Economics Test - 18

At the base of purchasing power parity, India is the third largest economy after China and the US and at the base of the exchange rate, India is the seventh largest economy.

• The importance of foodgrains in the Indian agricultural economy may be gauged from the fact these crops occupy about two-third of the total cropped area in the country.
• Foodgrains are dominant crops in all parts of the country whether they have subsistence or commercial agricultural economy.
• On the basis of the structure of grain, the foodgrains are classified as cereals and pulses.

India is the second-largest producer of fruits in the world: correct

• After China, India is the second-largest producer of horticultural crops and fruits.
• India is the world's largest producer of Mangoes, along with Banana, Papaya, and Lemon.
• Tamil Nadu, Gujarat and Maharashtra are the topmost Banana producing Indian states.

India is the biggest producer of vegetables in the world: incorrect

• In 2019, China was the leading producer of vegetables in the world.
• With a production volume of nearly 588.26 million metric tons.
• It is followed by India with approximately 132 million metric tons of fresh vegetables. 
• Tomatoes were the leading vegetables based on global production volume in that year.

Production of fruits, vegetables and spices called horticulture: correct

• Horticulture is the art of cultivating plants in gardens to produce food and medicinal ingredients.
• It also involves the cultivation of plants for comfort and ornamental purposes.
• Horticulturists grow flowers, fruits and nuts, vegetables, spices and herbs, as well as ornamental trees and lawns. 

Uttar Pradesh is the largest producer of wheat in India: correct

• Uttar Pradesh is the largest producer of wheat in India with a production of 30.06 million tonnes (2016-17).
• It is followed by Madhya Pradesh and Punjab with a production of 17.94 and 16.44 million tonnes (2016-17) respectively.

Thus, India is the biggest producer of vegetables in the world is not correct.

The correct answer India.

• The importance of foodgrains in the Indian agricultural economy may be gauged from the fact these crops occupy about two-thirds of the total cropped area in the country.
• Foodgrains are dominant crops in all parts of the country whether they have subsistence or commercial agricultural economy.
• On the basis of the structure of grain, the foodgrains are classified as cereals and pulses.
• The cereals occupy about 54 percent of the total cropped area in India.
• India produces a variety of cereals, which are classified as fine grains (rice, wheat) and coarse grains (jawar, bajra, maize, ragi), etc.

Key Points

Rice:

• India had the highest export volume of rice worldwide, at 15.5 million metric tons as of 2020/2021.
• Vietnam was the second-largest rice exporter, with about 6.4 million metric tons of rice worldwide in that year.
• In terms of imports, China remains the number one importer of rice. 
• The top three countries for rice consumption are China, India, and Indonesia. ​

Thus, India is the largest exporter of rice in the world.

The correct answer is option 1, i.e. Mixed.

• Capitalist Economy: 
  • It is the free market economy where the means of production of goods and services are owned by private entities.
  • It is a competition-driven economy motivated by the self-interest of individuals.
  • The origins lie in the book 'The Wealth of nations' written by Adam Smith (1776).
  • The USA is the finest example of the Capitalist economy.
• Socialist Economy:
  • It is a type of state economy where the collective ownership of the means of production exists.
  • The state plays a major role in regulating the economy and means of production.
  • Cuba and China are examples.
• Mixed economy:
  • The economic system in which characteristics of both, capitalism and the state economy are blended.
  • Both private entities and the State own the means of production.
  • John Maynard Keynes promoted this concept in the wake of 'The Great Economic Depression of 1928'.
  • Iceland, Sweden, and India are some of the examples.

The correct answer is Option 3.

Key Points

• Third Five Year Plan was a failure due to India-China war followed by Indo-Pakistan.
• Third Five Year Plan (1961-66) aimed to make India’s economy ‘self-reliant’ and ‘self-generating’.
• It has faced a lot of political and economic crisis.
• The Indo-China war (1962) and Indo-Pak war (1965) had exposed the weakness of country’s defence sector, so, the good amount of money from the budget was invested in this sector.
• It could not even achieve its growth target of 5.6%

​The correct answer is option 2 i.e., Russia.

• Russia made national planning for the first time.
• In a basic sense, planning simply means thinking ahead to prepare for the future.
• Beginning in 1928, the course of the economy of the Soviet Union was guided by a series of five-year plans.
• Under Joseph Stalin's close supervision, a complex system of planning arrangements had developed since the introduction of the first five-year plan in 1928.
• China adopted the Soviet economic model, based on state ownership in the modern sector, large collective units in agriculture, and centralized economic planning.
• The Soviet approach to economic development was manifested in the First Five-Year Plan (1953–1957).
• India too was inspired by the Russian experience.
• The Planning Commission was set up to prepare five-year plans. First Five year Plan came in 1951.
• The United States has a mixed economy.

The correct answer is Its high population in the age group of 15-64 years.

