BRAND MANISH DUA

QUESTIONS FOR CA-CPT (ECONOMICS)

CHAPTER 1
1. The words Economics have been derived from Greek word
Oikonomia.
2. Oikonomia means household.
3. A
Adam Smith define economics in 1776 as “Enquiry into the
nature about causes of wealth”.
U
4.
D
J.B. Say said “Economics is branch of knowledge which deals
wealth.”
5.
H
According to Alfred Marshall, “Economics is the study of
mankind in the ordinary business of life in which we study that
S
I
part of individual and social action which are most close
connected to Material Welfare.
6.
N
Marshall and A.C. Pigou were welfare economists.
7.
8. A
Robbins defined economics as science of scarcity.
Robbins said Economics is neutral between ends.
9.
10.
11.
M
Robbins said Economics is positive science.
Robbins defined Economic as science of choice making.
What to produce, how to produce and for whom to produce
are the 3 economic problems which arises due to scarcity of
resources.
12. Positive science explains “cause & effect” relationship.
13. Normative science explains “What ought to be” or “What ought
not to be” the relationship.
14. In inductive method reason proceeds from particular to general.
15. In deductive method reason proceeds from general to particular.
16. PPC is also known as Production Possibility Frontier and
Transformation curve.
17.
A
Combination lying on or inside the PPC are attainable but

18. U
combination lying outside the PPC are unattainable.
PPC is concave to the origin due to increasingly marginal

19.
opportunity cost.
D
Increase in resource, technology will shift the PPC rightward.
20.
H
Movement from inside PPC to the PPC shows reduction in

S
unemployment. It does not shift the PPC.
21.
I
In socialist, controlled or command economy resources are

N
owned by public but controlled by govt. In such economy,
economic decision are taken by planning authority.
22.
A
In capitalist, or free economy resources are owned by private
sector and economic decision are taken by forces of market

23.
M
demand and supply curve.
In mixed economy Dual Price System exist.
24. According to Jacob Viner, “Economics is what economist do”.
25. Inductive and deductive method are like left and right shoes
and both are required for walking.
26. According to Schummpter mixed economy is like oxygen in
 the tent.
27. According to MC Connel macro economics is study of forest
and not tree.
28. Socialistic economy is also known as Planned , Administrative
, Controlled , Command economy.
29. Capitalistic economy is is also known as Free, Market, lessiez
faire economy.
A
30. Inequalities of income is the disadvantage capitalist economy.
U
31. Micro economic theory deals with allocation of resources it is
also known as Price Theory.
CHAPTER 2 D
SH
32. Demand is a flow concept. It differ from desire.
33. Substitute goods are also known as alternative goods.

I
Substitution effect is positive i.e. increase in price of one

N
substitute results in increase in demand of other substitute
goods.

A
34. Demand for complementary goods is also known as Tied and
Joint demand.

M
35. Income effect of normal good is positive and of inferior goods
is negative.
36. Size of population distribution of income effect market demand.
37. Law of demand is qualitative statement.
38. Giffen goods paradox was given by Sir Robert Giffen.
39. He explain behaviour of two goods Bread and Meat.
40. Giffen goods exhibit positive price effect and their demand curve
is upward sloping.
41. Goods demanded not because of their intrinsic worth but
because of the prestige attached to them is called Veblen
effect.
42. Diamonds, rare paintings are called Veblen goods.
43.
A
Change in quantity demanded is due to change in price.
44.
U
Change in demand is due to change in factors like, Income,
Price of related goods, Taste & Pref.
45. D
Change in quantity demand is shown by movement along with
demand curve.
46.
47.
SH
Change in demand is shown by shift in demand curve.
Price elasticity measures degree change in demand due to
I
change in price of the commodity.
48.
N
The value of price elasticity ranges from 0 to 
49.
A
Point method measures elasticity of demand for very minute
change in price.
50.

51.
M
Arc method is used to measure elasticity of demand between
two points of demand curve.
Where the demand curve touches price axis, d = .
52. Where the demand curve touches quantity axis d = 0.
53. Moving down the demand curve elasticity decreases.
54. In the mid of the straight line demand curve d = 1.
54. Higher price, higher d and lower price, lower d.
55. Perfectly inelastic demand curve is vertical to x-axis.
56. Perfectly elastic is horizontal to x-axis.
57. No commodity have perfectly inelastic demand not even salt.
Salt have almost inelastic demand.
58. Cross elasticity measures degree change in demand due to
change in price of related goods.
A
59.
U
The value of cross elasticity if positive then two good are
substitute goods.
60.
D
The value of cross elasticity is negative then two goods are
complementary goods.
61.
H
In case of value of cross elasticity is zero then two goods are
unrelated.
S
62.
I
Monopoly have zero cross elasticity.
63.
N
Perfect substitutes have infinite cross elasticity.
64.
65. A
Monopolistic competition have very high cross elasticity.
When the demand is elastic increase in price will results in

66. M
decrease in total expenditure.
When demand is inelastic increase in price will results in
increase in total expenditure.
67. When demand is unitry elastic, and change in price brings no
change in total expenditure.
68. Unity elastic demand curve have rectangular hyperbola.
69. Derived demand is the demand of inputs which arised due to
demand of final goods.
70. When we demand shirt, manufacturer demands cloths thus
cloth is derived demand.
71. Marshall has given cardinal approach.
72. According to cardinal approach, utility derived from a commodity
can be measured.
A
73.
74. U
Constant marginal utility of money is assumed constant.
When marginal utility is positive, the total utility keep on rising.
75.
76.
D
When marginal utility is zero, total utility is maximum.
When marginal utility is negative, total utility starts falling.
77. H
Area lying below the marginal utility curve is total utility.
S
78.
I
Consumer equilibrium is the point where
Utility derived = Utility sacrificed in terms of price
N
Marginal utility = Px.MUm
79.
80. A
Consumer surplus was given by Alfred Marshall.
Consumer surplus is the difference between what the

