Q3easy
The Global Competitiveness Report is published by the
(a) International Monetary Fund
(b) United Nations Conference on Trade and Development
(c) World Economic Forum
(d) World Bank
Answer: (c)
UPSC 2019 Economics PYQ Solved
24 Economics questions from UPSC 2019 Prelims GS Paper 1 — solved with answers
24
Questions
63%
Trap Rate
Partial Truth
Top Trap
Q24moderateScope Confusion
In a given year in India, official poverty lines are higher in some States than in others because
(a) poverty rates vary from State to State
(b) price levels vary from State to State
(c) Gross State Product varies from State to State
(d) quality of public distribution varies from State to State
Answer: (b)
Trap: Scope Confusion
Option (a) confuses poverty rate with poverty line. The poverty LINE is the threshold (income/expenditure level), while poverty RATE is the percentage below that line. The line itself is higher in costlier states because it's based on the cost of a basic consumption basket, which varies with price levels.
Q48moderatePartial Truth
Consider the following statements:
1. Coal sector was nationalized by the Government of India under Indira Gandhi.
2. Now, coal blocks are allocated on lottery basis.
3. Till recently, India imported coal to meet the shortages of domestic supply, but now India is self-sufficient in coal production.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 and 3 only
(c) 3 only
(d) 1, 2 and 3
Answer: (a)
Trap: Partial Truth
Statement 2 is wrong: coal blocks are allocated via auction (not lottery) after the Supreme Court cancelled earlier allocations. Statement 3 is wrong: India still imports coal (not self-sufficient). Students may believe India became self-sufficient given government push for increased domestic production.
Q57easyPartial Truth
Consider the following statements:
1. According to the Indian Patents Act, a biological process to create a seed can be patented in India.
2. In India, there is no Intellectual Property Appellate Board.
3. Plant varieties are not eligible to be patented in India.
Which of the statements given above is/are correct?
(a) 1 and 3 only
(b) 2 and 3 only
(c) 3 only
(d) 1, 2 and 3
Answer: (c)
Trap: Partial Truth
Statement 2 is tricky: IPAB did exist (established in 2003) at the time of this exam in 2019. It was later abolished in 2021. So in the context of 2019, Statement 2 was wrong. Statement 1: Section 3(j) of Patents Act excludes biological processes for seed/plant creation from patentability.
Q60easyCommon Misconception
Consider the following statements:
As per the Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018
1. if rules for fixed-term employment are implemented, it becomes easier for the firms/companies to lay off workers
2. no notice of termination of employment shall be necessary in the case of temporary workman
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer: (b)
Trap: Common Misconception
Statement 1 is a trap. Fixed-term employment doesn't make layoffs easier - it means the contract automatically ends at the fixed term without needing to lay off. Workers also get the same benefits as permanent workers during their tenure. Students confuse 'fixed-term' with 'easier to fire'.
Q61moderate
The Service Area Approach was implemented under the purview of
(a) Integrated Rural Development Programme
(b) Lead Bank Scheme
(c) Mahatma Gandhi National Rural Employment Guarantee Scheme
(d) National Skill Development Mission
Answer: (b)
Q62moderatePartial Truth
With reference to the management of minor minerals in India, consider the following statements:
1. Sand is a 'minor mineral' according to the prevailing law in the country.
2. State Governments have the power to grant mining leases of minor minerals, but the powers regarding the formation of rules related to the grant of minor minerals lie with the Central Government.
3. State Governments have the power to frame rules to prevent illegal mining of minor minerals.
Which of the statements given above is/are correct?
(a) 1 and 3 only
(b) 2 and 3 only
(c) 3 only
(d) 1, 2 and 3
Answer: (a)
Trap: Partial Truth
Statement 2 is the trap. While states do grant mining leases for minor minerals, the power to frame rules ALSO lies with State Governments (not Central Government). Under MMDR Act, for minor minerals, rule-making power is with State Governments. The statement makes it sound like only Centre can frame rules.