Key Points

• The demographic dividend is the economic growth potential that can result from shifts in a population’s age structure, mainly when the share of the working-age population (15 to 64) is larger than the non-working-age share of the population (14 and younger, and 65 and older).
• Demographic dividend in India :
  • As populations in countries such as China, US, and Japan is getting older, India’s population is getting younger.
  • India’s working-age population is now increasing because of rapidly declining birth and death rates.
  • India’s age dependency ratio, the ratio of dependents (children and the elderly) to the working-age population (14- to 65-year-olds), is expected to only start rising in 2040, as per UN estimates. This presents a golden opportunity for economic growth.
  • However, this growth will depend on those in the working-age population actually working.
  • India’s labour force participation rate is declining, especially among rural youth (15- to 29-year-olds) and women.
  • For India to harness the power of its favourable demographics, India’s labour force needs to be empowered with the right skills for the modern economy.

The correct answer is 8.

• 8 countries are members of 'SAARC'.

Key Points

• South Asian Association for Regional Cooperation (SAARC):
  • It was established with the signing of the SAARC Charter in Dhaka on 8 December 1985.
  • The Headquarters of the Association is in Kathmandu, Nepal.
  • Its member countries are Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, Sri Lanka
  • Afghanistan became the newest member of SAARC at the 14th annual summit in 2007.
  • SAARC comprises 3% of the world's area, 21% of the world's population, and 3.8% of the total global economy.
  • Its objectives are to promote welfare and accelerate the economic growth of the people of South Asia.
  • SAARC Charter Day is observed every year on 8th December.

Important Points

• SAARC Member States	SAARC Observer States
  Afghanistan Bangladesh Bhutan India Maldives Nepal Pakistan Sri Lanka	Australia China European union Iran Japan Mauritius United States Myanmar Republic of Korea

  

The Correct Answer is Option 3 i.e Third Five Year Plan.

• First Five Year Plan:
  • The duration of the plan is 1951-56.
  • It was based on the Harrod-Domar model.
  • Its main focus was on the agricultural development of the country.
  • This plan was successful and achieved a growth rate of 3.6%, more than the target growth of 2.1%.
• Second Five Year Plan:
  • The duration of the plan is 1956-61.
  • It was based on the P.C. Mahalanobis Model.
  • Its main focus was on the rapid industrialization in the country.
  • This plan was successful and achieved a growth rate of 4.3% against target growth of 4.5%.
• Third Five Year Plan:
  • The duration of the plan is 1961-66
  • The aim of this plan was to make India a 'self-reliant' and 'self-generating' economy.
  • The Plan was a failure in reaching the target growth of 5.6% due to the following factors - Chinese aggression (1962), Indo-Pak war (1965), severe drought 1965-66. 
  • It was a thorough failure as it achieved a growth rate of 2.8% against target growth of 5.6% due to unforeseen events that took place during this tenure.
• Fourth Five Year Plan:
  • The duration of the plan is 1969-74.
  • This plan mainly emphasized on growth with stability and progressive achievement of self-reliance.
  • This plan was a failure and achieved a growth rate of 3.3% only against the target of 5.7%.
  • The liberation of Bangladesh and Influx of Bangladeshi refugees and successive failures of monsoon are the few problems that made this plan a failure.

Concept:

Developing countries:

• In comparison to other countries, a developing country is a sovereign state with a less developed industrial base and a lower Human Development Index (HDI).
• Examples: Bangladesh, India, Pakistan etc.

Developed countries:

• In comparison to other less industrialised nations, a developed country or high-income country is a sovereign state with a high quality of life, a developed economy, and advanced technological infrastructure.
• Gross domestic product (GDP), gross national product (GNP), per capita income and level of industrialization are the most prominent parameters used to assess economic development.
• Examples of developed countries are the USA, UK, Germany, and Australia.

Explanation:

Resource consumption:

• The indicator of a country's economic development is based on countries per head energy or resource consumption level.
• A country with well develop manufacturing, good provision of transport, good movements of goods and high employment have high energy of resource demand than developing countries.
• A 2010 survey on per capita energy consumption shows us that developing countries' per head energy consumption is 800 times lesser than developed countries like Canada, or the USA.
• Another cause of using lesser resources in developing countries is that proper resource exploitation is not implemented.
• Resources or energy consumption is less in developing countries because developed countries have a high concentration of industry, a high level of car ownership, and high domestic uses of home appliances that need high energy or resources than developing countries.

Thus, developing countries use lesser resources when compared developed nations.
Additional InformationResource:

• Everything available in our environment which can be used to satisfy our needs, provided, it is technologically accessible, economically feasible and culturally acceptable can be termed a 'Resource'.

Type of resource:

• Natural Resources: 
  • ​Resources that are drawn from Nature and used without much modification are called natural resources.
• Human-made Resources: 
  • People use natural resources to make buildings, bridges, roads, machinery and vehicles, which are known as human-made resources.
  • Technology is also a human-made resource.
• Human Resources: 
  • Education and health help in making people a valuable resource.
  • Improving the quality of people’s skills so that they are able to create more resources is known as human resource development.