Important Concepts in Economy: UPSC Previous Year Questions (Indian Economy)
1 previous year UPSC Prelims question on Important Concepts in Economy (Indian Economy). Choose an option to see the answer and explanation.
Explanations state facts as of the year each question was asked; words like “recently” refer to that year.
Showing 1–1 of 1 question
UPSC 2014Indian Economy · Important Concepts in Economy
Q1. If the interest rate is decreased in an economy, it will:
Explanation
Decreased interest rates lower the cost of borrowing for businesses, making it more attractive to finance new investments in capital goods and expansion projects. This leads to an increase in investment expenditure.
Option (a), (b) and (d) are incorrect:
Lower interest rates reduce the cost of borrowing, encouraging consumers to take loans for purchases, thereby increasing consumption expenditure. While lower interest rates can stimulate economic activity, leading to higher incomes and potentially increased tax revenues, this effect is indirect and not guaranteed. Lower interest rates reduce the returns on savings, which may discourage individuals from saving, potentially decreasing total savings.
Answer key for these questions
Q
UPSC year
Correct answer
1
2014
(c) Increase the investment expenditure in the economy
Frequently asked questions
How many previous year UPSC questions are there on Important Concepts in Economy?
This page covers 1 previous year UPSC Prelims GS Paper-I questions on Important Concepts in Economy (Indian Economy), asked from 1996 to 2022. Each has the correct answer and an explanation.
How should I use previous year UPSC questions for Prelims?
Attempt each question first, then open the answer and read the explanation for every option. Repeat by chapter, and track which statements UPSC reuses across years. Previous year questions show the exam pattern and difficulty level.
Which years are covered for Important Concepts in Economy?
Questions on Important Concepts in Economy (Indian Economy) are available for 11 years, from 1996 to 2022. Use the Year filter to practise a single paper.