Q63moderateCommon Misconception
Consider the following statements:
1. Most of India's external debt is owed by governmental entities.
2. All of India's external debt is denominated in US dollars.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer: (d)
Trap: Common Misconception
Statement 1: Most of India's external debt is actually owed by private sector (non-government), not government entities. Statement 2: India's external debt is denominated in multiple currencies (USD, SDR, Yen, Euro, etc.), not only USD. Students assume government owes most debt and it's all in dollars.
Q64easy
Which of the following is not included in the assets of a commercial bank in India?
(a) Advances
(b) Deposits
(c) Investments
(d) Money at call and short notice
Answer: (b)
Q65moderateAbsolute Qualifier
In the context of India, which of the following factors is/are contributor/contributors to reducing the risk of a currency crisis?
1. The foreign currency earnings of India's IT sector
2. Increasing the government expenditure
3. Remittances from Indians abroad
Select the correct answer using the code given below.
(a) 1 only
(b) 1 and 3 only
(c) 2 only
(d) 1, 2 and 3
Answer: (b)
Trap: Absolute Qualifier
Statement 2 is the trap. Increasing government expenditure can actually INCREASE the risk of currency crisis (fiscal deficit leads to higher imports, inflation, capital flight). Students may think more spending stabilizes the economy. IT earnings and remittances bring in foreign currency, reducing crisis risk.
Q67easy
Which of the following is issued by registered foreign portfolio investors to overseas investors who want to be part of the Indian stock market without registering themselves directly?
(a) Certificate of Deposit
(b) Commercial Paper
(c) Promissory Note
(d) Participatory Note
Answer: (d)
Q70moderatePartial Truth
With reference to India's Five-Year Plans, which of the following statements is/are correct?
1. From the Second Five-Year Plan, there was a determined thrust towards substitution of basic and capital good industries.
2. The Fourth Five-Year Plan adopted the objective of correcting the earlier trend of increased concentration of wealth and economic power.
3. In the Fifth Five-Year Plan, for the first time, the financial sector was included as an integral part of the Plan.
Select the correct answer using the code given below.
(a) 1 and 2 only
(b) 2 only
(c) 3 only
(d) 1, 2 and 3
Answer: (a)
Trap: Partial Truth
Statement 3 is fabricated - the Fifth Five-Year Plan focused on poverty alleviation and self-reliance, not financial sector integration. Students may not remember specific plan objectives and may accept this. Statement 1 (Mahalanobis model - heavy industry focus in 2nd Plan) and Statement 2 (4th Plan's equity focus) are correct.
Q71moderateCommon Misconception
With reference to Asian Infrastructure Investment Bank (AIIB), consider the following statements:
1. AIIB has more than 80 member nations.
2. India is the largest shareholder in AIIB.
3. AIIB does not have any members from outside Asia.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
Answer: (a)
Trap: Common Misconception
Statement 2: China (not India) is the largest shareholder in AIIB. India is the second-largest. Statement 3: AIIB has non-regional members from outside Asia (UK, Germany, France, etc.). Students may assume India leads AIIB shareholding or that 'Asian' bank means Asia-only members.
Q72moderate
What was the purpose of Inter-Creditor Agreement signed by Indian banks and financial institutions recently?
(a) To lessen the Government of India's perennial burden of fiscal deficit and current account deficit
(b) To support the infrastructure projects of Central and State Governments
(c) To act as independent regulator in case of applications for loans of Rs 50 crore or more
(d) To aim at faster resolution of stressed assets of Rs 50 crore or more which are under consortium lending
Answer: (d)
Q73moderateCommon Misconception
The Chairmen of public sector banks are selected by the
(a) Banks Board Bureau
(b) Reserve Bank of India
(c) Union Ministry of Finance
(d) Management of concerned bank
Answer: (a)
Trap: Common Misconception
Students may think RBI selects PSB chairmen (as banking regulator) or the Finance Ministry (as owner of PSBs). The Banks Board Bureau was created in 2016 specifically to recommend appointments of directors and chairpersons of public sector banks. However, final appointment is by the government based on BBB's recommendation.