81. M
consumer is willing to pay and what be actual pays.
Consumer surplus is maximum in case of necessities and
minimum in case of luxuries.
82. Consumer surplus is the area lying below demand curve and
above price line.
83. For explaining consumer surplus Marshall used concept of
 perfect competition.
84. Water-Diamond paradox is explained by Law of Scarcity.
85. In case of 1st degree price discrimination, consumer surplus
is zero.
86. Indifference curve provides same level of satisfaction. It is also
know as Iso-Utility Curve.
87.
A
Ordinal approach was given by J.R. Hick and Allen.
88.
89.
Slope of Indifference Curve = MRSxy.
U
IC Curve and convex to origin because MRSxy is diminishing.
90.
D
When MRSxy = 0, the Indifference Curve is L-shaped, this is
the case of perfect complementary.
91.
H
In case of perfect substitute MRSxy =1 & constant and IC

S
curve is straight line.
92. I
Higher IC curve provides higher level of satisfaction, IC do not

93. N
cut each other.
IC curve do not touch the axis.
94. A
In the left hand above corner of IC curve MRSxy is very high.
95.
96. M
In the right hand below corner of IC curve MRSxy is very low.
In case of good-good commodity IC will b convex to origin and
in case of BAD –BAD commodity IC will be Concave to origin.
97. Budget line represents various combination of 2 goods X & Y
which consumer can purchase out of given income.
98. Combination lying on or inside the budget line are attainable
 but the combination lying inside the budget line are unattainable.
99. Slope of budge line = Px/Py
100. In case consumer purchases commodity, X only, then budget
line merged with X-axis.
101 In case consumer purchases commodity Y only then budget
line will merged with Y-axis.
102 Consumer equilibrium condition by IC,
A
i) MRSxy = Px/Py
U
ii) At equilibrium, IC curve must be convex to origin.
103 Supply is flow concept. D
104. Change in quantity supplied is due to change in price of the
commodity.
SH
I
105. Change in supply is due to change in technology, Increase in
number supplier, change in price of related good, change in

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government policy.

A
106. Elasticity of supply measures degree change in supply due to
change in price.

M CHAPTER 3
107. Production function explains relationship between Input and
Output.
108. In short Run production is function of variable factors.
109. In long Run production is function of fixed and variable factors.
110. Short Run is too short the time period when at least one factor
 is fixed.
111. Long Run is too long the time period when all the factors are
variable.
112. In very short period supply is fixed.
113. Perishable goods have perfectly inelastic supply.
114. Very large period is also called as secular period.

A
115. Very short period price is also known as market period price.
116. Long period price is Normal price.
U
117. Normal price is always less than market period price.

D
118. Alfred Marshall explained the impact of time element on price
and output.

constant.
SH
119. In the law of variable proportion, the technology remains

I
120. In the law of variable proportion the proportion between fixed

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and variable factor keeps on changing.
121. Out of MP, AP & TP , MP reaches at its maximum point at first
A
and TP at last.
122. Out of MP, AP &TP, MP starts falling at first and TP at last.
M
123. When AP is rising, MP is rising as well as falling.
124. When AP = 15 & MP = 20 , We cannot tell whether MP is
rising or falling.
125. When AP is maximum, AP = MP.
126. When AP is falling, AP > MP.
127. When AP = 20 & MP = 15, then both MP & AP both are falling.
128. Where MP is maximum corresponding to that point there is
point of inflexion on TP curve.
129. Returns to scale is long run production function, here the inputs
are increased in same proportion.
130. When returns to scale is increasing doubling the inputs results
in more than double the output.
A
U
131. When returns to scale is constant, then doubling the inputs
results in double the output.
D
132. When returns to scale is diminishing then doubling the inputs
results in less than double the output.

SH
133. TP = Total product, L = Total labour employed.
134. In the 1st stage of law of variable proportion, TP is increasing
I
with Increasing rate initially then with diminishing rate.

N
135. Stage 2nd of variable proportion ends where AP is maximum.

A
136. Stage 2nd of variable proportion ends where MP is zero and
TP is maximum.

M
137. When the distance between successive isoquant diminishes
we call it increasing returns to scale.
138. When the distance between successive isoquant diminishes
we call it increases returns to scale.
139. When the distance between successive isoquant remains same
we call it constant returns to scale.
140. Supply of land is Inelastic.
141. According to Riccardo the power of land is undestructible.
142. Supply curve of labour is backward bending.
143. Labour supply curve is an exception to law of supply.
144. All capital is wealth but all wealth is not capital.
145. Saving, mobilization of saving and investment are the 3-stages
of capital formation.
A
146.
U
Initiating business process, risk bearing and innovation are
function of entrepreneur.
147. D
Concept of innovative Entrepreneurship was given by
Schumpeter.
148.
(a)
SH
Increasing marginal returns is due to
Indivisible fixed factor
(b) I
Division of labour
(c)
N
Specialisation.
149.
A
Diminishing returns to factor is due to
(a) breaking VP of optimum combination between fixed and

150.
M
variable factor.
(b) Lack of capital.
Increasing returns to scale is due to economies of scale.
151. Decreasing returns to scale is due to diseconomies of scale.
152. Law of diminishing returns is applicable to all types of economic
activity.
153. Accounting cost is the cost incurred on hired factor of
production. It is also known as explicit cost.
154. Economic cost is sum of explicit and implicit cost.
155. Accounting profit is always more than economic profit.
156. The pain and discomforts which labour suffer during production
process is called as real cost.
A
157. Direct cost is known as traceable cost.

U
158. Implicit cost is the cost which incurred on owned factor of
production.
D
159. Implicit cost is calculated on the basis that what we could have
earned if we have employed our resources some where else.
H
160. Opportunity cost is the cost of forgone opportunity.
S
I
161. Fixed cost is parallel to x-axis.
162. Fixed cost do not depends upon level of output.
N
163. Variable cost changes with the change in level of output.

