Questions ( for Paper 3 ) (ECONOMY: NATIONAL INCOME, ECONOMY AND DEVELOPMENT) STUDY MATERIAL FOR TGPSC GROUP II Examinations : December, 2024

 

Questions

( for Paper 3  )

(ECONOMY: NATIONAL INCOME, ECONOMY AND DEVELOPMENT)

STUDY MATERIAL FOR

TGPSC GROUP II Examinations : December, 2024

For Study purpose only 

NATIONAL INCOME, GSDP, PCI, ECONOMY AND DEVELOPMENT 

Group II  : Syllabus : 

PAPER-III: ECONOMY AND DEVELOPMENT

I. Indian Economy: Issues and Challenges

2.Demography

2. National Income: Concepts ; Components of National Income – Measurement Methods –National Income Estimates in India and its Trends – Sectoral Contribution – Per Capita Income

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II. Economy and Development of Telangana

1. Structure and Growth of Telangana Economy: Telangana Economy in Undivided Andhra

Pradesh (1956-2014) – State Finances ( Dhar Commission, Wanchu Committee, Lalit

Committee, Bhargava Committee) – Land Reforms - 

Growth and Development of Telangana

Economy Since 2014 – Sectoral Contribution to State Income – Per Capita Income

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NATIONAL INCOME 

 

Measures of Economic Growth

1.What are the various methods of calculating National income? Explain them. 

Ans: National is the total value of all the final goods and services produced in a country in a year. It is calculated by the “Central Statistical Organization of India”. 

There are three methods to measure national income in India: 

1.Output method. 

2.Income method. 

3.Expenditure method

1.Output method: Product method is also known as inventory method or commodity service method . In this method we find the market value of all final goods and services produced in a country in a year. The entire output of final goods and services are multiplied by their market prices to find out the GNP .

 GNP= (P1,Q1, + P2Q₂ +... +Pn Qn) + Net income from abroad 

Where. GNP gross national product, P-prices of the goods or services , Q= Quantity of goods and service produced, 1, 2,.... n are the various goods and services produced Precautions of this method: 1.Only final goods values are taken into account. 2.Exact value should be taken into account. 3.The values of intermediary goods and services should not be included.

2. Income method: In this method national income is calculated by adding all the incomes earned by the individuals, house holds, firms, government ……etc. all the income are the rewards to the factors of production. It means land, labour, capital and organization. 

National income = Rent + Wage +Interest + Profit . 

Precautions of this method: (i) Transfer income like old-age pension, unemployment allowance, etc. are excluded. (ii) Sale and purchase of second-hand goods and service of house wife are excluded . (iv)Income from illegal activities like smuggling, black-marketing, etc. are excluded.

3.Expenditure method: In this method the total expenditure incurred by the society in a particular year is added. We add the personal consumption of households, expenditure of firms, government purchasing of goods and services and net exports.

 N.I = Eh + Ef +Eg + Net exports N.I = National income, Eh = Expenditure of household , Ef = Expenditure of firms Eg =Expenditure of government . 

Precautions of this method 

(i) Government expenditure on scholarships old-age pension, etc. is excluded. (ii) Expenditure on purchase of second-hand goods is excluded. (iii) Expenditure on purchase of old shares/bonds is excluded.

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1.What are the factors that determine national income? 

Ans: Determining Factors of National income: 

1.Natural resources: The availability of natural resources in a country, it's climatic conditions, geographical features, fertility of soil, mines and fuel resources influence the national income . 

2.Quality and Quantity Factors of Production: The national income of a country largely influenced by the quality and quantity of countries factors of production. For example: land, climate , rainfall, agricultural production etc.

3. State of Technology : Advanced techniques of production help in optimum utilization of a available resources in a country. 

4.Political will and Stability: Political will and stability in a country helps for planned economic development and faster growth of national income.

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Question: 2.Discuss the three definitions of national income. 

The definitions of national income are divided into two types.

 They are :- 

1.Traditional definitions advocated by Marshall, Pigou, Fisher etc. 

2.Modern definition given by Kuznets

Definitions of National Income:- 

1.Marshal's definition: According to Alfred Marshal "The labour and capital of a country acting on its natural resources, produce annually a certain net aggregate of commodities, material and non-material including services of all kinds .This is the true net annual income or revenue of the country." 

2. Fisher's definition : "The national income consists solely of services as received by ultimate consumers, whether from their material or from their human environments. Only the services rendered during this year are income." 

3.Kuznets definition: From the modern point of view, according to Kuznets ,"National income is the net output of commodities and services flowing during the year from country's productive system into the hands of the ultimate consumers."

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1.What is National income? 

Ans: National income is the market value of all the final goods and services produced annually in a country without duplication.