Q74easyCommon Misconception
Consider the following statements:
1. Petroleum and Natural Gas Regulatory Board (PNGRB) is the first regulatory body set up by the Government of India.
2. One of the tasks of PNGRB is to ensure competitive markets for gas.
3. Appeals against the decisions of PNGRB go before the Appellate Tribunals for Electricity.
Which of the statements given above are correct?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
Answer: (b)
Trap: Common Misconception
Statement 1 is wrong - PNGRB (2006) was NOT the first regulatory body. SEBI (1992), TRAI (1997), CERC (1998), and IRDA (2000) all predate it. Statement 3 is surprising but correct - APTEL handles PNGRB appeals. Students may doubt Statement 3 (why electricity tribunal for petroleum?) but it's factually correct.
Q77easy
Which one of the following is not a sub-index of the World Bank's 'Ease of Doing Business Index'?
(a) Maintenance of law and order
(b) Paying taxes
(c) Registering property
(d) Dealing with construction permits
Answer: (a)
Q79moderatePartial Truth
The economic cost of food grains to the Food Corporation of India is Minimum Support Price and bonus (if any) paid to the farmers plus
(a) transportation cost only
(b) interest cost only
(c) procurement incidentals and distribution cost
(d) procurement incidentals and charges for godowns
Answer: (c)
Trap: Partial Truth
Option (d) is the main trap - it includes procurement incidentals (correct) but pairs it with 'charges for godowns' (storage costs) instead of distribution cost. The economic cost formula is: MSP + bonus + procurement incidentals + distribution cost. Godown charges are part of incidentals, not a separate component.
Q80easy
In the context of any country, which one of the following would be considered as part of its social capital?
(a) The proportion of literates in the population
(b) The stock of its buildings, other infrastructure and machines
(c) The size of population in the working age group
(d) The level of mutual trust and harmony in the society
Answer: (d)
Q82moderateAbsolute Qualifier
Consider the following statements:
1. Purchasing Power Parity (PPP) exchange rates are calculated by comparing the prices of the same basket of goods and services in different countries.
2. In terms of PPP dollars, India is the sixth largest economy in the world.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer: (a)
Trap: Absolute Qualifier
Statement 2 confuses nominal and PPP rankings. In PPP terms, India was the 3rd largest economy (as of 2019), not 6th. In nominal terms, India was around 5th-6th. Students who know India is 'around 5th or 6th' may not distinguish between nominal and PPP rankings.
Q84moderateCommon Misconception
Among the agricultural commodities imported by India, which one of the following accounts for the highest imports in terms of value in the last five years?
(a) Spices
(b) Fresh fruits
(c) Pulses
(d) Vegetable oils
Answer: (d)
Trap: Common Misconception
Pulses (c) is the main trap because India's pulse imports were frequently in the news. However, vegetable oil imports (primarily palm oil) consistently account for the highest value among agricultural imports. India is the world's largest importer of edible oils.
Q86moderate
Which one of the following is not the most likely measure the Government/RBI takes to stop the slide of Indian rupee?
(a) Curbing imports of non-essential goods and promoting exports
(b) Encouraging Indian borrowers to issue rupee denominated Masala Bonds
(c) Easing conditions relating to external commercial borrowing
(d) Following an expansionary monetary policy
Answer: (d)
Q87moderatePartial Truth
Consider the following statements:
The Reserve Bank of India's recent directives relating to 'Storage of Payment System Data', popularly known as data diktat, command the payment system providers that
1. they shall ensure that entire data relating to payment systems operated by them are stored in a system only in India
2. they shall ensure that the systems are owned and operated by public sector enterprises
3. they shall submit the consolidated system audit report to the Comptroller and Auditor General of India by the end of the calendar year
Which of the statements given above is/are correct?
(a) 1 only
(b) 1 and 2 only
(c) 3 only
(d) 1, 2 and 3
Answer: (a)
Trap: Partial Truth
Statements 2 and 3 are fabricated additions that sound official. The RBI's data localization directive only requires data to be stored IN India - it doesn't mandate public sector ownership of systems or CAG audit reports. Students may assume government control extends to PSE ownership requirement.
Q90easy
The money multiplier in an economy increases with which one of the following?
(a) Increase in the cash reserve ratio
(b) Increase in the banking habit of the population
(c) Increase in the statutory liquidity ratio
(d) Increase in the population of the country
Answer: (b)