A
164. Variable cost increases with increase in level of output
165. When TVC increases with diminishing rate, The returns to

M
factor was increasing.
166. When TVC increases with the increasing rate, the returns to
factor was diminishing.
167. At zero level of output TC = TFC.
168. TC – TVC = TFC, since TFC remains constant  TC || TVC.
169. Marginal cost changes with change in variable cost.
170. Increasing returns shows Diminishing marginal cost and
Diminishing returns shows Increasing marginal cost.
171. AFC curve continues to fall but never touches x-axis.
172. AFC curve is rectangular hyperbola.
173. AFC is convex to origin.
174. AVC is u-shaped cost curve. Initially it diminishes due to

A
increasing return and after reaching at its maximum point it

U
starts rising because of diminishing returns.
175. AC is also u-shaped cost curve.

D
176. The difference between AC & AVC keeps on falling because
AFC continues to fall. But these two curves never touches x-

SH
axis as AFC never becomes zero.
177. Out of MC, AC &AVC , MC reaches at its minimum point at
I
first then AVC and then AC.

N
178. Initially MC and AC both are falling but falling rate of MC > AC.
179. At minimum point of AC , AC = MC.
A
180. MC = 20, AC = 15, both MC & AC are rising or AC is rising.

M
181. MC = 15, AC = 20, Impossible to tell whether MC is falling or
rising OR AC is falling.
182. Long run Avg. cost curve is also known as Planning curve and
Envelop curve.
183. Output at minimum point of LAC is efficient output.
184. Negatively sloped part of LAC is due to Economies of scale.
185. Positively sloped part of LAC is because of Diseconomies of
scale.
186. Only one short run Average cost curve (SAC) is tangent to
long run average cost curve (LAC) at its minimum point.
187. At minimum point of LAC , LAC = SAC = SMC = LMC.
CHAPTER 4

A
188. Difference between Price and MC is the degree of Monopoly

189.
Power.
d MR U
greater than 1
euqal to 1
positive
zero
D
less than 1

SH negative
190. In perfect market AR = MR = P.
I
191. In imperfect market, AR and MR are downward sloping.

N
192. MRn = TRn – TRn – 1

A
193. In perfect market , number of seller are very large  one firm
cannot influence the price.

M
194. In perfect market , firm sells homogeneous product  cross
elasticity is infinity.
195. In perfect market, firm produces efficient output.
196. In perfect market there exists no excess capacity.
197. The demand curve of perfect competitive firm is horizontal.
198. In perfect market the firms earns, super normal profit, normal
 profit or may suffer the loss in short run.
199. In long run the competitive firms only normal profit because
entry is free.
200. In monopoly, the distinction between firm and industry
disappears.
201. The monopoly firm is price marker.
202. The competitive firm is price taker.
A
U
203. In monopoly the demand curve is downward sloping.
204. In monopoly there exists no substitutes  demand curve is
inelastic.
D
205. In monopoly the firm experience super normal profit even in

SH
the long run  the entry is restricted.
206. Soap, Shampoo and Toothpaste industry is example of
I
monopolistic competition.

N
207. In monopolistic competition the firms produces differentiated
products.
A
208. Product differentiation is the characteristics of monopolistic

M
competition.
209. In monopolistic competition the cross elasticity is very high.
210. In monopolistic competition there exist excess capacity.
211. In monopolistic competition the firm earns normal profit in the
long run because entry and exit is free.
212. Long run outcome of monopolistic competition is similar to that
 of perfect competition i.e. normal profit because in both market
entry is free.
213. The prime difference of perfect and monopolistic competition
is of product differentiation.
214. In short run the firm continue to produce even in situation of
loss as long as .
215.
A
In short run the firm leave market when AR < AVC.
216.
217. U
In long run the firm leaves market when AR < AC.
When MR > MC, the firm continue to produce.
218.
219.
D
When MR = MC, the firm produces equilibrium output.
When MR = MC, the firm produces profit maximizing output.
220. H
MC should cut MR from below this is sufficient condition of
S
221. I
equilibrium.
When MR < MC, the firm does not produce.
222.
N
Difference between Price and MC is the indicator of monopoly

223.
power.
A
Higher the elasticity, lower is the difference between price and

224.
225.
M
marginal cost therefore lower is monopoly power.
Bread, butter, eggs market is local market.
Semi-durable goods market is regional market.
226. Durable goods market is national market.
227. Gold, silver market is international market.
228. Where delivery of goods takes place on the spot the market is
 called spot market.
229. Where delivery of goods takes place in future we call it future
market.
230. Stock exchange is regulated market.
231. Organisation of petroleum exporting countries (OPEC) is cartel.
232. Cartel is also known as collusive oligopoly.

A
233. In pure oligopoly firm produces perfect substitutes.

U
234. Kinked demand curve was given by Paul M. Sweezy.
235. Kinked demand curve is used to explain price rigidity.
D
236. In kinked demand curve, the response to decrease in price is
more than increase in price.
H
237. Cartel is also called syndicated oligopoly.
S
I
238. Price discrimination can be carry out for different use, person
and place.

N
239. There must exists monopoly for carry out price discrimination.

A
240. There must exists difference in elasticity on two sub-market
for carrying out price discrimination.

M
241. In 1st degree price discrimination the consumer surplus is zero.
242. In 2nd degree price discrimination the firm charges different
price for different quantity purchased.
243. In 3rd degree price discrimination the firm divide the total market
into small sub-market.
244. That portion of marginal cost (MC) which lies above AVC is
 short run supply curve of perfect competition.
245. In pure competition there exist large no. of firm, free entry and
homogeneous product.
246. Agricultural goods market is closer to perfect competition.
247. Increase in supply with demand remaining constant results in
decrease in price.