2.What are subsidies? 

Ans:When a producer cell his product at the price less than the cost he incurred loss and this will be paid by the government to the producer in the form of subsidies. 

3.What is real per-capita Income? 

Ans: Per capita income is the average income of people in a country in a particular year. 

Real Per-capita income =  Real National income ÷ Country population

Question: No.4:

Expand CSO. What is its responsibility. 

Central Statistical Organization of India, was established in the year 1951 by the Central Government of India. It is established to estimate national income of India.

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Economic Growth :

1)What is Economic Growth?

Ans: Economic Growth is a narrower concept than economic development. It is an increase in a country’s real level of national output which can be caused by an increase in the quality of resources (by education etc.), increase in the quantity of resources and improvements in technology or in another way an increase in the value of goods and services produced by every sector of the money . 

2)How Economic Growth can be measured ?

Ans : Economic Growth can be measured by an increase in a country’s Gross Domestic Product (GDP)

3)What are the essentials of Economic Growth ?

a)Economic Growth shows a higher rate of increase in real per capita income than the rate of growth of  population

b)Economic growth is always linked with a larger increase in productivity ability of the economy 

c)Both (a) & (b)

d)None of these 

Ans : c 

4)What are the determinants of Economic Growth ?

a)rate of savings of the economy

b)Capital-output ratio, where the stock of capital is divided by output

c) rate of growth of labour force ;  and  rate of growth of technological process 

d)All the above 

Ans : d 

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ECONOMIC DEVELOPMENT:

What is Economic Development ?

Ans : Economic Development is economic growth coupled with ‘change’. The term ‘change’ here refers to the qualitative changes in the economy.  These are in the form of improvements in the level of living, reduction in inequalities in income and wealth, rise in efficiency, improvement in technique, faster growth of industrial sector , positive changes in attitudes and other concommitment changes in all the economic spheres. 

What is Economic Development ?

Ans : Economic Development is economic growth coupled with ‘change’.

Question: The term ‘change’ in Economic Growth refers to which of the following ?

a)in the form of improvements in the level of living, reduction in inequalities in income and wealth, rise in efficiency, 

b)improvement in technique, faster growth of industrial sector , 

c)positive changes in attitudes and other concommitment changes in all the economic spheres. 

d)All the above

Ans : d 

Question: Economic Development represents structural changes in various sectors of the country. Which of the following is correct ?

a)There is a change in the ‘occupational structure’.

b)In the Economic Development , there is decrease in the share of labour force in the primary sector (farming, finishing etc.,) and an increase in the share of labour force in secondary sector (industry and mining etc.)

c)Both (a) & (b)

d)None of these 

Ans : c 

Question: What are the objectives of Economic Development ?

a)A high rate of growth with a view to bring about an improvement in the standard of living 

b)Economic self-reliance; Social Justice; Modernisation 

c)Economic stability;  and  Inclusive growth 

d)All the above

An : d

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What are the indicators of Economic Development ?

a)National Income

b)Per capita Income 

c)Real National Income ; Physical Quality of Life Index (PQLI); Human Development Index (HDI); Gender related Development Indicator (GDI);Gender Empower Measure (GEM); The Social Progress Index (SPI), Multi-dimensional Poverty Index (MPI)

d)All the above 

Ans: d 

Question: Which factors are required to construct Human Development Index (HDI)?

a)Income for better living 

b)Education

c)Life Expectancy

d)All the above 

Ans : d

Question: What is the distinction between economic growth and economic development ?

Ans :

Sl.No.	Economic Growth	Economic Development
1	Economic growth refers to an increase in a country’s real output of goods and services	Economic Development refers not only to economic growth but also about progressive changes in the socio-economic structure of a country
2	Economic growth is a single dimensional phenomenon	Economic Development is a multi-dimensional phenomenon
3	Economic growth explains primarily about quantitative changes in the economy	Economic Development explains qualitative as well as quantitative changes in the economy
4	Economic growth occurs when a volume of goods and services produced in a year increases in a sustained manner over time, either through active role of government or not.	In the initial stages of development governmental intervention is desirable in view of low level of output in the country and hence an active role is of paramount importance for ushering in development
5	Faster economic growth occurs when more technological progress occurs	A higher level of Economic Development entails improvement in the quality of life of the people
6	Economic growth is the key issue under traditional economies. According to this approach ‘take care of growth, and poverty would eliminated automtically’. This is called as the trickle down approach	Economic Development is the main issue under modern economics literature . Accordingly , ‘take care of poverty, and growth would take care of itself .’
7	The scope of Economic growth is narrow because it is concerned with changes in per capita income level only	Scope of Economic Development is wide and comprehensive than economic growth. Its link is not only with an increase in income but also with the well being of the society and economy
8	Economic growth is considered as short – term process where we can measure income changes on an yearly basis. So its time span may be of one year	Economic Development is long – term process that spans about 20 to 25 years, as it takes more years to change social , economic and institutional set-up.
9	Economic growth is a more relevant concept in the case of developed countries of the world	Economic Development is the main issue of developing countries.
10	There may or may not be any social change in the case of Economic growth. It is only concerned with change in income level without giving due consideration to social change	Social changes in  case of Economic Development, are compulsory. It referes to the better jobs, availability of food, better health and education and a sustained increase in living standards where environmental issues are also given a due consideration.
11	Economic growth is measured only by comparing income levels of different years. It is usually measured numerically by comparing the rate of economic growth for every year.	Measurement of Economic Development is based on the computation of composite indices where reduction in poverty, development of human beings and living standards play an important role.

