Growth and Development Economics Questions and Answers

Q: Human capital formation as a concept is better explained in terms of a process, which enables1. individuals of a country to accumulate more capital2. increasing the knowledge3. increasing the skill levels4. increasing the knowledge, skill levels and capacities of the people of the countrySelect the correct answer using the codes given below.

The answer is Only 4.Human capital formation, as NCERT's economics textbook defines it, is the process of adding to the stock of human capital over time: increasing the knowledge, skill levels and capacities of the people of a country, through investment in education, health, on-the-job training, migration and information.Statement 4 states this complete idea. Statements 2 and 3 each give only part of it, and statement 1 describes physical or financial capital accumulation by individuals, which is not human capital formation.

Q: The sustainable Development Goal "Good Health and Well being' has shown improvement in India due to:

The improvement is due to the decline in Maternal Mortality Ratio.Sustainable Development Goal 3, Good Health and Well-being, has as its first target cutting the global maternal mortality ratio to below 70 per 100,000 live births. India's MMR, measured by the Sample Registration System, fell from 130 in 2014-16 to 113 in 2016-18, and that fall is one of the indicators that lifted India's SDG 3 score.The other options belong to other goals: clean water and sanitation is SDG 6, while housing and waste collection fall under SDG 11 (Sustainable Cities and Communities) and SDG 12. They may help health indirectly, but they are not measures of SDG 3.

Q: Which one of the following statements regarding Romer's Endogenous Growth model and Solow's Growth model is CORRECT?

The correct statement is Romer's Endogenous Growth model explains technological progress but Solow's Growth model does not.In the Solow model the rate of technological progress is given from outside the model, so long-run growth per worker is left unexplained. Romer's model makes technology the outcome of deliberate research by profit-seeking firms, with ideas that are non-rival, so the growth of technology is determined within the model.The returns-to-scale option reverses the models: Solow assumes constant returns to scale, while Romer's model has increasing returns in the aggregate because of non-rival ideas. Capital accumulation is endogenous in both models: in Solow it is driven by saving and depreciation within the model, so the options calling it exogenous in Solow, or in both, are wrong.

Q: Which of the following is the correct order in which the mentioned measures of development were introduced ?

The correct order is Per-capita Income, PQLI, HDI.Per capita income is the oldest measure, in use from the early national income estimates of the first half of the twentieth century. The Physical Quality of Life Index (PQLI), combining literacy, infant mortality and life expectancy, was devised by Morris David Morris in 1979. The Human Development Index was introduced by UNDP in its first Human Development Report in 1990.Every other order puts HDI before PQLI or before per capita income, which reverses the history.

Q: The Indian Economy is often described as having a "Leapfrogging" structural transition. Which of the following features best illustrates this unique characteristics?

The leapfrogging transition is a shift from agriculture directly to services, bypassing a massive industrialisation phase.Most developed economies moved from agriculture to manufacturing and only later to services. India's economy jumped to services, such as information technology and finance, which became the largest contributor to GDP while manufacturing's share stayed relatively small. Economists describe this as leapfrogging the industrial stage.The other options describe things that have not happened (100 per cent manufacturing employment, total public-sector dependence) or the opposite of the trend (a decline of the digital economy in rural areas).

Q: Consider the following statements.The knife-edge problem in the Harrod-Domar growth model implies a constant(i) Rate of population growth(ii) Output(iii) Rate of saving(iv) Capital-output ratioOf the statements :

The key's answer is (iv) alone is correct: the knife-edge problem implies a constant capital-output ratio.In the Harrod-Domar model the economy grows steadily only if the warranted rate of growth, \(s/v\) (the saving rate over the capital-output ratio), exactly equals the natural rate set by labour-force growth. Because the model fixes the capital-output ratio, technology allows no substitution between capital and labour, so nothing pulls the economy back once the two rates differ. Any deviation grows, which is the knife-edge.Solow's growth model removed the problem precisely by letting the capital-output ratio vary. The key therefore singles out (iv). Output (ii) is not constant in a growth model at all, and the options that add population growth and the saving rate treat parameters of the model as the source of the instability, which the key does not accept.

Q: The index with different features of deprivation in the quality of life to arrive at an aggregate judgement on the extent of poverty in a community is called _________ .

The index is the Human Poverty Index.The Human Poverty Index, introduced by the UNDP in its 1997 Human Development Report, combined measures of deprivation in a long and healthy life, in knowledge and in a decent standard of living to give an aggregate picture of poverty in a community.The Human Development Index measures average achievement rather than deprivation, the Human Freedom Index measures personal and economic freedom, and 'Human Deprivation Index' is not the name of the UNDP index.

