Q101. Which of the following economic activities is included in the calculation of Gross Domestic Product, despite often being a negative indicator of sustainable development?
Indian Economy: RAS Prelims MCQs
848 RAS Prelims practice MCQs on the Indian economy are on this page, in 10 chapters. They cover economic growth and development, the Human Development Index, monetary and fiscal policy and the Union Budget, fiscal federalism, agricultural development, industrial reforms and LPG, the service sector, energy and transport, skill development and employment, and social justice. Each question has an answer and an explanation.
Practice questions based on the RPSC RAS Prelims syllabus. They follow the exam pattern but are not past-paper questions.
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Q102. Read the following statements carefully:
Statement I: Gross Domestic Product per capita is a reliable indicator of the average standard of living for all citizens in a country.
Statement II: Gross Domestic Product calculations do not capture the depletion of natural resources.
Which of the following is correct?
Statement I: Gross Domestic Product per capita is a reliable indicator of the average standard of living for all citizens in a country.
Statement II: Gross Domestic Product calculations do not capture the depletion of natural resources.
Which of the following is correct?
Explanation
National income per capita represents a simple mathematical average and does not account for internal wealth disparities, making it an unreliable indicator of individual living standards. However, standard economic calculations do accurately omit the environmental costs of resource extraction. This lack of accounting for natural resource depletion is a major criticism of using aggregate production as a development measure.
Q103. Consider the following statements regarding the limitations of Gross Domestic Product as a measure of development:
I. It does not account for the distribution of income among the population.
II. It accurately evaluates the depreciation of environmental capital.
III. It excludes the value of unpaid domestic work.
Which of the above statement(s) is/are correct?
I. It does not account for the distribution of income among the population.
II. It accurately evaluates the depreciation of environmental capital.
III. It excludes the value of unpaid domestic work.
Which of the above statement(s) is/are correct?
Explanation
National accounting often overlooks the uneven distribution of wealth and the depletion of natural resources. Additionally, it fails to include the value of non-market activities such as unpaid household chores and caregiving. These exclusions mean that a high aggregate figure does not necessarily correlate with sustainable environmental practices or the actual well-being of the entire population across a nation.
Q104. Match the items in List I with those in List II:
| Economic Concept | Characteristic/Limitation |
|---|---|
| A. Real GDP | i. Deducts the cost of environmental damage |
| B. GDP per capita | ii. Does not account for inflation |
| C. Green GDP | iii. Masks extreme income inequalities |
| D. Nominal GDP | iv. Adjusted for general price level changes Options: |
Explanation
Measuring economic progress involves various specialized metrics. Nominal figures use current prices, while real figures adjust for inflation over time. Per capita averages often mask significant internal inequalities within a population. Additionally, green accounting attempts to provide a more sustainable view by subtracting the economic costs of environmental degradation and resource depletion from the total national output.
Q105. Which distinguished economist is primarily credited with the creation of the Human Development Index?
Explanation
The Pakistani economist Mahbub ul Haq is credited with pioneering this metric to shift policy focus from purely economic growth to human well-being. He aimed to create a simple composite measure that could challenge the dominance of income-based assessments. His work emphasized that the ultimate objective of development is to enlarge people’s choices, capabilities, and life opportunities globally.
Q106. Which of the following statements incorrectly describes the conceptual origin of the Human Development Index?
Explanation
This index was originally established to move beyond national income figures by focusing on people and their capabilities. It was first introduced in 1990 within a report published by the United Nations Development Programme, influenced by Amartya Sen’s capability approach. It is not a product of the World Bank, as it serves as an alternative to their frameworks.
Q107. Read the following statements carefully:
Statement I: The United Nations Development Programme has published the Human Development Report annually since 1990.
Statement II: The Human Development Index aims to capture long-term progress in three basic dimensions of human development.
Which of the following is correct?
Statement I: The United Nations Development Programme has published the Human Development Report annually since 1990.
Statement II: The Human Development Index aims to capture long-term progress in three basic dimensions of human development.
Which of the following is correct?