A
248. Equilibrium price is determined where demand is equal to
supply.
U
249. Globalization has made Indian market as buyer market.
D
250. Average revenue curve is also known as demand curve.
251. Oligopoly firm do not enter in price competition they carry out

SH
non-price competition.
252. Perfect competition is ideal market.
I
N
253. super normal profit (economic profit)
Normal profit (zero economic profit)
AR > AC
AR=AC
Loss A AR< AC

254. Market M Short Run

SNP NP Loss
Long Run
SNP NP
P.C.    x 
Monpoly     x
M.C.    x 
 CHAPTER 5: MACRO
253. An economy is said to be underdeveloped where agriculture
main occupation, poverty is widespread, population growth
rate is more than 2% etc.
254. In India the number of people dependent upon agriculture has
decreased in relative sense but increased in Absolute sense.

A
255. National Sample Survey Organisation (NSSO) measures
poverty in every 5years.
U
256. 22% of Indian population is still below poverty line during (2011-
12).
D
257. India’s per capital income is 1499$ in 2013.

SH
258. UNDP measure Human Development Index (HDI).
259. Longivity, knowledge and standard of living are three indicators
of HDI.
I
N
260. HDI rank of India is 136/187 in 2013.
261. HDI index is .554 in 2012.
A
262. Inequalities of Income is measured by Gini Index.
263. The value of Gini Index ranges from 0 to 1.
M
264. Gini Index of 0 shows perfect eqvalities of Income.
265. Gini Index of 1 showss perfect Inequalities.
266. India’s Gini Index is .368 in 2010 and ,.334 in 2011-12.
267. Countries having high GINI Index have high Inequalities
268. India Gini Index is less than other developed nation.
269. India’s National Income Increases 18 times but percaptita
National Income Increases only 5 times.
270. Irrigation facilities has increased to 63 mn. hact land.
271. Primary school has been quaderupled.
272. Literacy ratio is 73% 2011.
273. Occupational Structure
Primary 49% (11-12) A
Secondary 24.3% (11-12)
U
274.
Teritary 27% (11-12)
Share in GDP (2013-14) D
Primary

SH
Secondary 26.1%
13.9%

Teritary
I 59.9%
275. Share of agriculture in total export is 12% and Import 3%.
N
276. Production of food grain in 2013-14 was 265 mn ton.

A
277. Share of commercial crop like sugarcane, cotton and oilseeds
is increasing.

M
278. Green revolution was started in 1966.
279. Green revolution is also known as wheat revolution.
280. Land reform consist of
(a) Abolition of intermediaries
(b) Tenancy reforms
(c) Reorganisation of land holding
281. According to rent regulation act the rent is 25 to 50% of gross
produce.
282. Land ceiling is on 18 acre wet land or 54 acre unirrugated
land.
283. Regional Rural Bank (RRB) was established in 1975.
284. National Bank for Agriculture and rural development (NABARD)
was established in 1982.
A
U
285. NABARD is apex bank for Agriculture sector.
286. RRB was established for help of farmers & villagers.

D
287. Industrial development and per capital income are +vely
correlated.

SH
288. USA’s per capital income is 53143$.
289. 2nd F.Y.P stressed on development of Basic and capital good.
I
290. Mahalnobis model is connected with basic and capital goods.
291.
N
Basic Goods Capital Good

Cement A
Iron & Steel Rail road
Equipment

M
Fertilizers Tools
292. Durgapur, Rourkele and Bihlai Iron & Steel plant were made in
2nd F.Y.P.
293. In the 1st F.Y.P we have 5 PSU with total investment of 30 cr.
and now we have 277 PSU with investment of 85,00,00 cr.
294. In the planning period the industrial growth was uneven.
295. 1965-80 is known as period of deceleration & Retrogression.
296. III F.Y.P had registered highest growth rate of 9%.
297. In Xth F.Y.P the target growth rate was 10% but actual growth
rate was 8.7%.
298. XIth F.Y.P target the growth rate of 10% BUT actual growth
rate was on 7.4%.
299 XIIth FYP target growth rate of 9.6%.
A
U
300 Our Industries are under utilized, the maximum capacity
utilization is 50 to 60%.
D
301. Our Industries have increment capital output ratio, In 1 F.Y.P it
was 2.95, in 7th F.Y.P it was 3.9 in 8th & 9th F.Y.p it was 4.

SH
302. 50% of factories are situated in Gujarat, Maharastra, West
Bengal and Tamil Nadu.
I
303. Sick units is (a) when the borrowal account of the enterprise

N
remain NPA for 3 months or more Or (b) Net worth of the
company has been reduced to 50%
A
304. 2.5 lakh units are sick in India. Out of which 90% are small
scale units.
M
305. Service sector share 1/3rd of total export.
306. India’s share in the total world service export is 3.3%.
307. In the list of exporter India rank 12th.
308. India has 3rd largest scienctific and technical manpower.
309. Direct Tax are progressive in nature.
310. Indirect Tax are regressive in nature.
311. Burden of Direct Tax can’t be shifted and burden of Indirect
Tax can be shifted.
312. Incidence of tax lies on the person who ultimately bears the
burden of Tax.
313. Income Tax, corporate tax, capital gain tax, and gift tax are
direct tax.
A
314. Custom duty, Excise duty, VAT Service tax are indirect tax.
315 Tax U
Introduced Abolished Re-introduce
Income tax
Estate Duty
1860
1953
1873
1985
D 1886
–
Wealth Tax
SH1957 1993 1993
Gift Tax
Service Tax I 1958
1994-95
1998
–
2005
–
VAT N 1999

A
Implemented in 2005

M
316. Ad-volrem Tax is tax on certain % of price.
317. Tax collection is 17% of NY.
318. Direct : Indirect tax ratio
38.5% : 61.5%
319 Agriculture tax is exempt from tax
320 Tax collection of 2010-11 is 1158000 cr.
321 MODVAT:- Modified value added Tax.
322 CENVAT:- Centralised Value added tax.
323 MODVAT was introduced in 1986-87.
324. CENVAT was successor of MODVAT.
325. CENVAT was introduced in 2000-01.
326. Basic duty is 16%.
327. Excise is tax on production. A
328.
U
Custom Duty is tax on export and import.
329.
D
In pre-reform time custom duty was 125% but in post reform
time it reduced to 10%.

cost (NNPFC).
SH
330. National Income is equal to Net National Product at factor

I
331. Market price
(-) Net
Indirect Tax
Factor Cost.

