Q21. In the context of factors determining economic growth, physical capital accumulation leads to economic growth primarily by:
Economic Growth, Development and Sustainable Development: RAS Prelims MCQs
99 RAS Prelims MCQs on economic growth, development and sustainable development test the national income aggregates and the difference between growth and development. Nominal and real GDP, GDP and GNP, NDP, national income, per capita income and the factors that raise growth are asked as definitions and relationships, and each explanation shows how the aggregates are linked.
Practice questions based on the RPSC RAS Prelims syllabus. They follow the exam pattern but are not past-paper questions.
Showing 21–30 of 99 questions
Q22. Which of the following factors is widely considered the most crucial for long-term sustained economic growth according to endogenous growth theory?
Explanation
Endogenous growth theory posits that economic growth is primarily the result of internal processes rather than external forces. It emphasizes that investment in human capital, knowledge, and technological innovation leads to long-term sustained growth. Unlike theories focusing on finite resources, this approach suggests that ideas and improvements in technology can overcome diminishing returns, allowing for continuous advancement in productivity levels.
Q23. A lower Incremental Capital-Output Ratio (ICOR) indicates:
Explanation
The Incremental Capital-Output Ratio measures the amount of additional capital required to produce one extra unit of output. A lower ratio suggests that the economy is highly efficient, as it requires less investment to achieve a specific growth target. This efficiency often results from advanced technology, skilled labor, or better resource management. Conversely, a high ratio indicates wasteful or inefficient investment.
Q24. Consider the following statements regarding the role of labor in economic growth:
I. Human capital formation through education and health improves labor productivity.
II. An expanding working-age population automatically guarantees economic growth regardless of job creation.
III. The demographic dividend requires supportive economic policies to be realized.
Which of the above statement(s) is/are correct?
I. Human capital formation through education and health improves labor productivity.
II. An expanding working-age population automatically guarantees economic growth regardless of job creation.
III. The demographic dividend requires supportive economic policies to be realized.
Which of the above statement(s) is/are correct?
Explanation
Human capital formation through education and health is essential for improving labor productivity and driving economic growth. While an expanding working-age population provides a potential demographic dividend, this growth is not automatic. It requires supportive economic policies and job creation to be realized. Without these conditions, a large population can become a burden rather than an asset for the national economy.
Q25. Match List I with List II and select the correct answer using the codes given below:
| Factors of Growth | Examples/Mechanisms |
|---|---|
| A. Human Capital | i. Implementation of property rights and rule of law |
| B. Physical Capital | ii. Invention of a new efficient manufacturing process |
| C. Technology | iii. Construction of highways and telecommunication networks |
| D. Institutional Factors | iv. Investment in technical training and public health |
Explanation
Economic growth is driven by a combination of diverse factors. Human capital is developed through training and public health initiatives. Physical capital involves building tangible infrastructure like highways. Technological progress stems from inventing more efficient manufacturing processes. Finally, institutional factors like the rule of law and property rights create the stable environment necessary for investment and long-term economic prosperity.
Q26. In the stages of economic growth model, the "take-off" stage is characterized by:
Explanation
In the stages of economic growth model, the take-off stage represents a short period of intensive development. It is characterized by a significant surge in investment and the emergence of leading industrial sectors. During this time, the economy shifts from a traditional state to a self-sustaining growth path. New technologies are adopted, and the social and political structure evolves.
Q27. In the stages of economic growth model, the stage where modern technology permeates the entire economy and multiple new industries develop to replace older ones is known as:
Explanation
The drive to maturity is a long interval of sustained progress during which modern technology is applied to the bulk of economic activity. The economy demonstrates the capacity to move beyond the original industries that powered take-off. It develops a wider range of complex manufacturing and service sectors. This stage reflects a high level of technical sophistication and broad-based economic stability.
Q28. Which of the following is a primary characteristic of the "Pre-conditions for take-off" stage in the economic growth model?
Explanation
The pre-conditions for take-off involve the initial transition from a traditional society. During this stage, a new class of entrepreneurs emerges, and investment in social overhead capital, such as transport and infrastructure, begins to increase. While agriculture remains dominant, the foundations for industrialization are laid. This phase is necessary to prepare the economy for the rapid growth seen in later stages.
Q29. Consider the following characteristics related to the stages of economic growth model:
I. Traditional society is characterized by a ceiling on productivity due to limited technology.
II. During the take-off stage, net investment rises from about 5% to over 10% of national income.
III. Drive to maturity occurs when an economy can produce anything it chooses to produce.
IV. High mass consumption focuses predominantly on heavy industries and capital goods.
Which of the above statement(s) is/are correct?
I. Traditional society is characterized by a ceiling on productivity due to limited technology.
II. During the take-off stage, net investment rises from about 5% to over 10% of national income.
III. Drive to maturity occurs when an economy can produce anything it chooses to produce.
IV. High mass consumption focuses predominantly on heavy industries and capital goods.
Which of the above statement(s) is/are correct?
Explanation
Traditional societies face productivity ceilings due to limited technological knowledge. During take-off, investment must rise significantly to sustain growth. The drive to maturity stage reflects an economy’s ability to diversify into various industries. However, the age of high mass consumption focuses on consumer durables and social welfare, rather than being dominated by heavy industries and capital goods production.
Q30. Which stage in the stages of economic growth model emphasizes the allocation of resources towards social welfare and security over further capital accumulation?
Explanation
The age of high mass consumption is the final stage in the growth model. In this phase, real per capita income rises to a point where a large number of people can afford more than basic necessities. Consequently, society shifts its focus toward the production of durable consumer goods and the provision of social welfare, security, and expanded public services.Answer key for these questions
| Q | Correct answer |
|---|---|
| 21 | (c) Enhanced productivity and capacity. |
| 22 | (b) Technological innovation |
| 23 | (d) The economy is producing output more efficiently with the available capital. |
| 24 | (b) I and III only |
| 25 | (a) A-iv, B-iii, C-ii, D-i |
| 26 | (a) Investment surge and self-growth. |
| 27 | (d) Drive to maturity |
| 28 | (b) New entrepreneurs and infrastructure |
| 29 | (a) I, II and III only |
| 30 | (d) Age of high mass consumption |
Key facts from Economic Growth, Development and Sustainable Development
- Real GDP differs from nominal GDP because it is adjusted for price level changes (inflation).
- In the value-added method, the value of intermediate consumption is deducted from the value of output.
- GNP differs from GDP by the inclusion of net factor income from abroad.
- Net Domestic Product is obtained by deducting depreciation from Gross Domestic Product.
- National Income is equivalent to Net National Product at factor cost.
- Per capita income is national income divided by total population, and it masks welfare because it leaves out unpaid domestic work and leisure.
Frequently asked questions
How many RAS Prelims practice MCQs are there on Economic Growth, Development and Sustainable Development?
This page has 99 practice MCQs on Economic Growth, Development and Sustainable Development (Indian Economy). Each has the correct answer, and most have an explanation.
What is the difference between nominal and real GDP?
Nominal GDP is measured at current prices, and real GDP is adjusted for price level changes (inflation) by using the prices of a base year. Real GDP therefore shows the actual growth in the volume of output.
How does GNP differ from GDP?
GNP includes net factor income from abroad, that is income earned by a country’s residents abroad minus income earned by foreigners in the country. GDP counts only the output produced within the domestic territory.
What is National Income?
National Income is the Net National Product at factor cost. It is obtained from GDP by adding net factor income from abroad, deducting depreciation and subtracting indirect taxes net of subsidies.