Explanation
Since its inception in 1990, the United Nations Development Programme has released annual reports assessing global progress. The primary composite index used in these reports evaluates three essential dimensions of human life: health, education, and living standards. These dimensions provide a more comprehensive view of long-term national development than purely economic indicators, reflecting a broader perspective on societal wellbeing.
Q108. Consider the following statements regarding the origin and concept of the Human Development Index:
I. It was developed by the Pakistani economist Mahbub ul Haq.
II. Amartya Sen contributed significantly to the conceptual framework of the index.
III. The first Human Development Report was published by the International Monetary Fund.
IV. It was created to demonstrate that economic growth does not automatically translate to human development.
Which of the above statements are correct?
I. It was developed by the Pakistani economist Mahbub ul Haq.
II. Amartya Sen contributed significantly to the conceptual framework of the index.
III. The first Human Development Report was published by the International Monetary Fund.
IV. It was created to demonstrate that economic growth does not automatically translate to human development.
Which of the above statements are correct?
Explanation
This composite metric was created by Mahbub ul Haq to show that economic expansion does not always improve human lives. Amartya Sen provided the essential theoretical framework based on human capabilities. Although widely used, it was launched by the United Nations Development Programme rather than the International Monetary Fund. It remains a vital tool for assessing global progress and social health.
Q109. Which of the following represents the correct chronological sequence in which these development metrics were first introduced globally?
Explanation
National income accounting emerged first in the mid-twentieth century as a primary economic tool. The social indicator movement then led to the creation of the Physical Quality of Life Index in the 1970s. This was followed by the broader human-centric metric in 1990. Finally, the multidimensional approach to measuring poverty was introduced globally in 2010 to replace methods.
Q110. What are the three foundational dimensions of the Human Development Index?
Explanation
The framework for assessing human progress centers on three fundamental areas of life. These include the ability to lead a long and healthy existence, the opportunity to acquire knowledge through schooling, and the attainment of a decent standard of living. By combining these factors, the index provides a more comprehensive view of development than purely financial or infrastructure-based national metrics.Answer key for these questions
| Q | Correct answer |
|---|---|
| 101 | (a) Cleanup costs for environmental disasters |
| 102 | (d) Statement I is incorrect but Statement II is correct |
| 103 | (b) I and III only |
| 104 | (a) A-iv, B-iii, C-i, D-ii |
| 105 | (b) Mahbub ul Haq |
| 106 | (d) It was developed under the auspices of the World Bank |
| 107 | (a) Both Statement I and Statement II are correct |
| 108 | (c) I, II and IV only |
| 109 | (a) Gross Domestic Product, Physical Quality of Life Index, Human Development Index, Multidimensional Poverty Index |
| 110 | (d) Health, Education, and Standard of Living |
Key facts from Indian Economy
- The RPSC syllabus lists economic concepts and the Indian economy as the first part of the Economy paper, followed by the economy of Rajasthan.
- Concept questions test definitions: nominal and real GDP, GNP and NDP, per capita income and the value-added method.
- Policy questions pair a tool with its effect, for example a rise in CRR reduces the lendable resources of banks.
- Scheme questions ask for the target group, ministry or year of schemes such as PMKVY, NAPS, PM SVANidhi and PM-SYM.
- Questions on Finance Commission and GST link the body to its Article, such as Article 280.
Frequently asked questions
How many RAS Prelims practice MCQs are there on Indian Economy?
This page has 848 practice MCQs on Indian Economy. Each has the correct answer, and most have an explanation.
Which chapters does the Indian economy set cover?
Ten chapters: economic growth, development and sustainable development; measurement of development (HDI); monetary and fiscal policy and the Union Budget; fiscal federalism and the Finance Commission; agricultural development; industrial growth and LPG reforms; the service sector; energy, transport and communication; skill development and employment; and social justice and empowerment.
Is the Indian economy in the RAS Prelims syllabus?
Yes. RPSC lists Economic Concepts and the Indian Economy as the first part of the Economy paper. The second part covers the economy of Rajasthan, which is on its own page.
How should I revise economy for RAS Prelims?
Learn the definitions and the cause-and-effect chains first, then the schemes with their year, ministry and target group. Attempt each chapter, read every explanation and keep a one-line note for each scheme and body.