  

Model questions (ECONOMY  - SGDP and PCI ) 

TSPSC GROUP II

 Prepared by : Praturi Potayya Sarma 

ECONOMIC FEATURES OF TELANGANA

SGDP and PCI (based on data upto 2015, which is subject to correction, as per official data  )

SGDP

SGDP : The State GDP is defined as total value of finished goods and services produced in the  Telangana State during a year . 

Question: 1)What is SGDP ?

Ans: a)State Gross Domestic Product (GSDP)

b)SGDP or state income is the most important indicator for measuring the economic growth of a state.

c)State Gross Domestic Product may be defined as ‘the sum of total volume of all goods and services produced in a year within the geographical boundaries of a state accounted without duplication ‘

d) All the above 

Ans : d

Question: 2)Who estimates of SGDP ? (This answer to subject to verification)

Ans: a)Directorate of Economics and Statistics

b)Directorate of Economics and Statistics estimates the state gross domestic product by using product method and income method

c)Both (a) & (b)

d) None of these 

Ans : c

Question: 3) Broadly SGDP can be analysed in two different ways. What are they ?

Ans: a)One method is to examine the growth in the level of gross income generated over decades at current prices as well as at constant prices 

b) In the second method , the sectoral contribution to the SGDP from the three sectors, namely, primary , secondary , and tertiary sectors can also be analysed to get an idea about the relative changes in the sectoral contribution to the SGDP over the years, which would also indicate the relative importance of diffrerent sectors  

c)Both (a) and (b)

d) None of these 

Ans: c

Question: 

4) What are the trends of SGDP in Telangana State (based on data upto 2015)?

Ans: 

a)Growth rate of SGDP indicates the performance of a state economy, the sectoral performance reflects the change in the magnitude  and composition of different sectors out of SGDP of the state economy over a time.

b)The SGDP of Telangana state at constant prices recorded double digit growth from 2005-06 to 2010 – 2011 , except in 2009-2010 where a steep low growth was recorded

c)The SGDP at current prices for the year 2014-15 is estimated at Rs.4,30,599 crores (AE) as against Rs.3,91,751 (FRE) crores for 2013-14 with a growth rate of 9.9% 

d) All the above 

Ans : d (Source : Socio Economic Outlook, Directorate of Economics and Statistics , Govt. of Telangana ,2015 and CSO, New Delhi ) 

Question: 5) During the decade 2004-05 to 2013-14, the Telangana State registered an average growth rate of _______ against 7.6% of national average . (based on data upto 2015)

Ans : 9.8%

Question: 6)Which of the following is correct about average growth rates for Telangana state (Period : 2004-05 to 2013-14).  ( based on data upto 2015)?

a)Agriculture : 7.2%

b)Industry : 9.4%

c)Service : 10.9%

d) All the above (National Average : in agriculture: 3.9% ; in industry :6.9% ; and in services : 9.1%)

Ans : d 

PER CAPITA INCOME (PCI)

1)What is Per Capita Income (PCI) ?

Ans : If national income is divided by the population, it is called per capita income. It is the replica of the standard of living of the people 

2)Primary Sector (in the economy) consists of which of the following?

a)Agriculture

b)Animal Husbandry

c) Forestry and Irrigation 

d) All the above

Ans : d

Question: 3)Per Capita Income (PCI) in Telangana State in 2001 was Rs.17,051/-.   It increased to how much in 2009? 

Ans : 58,304/-

 

Question: 4)Three districts namely Ranga Reddy, Hyderabad and Medak districts have an average per capita income more than that of the state average (during 2010 – 2013 ) . Which of the following is correct in the context of  average PCI ?  (based on data upto 2015)

a)Hyderabad  district : Rs.1,10,022

b) Ranga Reddy district : Rs. 1,04,013

 c)Medak district :   Rs.1,00,179

d) All the above 

Ans : d  (Source: Memorandum to 14th Finance Commission, Finance Department, Government of Telangana , September, 2014)  . 