332. Gross N -pep>

Net

333. Domestic A +NFIA

National

M
334. GDP > GNP if NFIA is -ve
GDP = GNP if NFIA is zero
GDP < GNP if NFIA is +ve
335. Indian Economy is divided into 3 sectors primary, secondary
and tertiary.
336. Primary sector is divided into Agriculture, Animal Husbandry
 Fishery, Forestry, Minning and Querring.
337. We use production method for entire primary sector and
Registered manufacturing.
338 For construction sector we use expenditure method.
339 Production method is also known as industry origin method.
340. Personal Income-Personal Taxes = Personal Disposal Income.

A
341. Private Income- corparte saving and taxes = Personal Income.

U
342. Transfer is not the part of National Income.
343. Mixed Income is the income of self-employed people.
D
344. Final goods are demanded by both household and govt.
345. Intermediate goods are demanded by all producing units.

(CSO).
SH
346. National Income is calculated by Central Statistical Organization

I
347. Chellian Raja and Bhoot lingam committee were set up for tax
reform.
N
A CHAPTER 6
POPULATION

10
M
348. India’s population
01 102.7 cr
117 cr
11 121 cr
349. India population every year es equal to the population of
Australia.
350. India is 2,4% of world’s area.
351. India accommodates 17.5% of world’s population.
352. India share only 1.2% of world’s income.
353. Every 6th person is an Indian.
354. Every 3rd person is Chiense.
355. Birth rate - Death rate = Population growth rate.
356. India’s birth rate is declining. A
357.
U
In 1st state of demographic transition BR & DR both are very

358.
high.
Upto 1920 India was in stage 1. D
In 1921, India entered into 2nd state of demographic transition.
359.
360. H
1921, is known as year of great divide.
S
361.
362. I
India is in II stage of demographic transition.
In III stage of demographic transition BR & DR both falls.
363. N
Birth rate = No. of birth /1000
364.
365. A
Death rate = No.of death /1000
Density of population = No. of person living/SQ. KM.
366.
367.
M
Literacy ratio = % of literate in total population.
Sex ratio = No. of girls / 1000 boys
368. Rate All India Highest Lowest
Rate
Birth Rate 21.6 Bihar Kerala
Deathrate 7% Orissa West Bengal and
Maharastra
Density
of popul
382
SQ.KM
Bihar
A
Arunachal Pradesh

Literacy ratio 73% Kerala U

Bihar
Sex ratio
IMR
943
42/1000
Kerala
MP
DHaryana
Kerala
MMR
SH
1.7 MP Kerala
IMR =
I
N
Material mortality rate – MMR

A
369. Among Union Territory Delhi has highest density of population
11297 (2010).
370. Ratio
Sex ratio
M 01
933
11
943
Literacy 63% 73%
Life exp. 63.4 yrs 66.1%
371. New national population policy was made in 1976.
372. New population policy 2000.
373. Plan IMR MMR
IX 30/100 1/1000
X 43/1000 2/1000
XI 28/1000 1/1000
374. IMR in recent time is still very high (42).
A
375. MMR is also very till now. It is 1.78/1000.
POVERTY
U
D
376. Poverty is measured in 2 terms Absolute and Relative term.
377. In India we use Absolute Poverty Measures.

SH
378. Relative sense is used for developed nation.
379. Cut off for poverty line

I
Rural Area
2400 calories per day
Urban Area
2100 calories per day
816 p.m. N 1000 pm

A (according to TENDULKAR committee)

380. Gini cofficient is used for measuring poverty is relative sense.
M
381. National Sample Survey Organisation (NSSO) measures
poverty in every 5 years.
382. Year Poverty Ratio
93-94 36%
99-00 26%
011-12 22%
383. Still ¼ of India population lives below poverty line.

384. No. of day Family exp.

Mixed recall period 365 days on 5 non food items
21.9% (Cloths,

(MRP method) footwear, health,

A education
Durables)
Uniform recall 30 days U on Food items

Period (URP method)

27.5%
D
SH
385. According to Planning Commission of India on MRP method

I
poverty is 21.9%.
386. Swarn Jayanti Gram Swarojgar Yojna (SGSY) started to help
N
poor peoples in villages by opening micro enterprises.

A
(IRDP+MWS = SGSY  NRLM now knowns as AJEEVIKA
387. Jawahar Rojgar Yojna + Employment Assurance Scheme =

M
SGRY later on merged with MNGEGA.
388. Mahatma Gandhi National Rural Employment Guarantee Act
was started to provide 100 days employment to rural poor.
389. SJSRY = Swarn Jayanti Shahri Rojgar Yojna. Now SJSRY has
renamed as National Urban livelihood Mission(NULM)
 UNEMPLOYMENT
390. Every 6th person of world is an Indian and every 3rd poor person
in the world is also an India.
391. Frictional unemployment is arised due to change in job.
392. In India most of the unemployment is structural.
393. In Xth plan around 70 mn people were unemployed.
A
394. Unemployment rate is 5.6% according to 68th NSSO round.

U
395. If a person is unemployed for round the year he is said to be
unemployed on usual status.
D
396. If a person had not worked even for a day during a week is said
to be unemployed on weekly basis.
H
397. If a person had worked for 1 hr. or more is said to be worked
S
I
for ½ of the day and if he worked for 4 hrs. or more during the
day is said to employed for whole day.

N
398. CDS is realistic measure.

