Mock Test

Exam: BPSC Subject: General Studies Topic: Economics

Total Questions: 20

Q1. The 'Bihar Investment Promotion Act' aims to:

Discourage investment Facilitate and promote investment in the state Increase land acquisition costs Restrict foreign direct investment
Q2. Sustainable development is closely linked to inclusive growth because:

Sustainable development ignores the needs of future generations Inclusive growth ensures that economic progress does not deplete resources for future generations Sustainable development focuses only on environmental protection Inclusive growth is achieved by exploiting natural resources rapidly
Q3. Which of the following is a consequence of unexpected deflation for borrowers?

The real value of their debt decreases. The real value of their debt increases. Their ability to repay is enhanced. They are incentivized to borrow more.
Q4. Which of the following is a tool of fiscal policy?

Repo rate Bank rate Government expenditure Cash Reserve Ratio (CRR)
Q5. Which economic tool is used to measure the value of environmental goods and services that do not have a market price?

Cost-benefit analysis Input-output analysis Environmental valuation Game theory
Q6. In a closed economy, a decrease in aggregate demand leads to a rise in unemployment. Which of the following is a primary driver of aggregate demand that, if reduced, could significantly impact employment in Bihar's non-agricultural sectors?

Government spending on rural roads Private consumption expenditure and business investment Exports of agricultural products Government subsidies for small businesses
Q7. The concept of 'Industrial Policy' in development economics refers to:

Allowing the market to determine the structure of industry without government intervention. Government strategies to promote specific industries or sectors deemed crucial for economic growth. Focusing exclusively on the development of the service sector. Encouraging a complete shift to a knowledge-based economy.
Q8. Bihar's focus on rural development and poverty alleviation often necessitates government intervention in the form of public works programs and social safety nets. This approach is most consistent with the principles of:

Pure laissez-faire capitalism. Anarcho-capitalism. A welfare state (typically within a mixed economy). Austrian economics.
Q9. A 'balanced budget' implies:

Government revenue is less than government expenditure. Government revenue is more than government expenditure. Government revenue is equal to government expenditure. Government expenditure is solely on capital projects.
Q10. The concept of 'inclusive growth' means:

Growth that benefits only a select few Growth that is shared across all segments of society Growth that ignores social welfare Growth achieved through exploitation
Q11. The 'Lewis Model of Development' describes a dual economy characterized by:

A developed formal sector and a stagnant informal sector. A traditional agricultural sector with surplus labor and a growing modern industrial sector. A strong service sector and a declining manufacturing sector. A planned economy and a free market economy operating side-by-side.
Q12. Globalization has led to an increase in the outsourcing of services from India, particularly in which domain?

Healthcare Education Information Technology (IT) and Business Process Outsourcing (BPO) Manufacturing
Q13. Which of the following best describes the concept of 'rent-seeking' in public finance?

The efficient allocation of public resources. Efforts by individuals or groups to influence government policy in a way that benefits them at the expense of others. The process of collecting taxes efficiently. The provision of public goods by the government.
Q14. The 'Mahatma Gandhi National Rural Employment Guarantee Act' (MGNREGA) guarantees a minimum of 100 days of wage employment in a financial year to every rural household whose adult members are willing to do unskilled manual work. Which of the following is a critical criticism often leveled against MGNREGA's implementation in the context of sustainable rural development?

Insufficient allocation of funds Lack of demand for unskilled labor Focus on water conservation and land development projects Perpetuation of dependency on wage labor without skill enhancement
Q15. Which city in India is currently developing a major international airport under the 'Greenfield Airports Policy'?

Mumbai Chennai Noida (Jewar Airport) Kolkata
Q16. A government wishes to raise revenue through a tax on a specific good. To maximize tax revenue, the government should impose the tax on a good for which the:

Demand is elastic Supply is elastic Demand is inelastic Supply is inelastic
Q17. The 'liquidity trap' is a situation where:

Interest rates are so high that they discourage investment and consumption. The central bank has exhausted all its tools to stimulate the economy. Monetary policy becomes ineffective because nominal interest rates are at or near zero, and people hoard cash. Banks are unwilling to lend due to a lack of collateral.
Q18. An environmental Kuznets Curve (EKC) suggests that environmental degradation:

Always increases with economic development. First increases with economic development and then decreases after a certain income level. Always decreases with economic development. Is unrelated to economic development.
Q19. In the context of inclusive growth, the 'poverty trap' is often perpetuated by:

Effective government social safety nets and skill development programs. Limited access to education, healthcare, and financial services, coupled with low productivity. A highly competitive job market with ample opportunities for all. Policies that encourage widespread entrepreneurship among the poor.
Q20. The 'substitution effect' in environmental economics refers to the tendency of individuals and firms to:

Reduce their consumption of a good when its price increases. Substitute away from a relatively more expensive good towards a relatively cheaper substitute. Increase their consumption of a good when its price decreases. Respond to price changes by altering their consumption patterns.

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