector and investors get attracted to its long-term growth prospects.

Ques 4: Consider the following statements with reference to PPP (Public Private Partnership) model:

  1.  is an arrangement between the government and private sector for the provision of public assets and also includes Public Services.
  2. In such time of arrangement, the risk is entirely shared by the Private entity.

Which of the given statements is/are not correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Ans: b

Explanation:

In PPP model, there is a well defined allocation of risk between the private sector and the public entity.

Ques 5: Which of the following given steps if taken by the Government, will boost the Indian Economy?

  1. Opening up the Insurance sector to NRIs
  2. Promotion of SMEs
  3. Foreign Portfolio investment

Select the correct code:

(a) 1 and 2 only

(b) 2 only

(c) 2 and 3 only

(d) 1, 2, and 3 only

Ans: d

Explanation:

In a bid to bring more investments into India’s debt and equity markets, the Reserve Bank of India (RBI) has set up a framework for investments which will enable foreign portfolio investors to take part in open offers.

FIIs and non-resident Indians (NRIs) will now be able to invest in the insurance sector, within the 26 percent cap on FDI. This would boost the economy.

A positive policy framework allied with the growth of angel funds and a vibrant entrepreneurial culture is contributing to the growth of first generation entrepreneurs in the country.

Ques 6: Which of the following correctly defines the term ‘monopsony’? 

(a) A single enterprise is being supplier of a particular commodity or service

(b) An industry being dominated by a small group of large suppliers 

(c) An industry being dominated by small group of buyers 

(d) A single buyer substantially controlling the market

Ans: d

Explanation:

A monopsony is a market condition in which there is only one buyer, the monopsonist. It is a market structure in which a single buyer substantially controls the market as the major purchaser of goods and services offered by many would-be sellers. 

An oligopoly is a market structure in which a few firms dominate. When a market is shared between a few firms, it is said to be highly concentrated. 

A monopoly contains a single firm that produces goods with no close substitute.

Ques 7: Which of the following institution publishes the Financial Stability Report (FSR) in India?

(a) Reserve Bank of India

(b) Securities and Exchange Board of India

(c) Competition Commission of India

(d) NITI Aayog

Ans: a

Explanation:

The Financial Stability Reports, published by Reserve Bank of India, after approved by Financial Stability and Development Council (FSDC) Sub-Committee since its inception, taking inputs from financial sector regulators i.e. RBI, SEBI, PFRDA, IRDAI including Ministry of Finance, are periodic exercise for reviewing the nature, magnitude and implications of risks that may have a bearing on the macroeconomic environment, financial institutions, markets and infrastructure.

Ques 8: Which of the following is/are characteristics of a Public good?

  1. Non-excludability
  2. Rival Consumption
  3. Rejectable

Select the correct answer using the code given below:

(a) 1 only

(b) 1 and 3 only

(c) 2 only

(d) 3 only

Ans: a

Explanation:

Public goods are goods that can be consumed simultaneously by a large number of people without the consumption by one imposing an opportunity cost on others.

The characteristics of a public good:

Non-excludability

Non-Rival Consumption

Non-Rejectable

Ques 9: Consider the following statements regarding the Economic Census:

  1. It is conducted by Department of Economic Affairs, Ministry of Finance.
  2. It covers all entrepreneurial units which involved in any economic activities of either agricultural or non-agricultural sector.

Which of the statements given above is/are not correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Ans: a

Explanation:

The Economic Census is being conducted by Ministry of Statistics and Programme Implementation (MoSPI) to provide disaggregated information on various operational and structural aspects of all establishments in the country.

Ques 10: Which of the following statement correctly defies the term ‘gig worker’?

(a) Workers outside the traditional employer-employee relationship

(b) Labour working without appropriate remuneration

(c) An employee with written contract of employment for a fixed period

(d) Workers not covered by the social security schemes of the government

Ans: a

Explanation:

The Code on Social Security, 2020 has defined “gig worker” as a person who performs work or participates in a work arrangement and earns from such activities outside of traditional employer-employee relationship. Read more...

We sincerely hope that the given questions would have helped you in your Prelims preparation. You can also check the below link to keep yourself updated on the latest GK quiz and events. 

GK Quiz on Daily Static and Current Events

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