A
399. Unemployment order.
CDS > CWS > VS

M
400. Employment order
US > CWS > CDS
401 Most of the unemployment is STUCTURAL in India.
INFRASTRUCTURAL CHALLANGES
402. Requirement energy and eco. development are +vely correlated.
403. 3% rise in industrial development is accompompained with 2%
 rise in requirement of energy.
404. India is 6th largest energy producer and 4th largest consumer.
405. 22% of our energy requirement is fulfilled from non-comm.
source.
405. Coal, Oil & gas are both primary and final energy source.
406. Electricity is only final energy source.

A
407. Industry is main consumer of our energy.

U
408. Electricity generated from coal, oil & gas is called as Thermal
energy.
D
409. Our energy installed capacity has increased from 2300 MW to
2,49,000 MW.

SH
410. In the term of generation thermal is the most efficient source.
411. In Delhi electricity was privatised in 2002.
I
412. Rajiv Gandhi Grameen Vidhyutikarn Programme was started

N
to provide electricity to villages.

A
413. 37% of total import is of Petrol, Oil and Lubricants.
414. Transmission and distribution loss is very high i.e., 20%.

M
415. Plant Load Factor (PLF) measures operational efficiency of
Thermal Power Plant.
416. Sourthern region has highest PLF of 81% and Eastern region
has lowest of 62%.
417. Among Central, SEB and private sector, central and private
has highest PLF and SEB has lowest PLF.
418. Railways largest in Asia and 4th largest in World.
419. Route length of railway = 65400 thousand Km.
420. Two segment
Freight : 70% of revenue
Passanger : 30% of revenue
421. Roadways 2nd largest in world.
422. Road length 4.86 mn km.
A
U
423. National Highway route length = 92851 Km. It handles 40%
total road traffic.
D
424. Airways has 125 airports and 16 international airports.
425. Air India and Indian airlined was amalgamated to form National
H
Aviation Co. Ltd.
S
I
426. Name National Aviation Co. Ltd. has been changed to Air India.
427. Our coastal line is 7517 Km having 12 major parts and 200

N
minor parts.

A
428. 12 major parts handles 57% of total traffic with Kandla as top
traffic handler.

M
429. Gross Registered Tonnage (GRT)
430. India rank 20th in the world shipping tonnage.
431. Shipping fleet on March 2013 was 1186 vessels.
432. Postal department was setup in 1837.
433. Postal network is largest in the world.
434. We have 1.55 lakh post office out of which 90% post offices
 are in rural areas.
435. 7175 person/post office.
436 In every 21.21 Km we have 1 post office.
437. Postal index number cane in 1974.
438. Telephone network is 2nd largest in world.
439. Telephone density is 75.23 %.
440. Village Public Telephone (VPT).
A
441.
442.
165 mn Internet users are in India.
U
NRHM - National Rural Health Mission was started in 2008.
443. D
Sarv Siksha Abhiyan started in 2001-02.
444.
445. H
National Literacy Mission was started 1998 for adult education.
Malaria, T.B. & Polio cases has reduced but AIDS, Cancer &
S
I
Blindness cases has increased.
BUDGET AND EXT DEBT
446.
N
Budget Deficit = Total Exp – Total Receipts
447.
448. A
Budget Deficit + Borrowing & Liability = Fiscal Deficit.
Fiscal Deficit – Interest Payment = Primary Deficit.
449.

450.
M
Fiscal Responsibility of Budget Management Bill was passed
in 2003. (FRBM)
The aim of FRBM bill was to reduce fiscal deficit by .5% every
year.
451. Fiscal deficit = 4.9% of GDP (12-13)
452. External Debt = 23% of GDP 2013
453. Concessional Debt = 23%
454. Debt-service ratio = 6%
455. 90% of external assistance is in the form of loan.
456. India rank 3th in top 15 debtor countries (2012).
457. Balance of payment is systematic record of all type of
international transaction a country with rest of the world.
458. A
BOP is prepared on double entry accounting system.
459.
U
Balance of trade is the balance of goods exported and imported
by a country. It is also known as visible trade.
460. D
Balance of current account is summation of BOT, BOS &
BOUT.
461. H
In Xth plan our export was 24% and import was 30%.
S
462.
463. I
In XIth plan export is estimated to be 20% and import 23%.
Upto 2008-09, USA was the top desination of our export.
464.
N
Now Asia and ASEAN countries have become the major trading

A
partners .India 60% export and import are with ASIA and
ASEAN.
465.
466.
467.
M
Balance of services is also knowns as Invisibles
Inflation of continous increase in price.
Inflation is measured on whole sale price index.
468. If prices es due to increase in demand, we call it demand pull
inflation.
469. If prices es due to increase in cost of production, we call it
 cost push inflation.
470. Stagflation = Stagnation + Inflation.
471. Highest inflation rate was 13.9% in 1965.
CHAPTER 7 : ECONOMIC REFORM
472. Economic reforms started in 1991.
473. In the pre-reform period India has very poor economic condition.
(a) National debt was 60% of GDP A
(b) Inflation was 12%
U
(c)
week. D
Foreign exchange reserve only to finance import of 3

H
474. Industrial licensing has been abolished for 18 industries now
reduced to 5 industries. These are Hazardous chemical ,
S
I
Industrial explosives, electronic and aerospace defence
equipments, alcoholic drinks, cigar and cigarettes

N
475. No. of industries reserved for public sector are 2|(Railways

A
and Atomic energy)
476. Defence has been dereserved in 2001. Now private company

M
can invest in defence but minimum requirement is 100 for entry.
477. For importing capital goods no permission is required provided
(a) the amount of imported capital is not more than 2 crore and
25% of total plant size (b) availability of foreign exchange is
ensured.
478. Mandatory convertibility clause from lending operation has been
 abolished.
479. Case by case approval for new projects is not required.
480. FDI Areas
100% Drug & Pharma, Airport, Hotel, E-commerce, Oil
refining, Film ,Single brand retailing.
51 % Multibrand retailing
49% Telecom A
74% Pvt. Banking
U
26%
D
Defense, Print media, Insurance
481. Before reform banking sector was highly regulated.