Q: Consider the following statements as per NITI Aayog's 'Multidimensional Poverty in India since 2005-06' report :1. Multidimensional poverty in India declined significantly between 2013-14 and 2022-23, with more than 24 crore people escaping poverty during this period.2. All 12 indicators of Multidimensional Poverty Index showed a remarkable improvement during this period.3. Bihar registered the largest decline in the number of multidimensional poor followed by Odisha.Which of the statements given above are correct ?

Statements 1 and 2 are correct, so the answer is 1 and 2 only.NITI Aayog's discussion paper of January 2024 estimated that about 24.82 crore people moved out of multidimensional poverty between 2013-14 and 2022-23, and that all twelve indicators of the index (covering health, education and standard of living) improved over the period.Statement 3 is wrong. The largest decline in the number of multidimensionally poor people was in Uttar Pradesh (about 5.94 crore), followed by Bihar and Madhya Pradesh; Odisha was not second.

Human capital formation as a concept is better explained in terms of a process, which enables

1. individuals of a country to accumulate more capital
2. increasing the knowledge
3. increasing the skill levels
4. increasing the knowledge, skill levels and capacities of the people of the country

Select the correct answer using the codes given below.

A.Only 1
B.1 and 2
C.3 and 4
D.Only 4

Exam Year(s)

BPSC Exam - 2023, BPSC CDPO - 2023,

Answer: D

The answer is Only 4.

Human capital formation, as NCERT's economics textbook defines it, is the process of adding to the stock of human capital over time: increasing the knowledge, skill levels and capacities of the people of a country, through investment in education, health, on-the-job training, migration and information.

Statement 4 states this complete idea. Statements 2 and 3 each give only part of it, and statement 1 describes physical or financial capital accumulation by individuals, which is not human capital formation.

Discuss in Forum

Problems of Informalization of labour does not include:

A.Lack of social security measures
B.Increased productivity
C.Lower wages
D.Reduces the tax base based on incomes of the employees

Exam Year(s)

DSSSB PGT - 2023,

Answer: B

Informalisation of labour means that more workers are employed without a contract or social security. Its problems are the lack of social security, the lower wages that such workers get and the narrowing of the tax base, as incomes in the informal sector are not taxed. Increased productivity is not a problem of informalisation, and so it is the item that is not included. The answer is option B. Lower wages and lack of social security result because informal workers have no formal contracts or bargaining power.

Discuss in Forum

A true indicator of economic growth is:

A.Per capita income
B.Real GDP
C.Inflation
D.Employment

Exam Year(s)

DSSSB PGT - 2023,

Answer: A

A true indicator of economic growth is per capita income, which measures the average income of each person and takes account of the growth in population, so it shows whether people are better off. Real GDP also measures output growth, and many economists use it, but the key prefers per capita income. Inflation and employment are not measures of growth. The key gives option A. Per capita income is total income divided by the population, so it allows for the growth of population.

Discuss in Forum

The sustainable Development Goal "Good Health and Well being' has shown improvement in India due to:

A.Clean Water & Sanitation
B.Decline in Maternal Mortality Ratio
C.Better Access to Housing
D.Widespread Waste Collection and Procession

Exam Year(s)

HPPSC HPAS - 2021,

Answer: B

The improvement is due to the decline in Maternal Mortality Ratio.

Sustainable Development Goal 3, Good Health and Well-being, has as its first target cutting the global maternal mortality ratio to below 70 per 100,000 live births. India's MMR, measured by the Sample Registration System, fell from 130 in 2014-16 to 113 in 2016-18, and that fall is one of the indicators that lifted India's SDG 3 score.

The other options belong to other goals: clean water and sanitation is SDG 6, while housing and waste collection fall under SDG 11 (Sustainable Cities and Communities) and SDG 12. They may help health indirectly, but they are not measures of SDG 3.

Discuss in Forum

Which one of the following statements regarding Romer's Endogenous Growth model and Solow's Growth model is CORRECT?

A.Romer's Endogenous Growth model assumes constant returns to scale whereas Solow's Growth model assumes increasing returns to scale.
B.Capital accumulation is exogenous in Solow's Growth model and endogenous in Romer's Endogenous Growth model.
C.Romer's Endogenous Growth model explains technological progress but Solow's Growth model does not.
D.Capital accumulation is exogenous in both models.

Exam Year(s)

IIT JAM - 2026,

Answer: C

The correct statement is Romer's Endogenous Growth model explains technological progress but Solow's Growth model does not.

In the Solow model the rate of technological progress is given from outside the model, so long-run growth per worker is left unexplained. Romer's model makes technology the outcome of deliberate research by profit-seeking firms, with ideas that are non-rival, so the growth of technology is determined within the model.

The returns-to-scale option reverses the models: Solow assumes constant returns to scale, while Romer's model has increasing returns in the aggregate because of non-rival ideas. Capital accumulation is endogenous in both models: in Solow it is driven by saving and depreciation within the model, so the options calling it exogenous in Solow, or in both, are wrong.

Discuss in Forum

Which of the following is the correct order in which the mentioned measures of development were introduced ?