Question: 5) What is State Average of PCI in Telangana in the period 2010 – 13 ? (This question is based on data upto 2015) 

Ans : Rs.74,364     

(Source: Memorandum to 14th Finance Commission, Finance Department, Government of Telangana , September, 2014)                                                                                                                                                                                                                                                                                                                         

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Questions based on 

2024 Socio Economic Outlook of Telangana : 

1)In 2023-24, Telangana’s Gross State Domestic Product (GSDP) at current prices is _________, which increased by 11.9%.

Ans: Rs.14.64 Lakh crores

2)In 2023-24, the Per Capita Income (PCI) at current prices in Telangana is Rs.3.47 lakh , which is Rs. 1.64 lakh higher than the national per capita income in_______ (Rs.1.83 lakh).

Ans: 2023-24

3)Per capita income is a fundamental metric in economics that helps to gauge living standards, economic development, and the distribution of wealth within a population. In the year 2023-24, Telangana’s per capita income is estimated at _____.

Ans: Rs.3,47,299 . 

4)In the fiscal years 2021-22, 2022-23, and 2023-24, Telangana has seen growth in Per Capita Income compared to the national average. Which of the following is correct ? 

a)In 2021- 22, Telangana’s Per Capita Income 

stood at Rs. 2,69,161, surpassing the national average of Rs.1,50,906. 

b)This trend continued into subsequent years, with Telangana’s Per Capita Income rising to Rs. 3,11,649 in 2022-23 and further to Rs. 3,47,299 in 2023-24, compared to the corresponding national figures of Rs.1,69,496 and Rs.1,83,236, respectively

c)Both (a) & (b)

d)None of these 

Ans : c 

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5)The PCI of __________ (Rs. 9,46,862), the district with the highest Per Capita Income in the state in 2022- 23, was more than 5 times the national per-capita income in that year

Ans: Rangareddy 

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6)Telangana’s Agriculture and Allied sectors achieved a year-on-year growth in Gross Value Added (GVA) (current prices) of 4.0% between 2022-23 and 2023-24. Since the sector employs ______of the state’s population, its economic success is crucial to improving the living standards in Telangana.

Ans: 47.3%

7)The Agriculture sector GSVA in Telangana at Current Prices has increased by 4%, from Rs. 2,03,247 crore in 2022-23 (FRE) to _____________ in 2023-24 (AE). 

Ans: Rs.2,11,422 crore

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8)The Industrial sector in Telangana achieved a growth of 10.1% in 2023-24.

The industry sector’s contribution to Telangana’s economy has remained steady, constituting approximately 18% of the Gross State Value Added (GSVA). For the year 2023-24 (AE), this contribution stands at ______ . The sector’s contribution to Telangana’s GSVA at current prices has increased by 10.1%, rising from Rs. 2,25,663 crore in 2022-23 (FRE) to Rs. 2,48,505 crore in 2023-24 (AE).

Ans: 18.54 %

9)In the fiscal year 2023-24, the industrial sector displayed varied growth rates across its subsectors. Which of the following is correct ?

a)Mining and Quarrying experienced a notable growth rate of 10.5%, 

b) Manufacturing grew at a comparatively lower rate of 9.6%, suggesting some challenges in production capacity or market demand. 

c)The Electricity, Gas, Water Supply, and Other Utility Services subsector saw a growth rate of 10.3%. Meanwhile, Construction demonstrated robust growth with a rate of 10.9%

d)All the above

Ans : d

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10)The Services sector, the primary contributor to the state’s economic growth, witnessed a remarkable _____ increase in GVA at current prices in 2023-24.

Ans: 14.6%

11)In the fiscal year 2022-23, Telangana’s IT sector demonstrated impressive growth, with IT exports totaling ____________. This represents a signifi cant increase compared to the national growth rate, with Telangana’s IT exports growing by 31.44%, far exceeding the national average of 9.36%. 

Ans: Rs.2,41,275 crores

12)Employment in the state’s IT sector also saw substantial growth, increasing from 7,78,121 in 2021-22 to ___________ in 2022-23. This exceptional performance in both exports and employment solidifi es Telangana’s position as a leading destination for innovation and investment in the IT sector

Ans: 9,05,715

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13) Telangana’s contribution to India’s GDP has shown a steady increase. In 2021-22, Telangana accounted for _______ of the national GDP. This share rose to 4.90% in 2022-23 and further to 5% in 2023-24. This upward trend reflects Telangana’s growing economic signifi cance and enhanced role in the national economy.

Ans: 4.80%