H
482. CRR was 15%, SLR was 38.5% but now it has reduced to 4%
and 22% respectively.
S
I
483. The securitisation and reconstruction of financial asset and
enforcement of Security Interest Act was passed for recovery
of loan.
N
A
484. Basel II reform was launched in 2008.
485 Basel III reform was launched in 2013.

•
M
486. In order to promote export following scheme was launched
• Cash Compensation Scheme
100% Export Oriented Undertaking (EOU)
• Special Economic Zone (SEZ)
• Duty drawback scheme
487. FIEO = Federation of Indian Export Organisation.
488. Devaluation means reduction in external value of currency in
respect of US$.
489. Devaluation has been done twice in 1991.
490. In July 1991, Indian rupee was devalued by 19%of US dollar
491. Import licenses has been reduced.
492. In 2000-01, 714 items has been removed from negative list in

A
01-02, 715 more items has been removed. Now few items have
quantitative restriction.
U
493. Cash Compensating Scheme bas been abolished in 1991.

D
494. Export Promotion of Capital Good (EPCG) Scheme was started
in 1990 and libralised in 1992 for promotion of import of capital
goods

SH
495. Special Ecomomic Zone policy was announced in 2000 and
I
ACT was set up in 2006.

N
496. SEZ provides employment to 6,44,000 person.
497. Foreign Exchange includes (a) foreign currency (b) gold reserve
(c) SDR.
A
498. FERA = Foreign Exchange Regulation Act.
M
499. FERA was enacted in 1973 in 2000 it was replaced by FEMA.
500. FEMA : Foreign Exchange Management Act.
501. Vishes Krishi Upaj Yojna started for promotion of agricultural
goods.
502. “Served from India Scheme” was started for promotion of export
 of services.
503. DFEC = Duty Free Export Credit.
504. DFEC has recast into served from India Scheme.
505. Chelliah Raja and Bhoot Lingam committee are related to Tax
reform.
506. In 1973-74 the maximum tax in highest slab was 97.75%.
507. Tax on Domestic Co. = 30%
A
Tax on Foreign Co. = 40%.
U
2008. D
508. Dematerialisation of TDS certificate was made effective from

509. FRBM Bill = Fiscal Responsibility of Budget Management Bill

H
was passed in 2003.
S
I
510. GST = Good Service Tax.
511. Disinvestment means selling of investment.

N
512. Privatisation means selling of public sector company share to

A
private sector company.
513. 100% disinvestment has been done in 18 Hotel of ITDC & 3

M
Hotel in HCI.
514. Cross Holding, Ware Housing, Strategic sale method are
method of disinvestment.
515. Disinvestment started in 1991-92.
516 In Minority Disinvestment public co. sell off less than 51 %
share and keep the management and control.
 Eg. Andrew Yule co. ltd. , NTPC, NHPC, RECorp.
517 In Majority Disinvestment Public co. sell off 51% or more of
the share to one strategic buyer .
Eg. Modern Food to HLL , BALCO to Steralite , CMC to TCS
518 In 100% Disinvestement Public co. sell off every thing.
519 2009 - National Hydropower Corporation was disinvested
through domestic issue.
A
U
520. Globalisation means integrating the domestic economy with
world economy.
521. WTO established in 1/1/1995.
522. GATT was predessor of WTO.
D
SH
523. WTO have 160 member countries.
524. WTO help in increase world trade.
I
525 Rupee got current account convertibility in August 1994.

N
526. Capital Account Convertibility (CAC) is being done under

A
phased manner .
527. Tarapore Committee was set up for CAC.

M
528. MIGA(1988) , IDA(1960) , ICSID(1966) ,IFC are bank in World
Bank group.
529. IMF was established in 1947.
530. Initially 31 countries have its member but now 188 countries
are its member.
531. IDA is soft window of World Bank.
532. World Bank is also known as International Bank for
reconstruction and development. It was established in 1945. It
has 188 members.
CHAPTER 8 : MONEY & BANKING
533. Prof. Walker said “Money is What Money Does”.
534. According to ROBERTSON “Any thing which is generally
A
acceptable as means of exchange is known as money”.
535. NM1 is narrow money supply.
536. NM3 is broad money supply. U
D
537. In refined version M4 has been deleted.
538. Total money supply in India is given by NM3.
H
539. NM1 does not includes Term deposit but NM3 includes Term
S
deposit.
I
540. NM1 = CC + DD + other deposite with RBI.

N
541. Function of comm. Bank
(a)
(b) A
Receipts of deposit
Lending of money
(c)
M
General services
542. Nationalisation started in July 1969.
543. In 1969, 14 Bank were nationalised.
544. In 1980, 6 more Bank were nationalised.
545. 1993, two Banks were merged.
546. Total nationalised bank are 19.
547. Factors responsible for nationalisation
(a) Economic concentation
(b) Urban bias
(c) Agri. sector reglected
(d) Violated the norm laid down in plan.
548. No. of bank branches – 111723 (2013).
A
549. Population per bank decreased from 55000 in 1969 to 12000
in 2013.
U
550. No. of branches in rural areas increased from 22% to 38 %
2013. D
551. Maharashtra contributes maximum to bank deposit (22%).
H
552. Lending to priority sector increased from 15% to 36% in 2013.
S
(a) I
553. Causes of low profitability of comm. bank
Insufficient growth
(b)
N
Regional imbalances
(c)
(d) A
Lack of expertise
Expansion of branches

