Previous Year UPSC Questions

Explanation

A ‘stimulus’ is an attempt by policymakers of a coun-try to kickstart a sluggish economy through a package of measures. The central bank will use a monetary stimulus to boost consumer spending by increasing the money supply or lowering interest rates. A fiscal stimulus is when the government increases spending out of its own funds or lowers tax rates. Consumer spending increases as a result of stimulus measures, which boosts demand and growth. It’s common to refer to a stimulus as "priming the pump" or "pump priming."

Explanation

The "base effect" refers to how unusually high or low inflation in the previous period can affect the calculation and interpretation of the inflation rate in the current period. It’s a statistical phenomenon, not a real economic event. Low Base Effect: If inflation was very low or even negative in the previous year (the "base" period), even a moderate increase in prices in the current year can appear as a high inflation rate simply because the comparison is being made against a very low base. This can give the impression of a rapid acceleration of inflation, even if the price increases are not exceptionally large in absolute terms. High Base Effect: Conversely, if inflation was very high in the previous year, even a substantial increase in prices in the current year might appear as a low inflation rate because the comparison is being made against a high base. This can mask the true extent of current price increases.

Explanation

Option (b) is correct: According to United Nations Population Fund (UNFPA), demographic dividend means, "the economic growth potential that can result from shifts in a population’s age structure, mainly when the share of the working-age population (15 to 64) is larger than the non-work-ing-age share of the population (14 and younger, and 65 and older)".

Explanation

Closed Economy Does not have economic relations with the rest of the world. Activities taking place outside the territory do not affect the economic activities. There is no difference b/w national income and domestic income. It is an imaginary economy. A closed economy is completely self-sufficient, which means that no imports enter and no exports leave the country. Open Economy An open economy has economic relations with other countries. Economic activities of such an economy are affected by international fluctuations. The size of national income may be greater or smaller than the domestic income. It is a realistic economy. Eg: USA, Singapore, Finland, etc.

Explanation

The carbon cycle is a natural process that involves the movement of carbon between the atmosphere, oceans, soil, rocks, and living organisms. Respiration, decay of organic matter, volcanic action, fossil fuel combustion, deforestation, ocean-atmosphere exchange adds carbon to the cycle. All living organisms (plants, animals, and microorganisms) respire and breaking down glucose and oxygen to release energy, CO₂, and water. This process adds carbon dioxide to the atmosphere. When dead plants, animals, and other organic materials decompose microbes break them down. During decomposition CO₂ and methane (CH₄) are released into the atmosphere. Volcanic eruptions release stored carbon dioxide from the Earth’s mantle into the atmosphere. This is a natural source of CO₂ emissions. During photosynthesis plants, algae, and some bacteria absorb CO₂ from the atmosphere and use sunlight to convert it into glucose and oxygen. This process removes carbon dioxide from the atmosphere rather than adding it.

Explanation

Statement 1 is incorrect: The broadening (not Deepening) of the Malacca straits between Malaysia and Indonesia will reduce the navigation time and distance. The Malacca Strait is situated between Malaysia and Indonesia and is one of the main shipping lanes. The narrow waterway creates a chokepoint between the Indian Ocean and the Pacific Ocean.

Statement 2 is correct: Opening a new canal across the Kra isthmus between the Gulf of Siam and the Andaman Sea can reduce the navigation time and distance. Kra isthmus is the narrowest part of the Malay Peninsula. It is bordered to the west by the Andaman Sea and to the east by the Gulf of Thailand.

Explanation

Ahmad Shah Abdali invaded India because the Marathas had expelled his son, Timur Shah, from Lahore in 1758. Timur Shah was Abdali’s viceroy in Punjab, and his removal by the Marathas was seen as a direct challenge to Abdali’s authority. This greatly angered him, and he decided to take revenge. In 1760, he marched towards India to reclaim Punjab and restore his influence. This was the main reason behind the Third Battle of Panipat in 1761.

Option (b) is incorrect: Adina Beg Khan was a Mughal officer who played an important role in Punjab’s politics. However, he did not invite Abdali to invade India. In fact, he had earlier invited the Marathas to fight against Abdali’s influence in Punjab.

Option (c) is incorrect: Abdali had financial interests in India, and he did demand revenue from Mughal territories. However, this was not the main reason for his invasion. By 1760, the Mughal administration had already weakened, and the real power in North India was shifting towards the Marathas and other regional powers. Abdali’s main enemy at this time was not the Mughals but the Marathas, who had taken over Punjab. His invasion was more about reclaiming lost territory than collecting revenue.

Option (d) is incorrect: Punjab was strategically important, and Abdali did want to maintain control over it. However, his primary goal was not permanent annexation but restoring his authority after the Marathas had removed his son from Lahore.

Explanation

Brazil, Mexico, and South Africa are all recognized as emerging economies due to their growing industrial bases, expanding middle classes, and increasing global trade integration. Brazil, a BRICS member, has a strong industrial sector and abundant natural resources. Mexico, with its industrialization and trade ties, especially under NAFTA/USMCA, is a key player in Latin America’s economy. South Africa, the only African nation in BRICS, boasts a diversified economy, a robust financial sector, and a well-established industrial base.

Explanation

Option (a) is incorrect: Multilateral Investment Guarantee Agency (MIGA) - Part of the World Bank Group, which is affiliated with the United Nations

Option (b) is incorrect: International Finance Corporation (IFC) - Also part of the World Bank Group, which is linked to the United Nations

Option (c) is incorrect: International Centre for Settlement of Investment Disputes (ICSID) - Another entity of the World Bank Group, indirectly connected to the United Nations.

Option (d) is correct: Bank for International Settlements (BIS) - Not related to the UN; it is an international financial institution based in Switzerland, that serves as a bank for central banks and focuses on monetary and financial stability.

Explanation

Statement (1) is correct: As of 2010, China had the largest GDP among BRIC nations, surpassing the combined GDP of Brazil, Russia, and India. This was due to its rapid economic growth and industrial expansion.

Statement (2) is incorrect: China’s population is more than the combined population of any two other BRIC countries. As of 2010, China’s population was approximately 1.34 billion, while India’s was close to 1.2 billion, making it nearly equal to China’s. In contrast, the combined population of Brazil (195 million) and Russia (143 million) was significantly lower than China’s. Clearly, combination of population of any two countries comes out to be lesser than China