Optionals IAS Mains Economics: Questions 105 - 112 of 216

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Question 105

Balanced and Unbalanced Growth
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Appeared in Year: 2016 (IEcoS)

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Essay▾

What is GDP deflator? How is it used to measure inflation?

Explanation

The GDP deflator is the ratio of the value of goods and services an economy produces in a particular year at current prices to that of prices that prevailed during the base year. It is calculated as:

  • Nominal GDP is the market value of goods and services produced in an economy, unadjusted for inflation. Real GDP is nominal GDP which has been adjusted…

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Question 106

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Appeared in Year: 2015 (IEcoS)

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Essay▾

Why the ‘Gross Domestic Product’ is sometimes referred to as a ‘Grossly Deceptive Product’ ?

Explanation

  • Gross Domestic Product (GDP) is defined as a measure of the total flow of goods and services produced by the economy over a specified period usually a year.
  • The following reason contributes to GDP becoming Grossly Deceptive Product:
  • Black money generation: Black money is not generated from the economic phenomenon only, but it has political, social, a…

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Question 107

Lewis Model of Development with Surplus Labour
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Appeared in Year: 2017 (IEcoS)

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Discuss the knife edge instability problem in Harrod Domar model.

Explanation

  • Both of them developed their theories in reaction to Keynesian theory. Keynes neglected twin effect of investment which means an increase in income and hence, effective demand and increase in productive capacity.
    • The classical economists emphasized productivity aspect of investment, which took for, granted the demand side whereas Keynes attached mor…

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Question 108

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Appeared in Year: 2017 (IEcoS)

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How surplus and hence, wealth is generated as per Physiocrats? Explain in terms of Quesnay՚s Tableau Economies.

Explanation

  • Physiocrats held agriculture supreme among all occupations, since it was the source of wealth.
    • It is in agriculture that nature works along with man. In this, agriculture has been given a dominant place because it plays an important role in economic development of the country.
    • Agriculture is the only sector, which yields surplus produce. It is only i…

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Question 109

WTO, TRIMS, TRIPS, Domestic Measures
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Appeared in Year: 2015 (IEcoS)

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Comment on Agreement on Agriculture (AoA) under WTO with reference to agricultural subsidies.

Explanation

  • The WTO Agreement on Agriculture contains provisions in 3 broad areas of agriculture and trade policy: market access, domestic support and export subsidies.
    • Market Access: This includes that prevailing non-tariff barriers in agriculture should be abolished and converted into tariff barriers.
    • Domestic Support: It can be categorized under various boxes…

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Question 110

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Appeared in Year: 2010 (IEcoS)

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Explain the meaning of National Product at market prices and National product at factor cost.

Explanation

Net National Product (NNP) is the monetary value of finished goods and services produced by a country՚s citizens, overseas and domestically, in a given period.

  • Net factor Income from abroad - Depreciation
  • Net factor Income from abroad – Depreciation – net indirect taxes
  • It can be defined as the net value added at factor cost (by the residents) in an…

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Question 111

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Appeared in Year: 2010 (IEcoS)

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“Despite merit, Hecksher Ohlin theory has some shortcomings” . Discuss.

Explanation

This theory is based upon highly over simplifying assumptions of perfect competition, full employment of resources, identical production function, and absence of transport costs. Because of these assumptions, this model becomes unrealistic.

  • This model assumes fixed quantities of factor of production, given the production functions, income and costs.…

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Question 112

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Appeared in Year: 2016 (IEcoS)

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What are the basic characteristics of monetarist school of thought?

Explanation

The monetarist school is generally associated with American economist Milton Friedman. This school maintains that the money supply is the key determinant on the demand side of short run economic activity.

  • Monetarist economists believe that the role of government is to control inflation by controlling the money supply.
  • Monetarists believe that markets…

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