M
554. NPA = Non-performing assets (Bad debts).
555. RBI is central bank of India.
556. RBI do not deals with general publc.
557. RBI is known as Bank of Issue.
558. RBI is known as Banker of Bank.
559. RBI is lender of last resort.
560. RBI was established in 1935.
561. RBI was nationalised in 1949.
562. One rupee note and all types of coins are issued by Central
Government.
563.
A
Under Lead Bank Scheme we appointed leader bank in every
area for banking development.
564.
U
RBI offers central settlement and clearance.
565.
Rate
Sep 2014
% D
Bank rate
Reppo rate
SH 9%
8%

I
Reverse reppo rate 7%

566.
SLR
N 22%
Prime Lending Rate (PLR) now decided by comm. bank earlier

567.
A
decided by RBI.
Qualitative measures indiscriminately effect the entire economy.

568.
M
(Q.31 ICAI)
Qualitative measures is also known as Selective Credit Control
Measures.
569. In order to encourage investment (credit expansion) CRR ,
BR, SLR need to decrease & buy the security.
570. In order to discourage investment (credit control) - CRR, BR,
SLR, PLR, sell the securities.
571. Change in margin requirement, moral suasion, credit rationing
are qualitative measure.

A
U
D
SH
I
N
A
M
 Frequently asked Abbrevations (FAA) in MACRO
ECONOMICS
1. ADR - American Depository Receipts
2. AIE - Alternative and Innovative Education
3. AMPC - Automatic Mail Processing Centres
4. BOP - Balance of Payment
5. BPO - Business Process Outsourcing. A
6. BSNL - Bhart Sanchar Nigam Limited
U
7. CDS - Current Daily Status
8. CENVAT - Central Value Added Tax D
SH
9. CRR - Cash Reserve Ratio
10. CSIR - Council of Scientific and Industrial Research

I
11. CWS - Current Weekly Status.

N
12. DDP - Desert Development Programme
13. DFEC - Duty Free Export Credit.

A
14. DPAP - Drought Prone Area Programme

M
15. EAS - Employment Assurance Scheme
16. EGS - Education Guarantee Scheme.
17. EMRs - Exclusive Marketing Rights
18. EOUs - Export Oriented Units
19. EPCG - Export Promotion Capital Goods.
20. EPZs - Export Processing Zone
21. FDI - Foreign Direct Investments
22. FEMA - Foreign Exchange Management Act
23. FERA - Foreign Exchange Regulation Act.
24. FIEO - Federation of Indian Export Organizations
25. FIIs - Foreign Institutional Investors
26. FRA - Forward Rate Agreement
A
27. FRBMA - Fiscal Responsibility and Budget Mgt. Act.
28. FYPs - Five Year Plans
U
D
29. GATT - General Agreement of Trade and Tariff.
30. GDP - Gross domestic Product

SH
31. GDRs - Global Depository Receipts
32. GER - Gross Enrollment Ratio

I
33. GNP - Gross National Product

N
34. GRT - Gross Registered Tonnage
35. HCI - Hotel Corporation of India Limited

A
36. HDI - Human Development Index
37. HYVP - High Yielding Variety programme
M
38. HZL - Hindustan Zinc Limited
39. IAY - Indira Awas Yojana
40. IBRD - International Bank for Reconstruction and Development
41. ICICI - Industrial Credit and Investment Corporation of India
42. ICOR - Increasing Capital - Output Ratio
43. ICSID - International Center for Settlement of Investment
Disputes
44. IDA - International Development Association.
45. IDBI - Industrial Development Bank of India
46. IDRA - Industrial Development Regulation Act.
47. IFC - International Finance Corproation
48. IFC - International Finance CorporationA
49. IIMs - Indian Institute of Management
U
D
50. IISERs - Institute of Science Education and Research
51. IMF - Indian Monetary Fund

SH
52. IMR - Infant Mortality Rate
53. IOC - Indian Oil Corporation

I
54. IPCC - Indian Petrochemical Corporation

N
55. IRDP - Integrated rural Development Programme
56. IWDP - Integrated Wastelands Development Programme

A
57. JGSY - Jawahar Gram Sammridhi Yojana

M
58. JRY - Jawahar Rozgar Yojana
59. KGBV - Kasturba Gandhi Balika Vidyalaya
60. LFPR - Labour Force Participation Rate
61. LIC - Life Insurance Corproation
62. LJMC - Lagan Jute Machinery Company Limited.
63. MFIL - Modern Food Industries Limited.
64. MIGA - Multi-Lateral Investments Guarantee Agency.
65. MMR - Maternal Mortality Rate
66. MODVAT- Modified Value Added Tax
67. MTA - Mid Term Appraisal
68. MTAs - Multilateral Trade Agreement

A
69. MTNL - Mahanagar Telephone Nigam Limited
70. MUL - Maruti Udyog Limited.
71. MWS - Million Wells Scheme
U
D
72. NABARD- National Bank for Agriculture and Rural Development
73. NDP - Net Domestic Product

SH
74. NFFWP - National Food for Work Programme
75. NFIA - Net Factor Income From Abroad

I
76. NHDP - National Highways Development Projects

N
77. NHPC - National Hydgrelectric Power Corporation.
78. NIP - New Industrial Policy.

A
79. NIT - National Institute of Technology

M
80. NIXI - National Internet Echange of India
81. NLM - National Literacy Mission
82. NNP - Net National Product
83. NPA - Non Performing Assets
84. NPCIL - Nuclear Power Corporation of India Limited
85. NPE - National Policy on Education
86. NPEGEL - National Programme for Education of Girls at
Elementary Levels
87. NPP - National Population Policy
88. NREG - National rural Employment Guarantee
89. NRIs - Non Residents Indians
90. NRY - Nehru Rozgar Yojana
A
91. NSAP - National Social Assistance Programme
92. NSE - National Stock Exchange
U
D
93. NSSO - National Sample Survey Organization
94. NTPC - National Thermal Power Corproation

SH
95. OCBs - Overseas Corporate Bodies.
96. OMO - Open Market Operation

I
97. ONGC - Oil andNatural Gas Corproation

N
98. OPEC - Organization of Petroleum Exporting

A
M