A.HDI (Human Development Index), Per-capita Income, PQLI (Physical Quantity of Life Index)
B.Per-capita Income, HDI, PQLI
C.PQLI, HDI, Per-capita Income
D.Per-capita Income, PQLI, HDI

Exam Year(s)

JPSC Civil Services - 2021,

Answer: D

The correct order is Per-capita Income, PQLI, HDI.

Per capita income is the oldest measure, in use from the early national income estimates of the first half of the twentieth century. The Physical Quality of Life Index (PQLI), combining literacy, infant mortality and life expectancy, was devised by Morris David Morris in 1979. The Human Development Index was introduced by UNDP in its first Human Development Report in 1990.

Every other order puts HDI before PQLI or before per capita income, which reverses the history.

Discuss in Forum

The Indian Economy is often described as having a "Leapfrogging" structural transition. Which of the following features best illustrates this unique characteristics?

A.A dominant shift from agriculture directly to the services sector for GDP contribution, bypassing a massive industrialization phase
B.Achieving 100% employment in the manufacturing sector before 2026
C.Complete dependence on the Public sector for all heavy industries
D.A decline in the importance of digital economy in rural areas

Exam Year(s)

JPSC Civil Services - 2026,

Answer: A

The leapfrogging transition is a shift from agriculture directly to services, bypassing a massive industrialisation phase.

Most developed economies moved from agriculture to manufacturing and only later to services. India's economy jumped to services, such as information technology and finance, which became the largest contributor to GDP while manufacturing's share stayed relatively small. Economists describe this as leapfrogging the industrial stage.

The other options describe things that have not happened (100 per cent manufacturing employment, total public-sector dependence) or the opposite of the trend (a decline of the digital economy in rural areas).

Discuss in Forum

Consider the following statements.

The knife-edge problem in the Harrod-Domar growth model implies a constant
(i) Rate of population growth
(ii) Output
(iii) Rate of saving
(iv) Capital-output ratio

Of the statements :

A.(iv) alone is correct
B.(i) and (ii) are correct
C.(i), (ii) and (iii) are correct
D.(i), (iii) and (iv) are correct

Exam Year(s)

Kerala PSC KAS - 2020,

Answer: A

The key's answer is (iv) alone is correct: the knife-edge problem implies a constant capital-output ratio.

In the Harrod-Domar model the economy grows steadily only if the warranted rate of growth, \(s/v\) (the saving rate over the capital-output ratio), exactly equals the natural rate set by labour-force growth. Because the model fixes the capital-output ratio, technology allows no substitution between capital and labour, so nothing pulls the economy back once the two rates differ. Any deviation grows, which is the knife-edge.

Solow's growth model removed the problem precisely by letting the capital-output ratio vary. The key therefore singles out (iv). Output (ii) is not constant in a growth model at all, and the options that add population growth and the saving rate treat parameters of the model as the source of the instability, which the key does not accept.

Discuss in Forum

The index with different features of deprivation in the quality of life to arrive at an aggregate judgement on the extent of poverty in a community is called _________ .

A.Human Development Index
B.Human Poverty Index
C.Human Freedom Index
D.Human Deprivation Index

Exam Year(s)

KPSC KAS - 2020,

Answer: B

The index is the Human Poverty Index.

The Human Poverty Index, introduced by the UNDP in its 1997 Human Development Report, combined measures of deprivation in a long and healthy life, in knowledge and in a decent standard of living to give an aggregate picture of poverty in a community.

The Human Development Index measures average achievement rather than deprivation, the Human Freedom Index measures personal and economic freedom, and 'Human Deprivation Index' is not the name of the UNDP index.

Discuss in Forum

10.

Consider the following statements as per NITI Aayog's 'Multidimensional Poverty in India since 2005-06' report :

1. Multidimensional poverty in India declined significantly between 2013-14 and 2022-23, with more than 24 crore people escaping poverty during this period.
2. All 12 indicators of Multidimensional Poverty Index showed a remarkable improvement during this period.
3. Bihar registered the largest decline in the number of multidimensional poor followed by Odisha.

Which of the statements given above are correct ?

A.1 and 2 only
B.1 and 3 only
C.2 and 3 only
D.1, 2 and 3

Exam Year(s)

Punjab Civil Service - 2025,

Answer: A

Statements 1 and 2 are correct, so the answer is 1 and 2 only.

NITI Aayog's discussion paper of January 2024 estimated that about 24.82 crore people moved out of multidimensional poverty between 2013-14 and 2022-23, and that all twelve indicators of the index (covering health, education and standard of living) improved over the period.

Statement 3 is wrong. The largest decline in the number of multidimensionally poor people was in Uttar Pradesh (about 5.94 crore), followed by Bihar and Madhya Pradesh; Odisha was not second.

Growth and Development Economics Questions and Answers

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