1. Which of the following statement correctly defines ‘Under-employment’?
(a) A situation when a group of population is not adequately represented in the labour force.
(b) A situation when workers are underpaid due to slowdown of the economy.
(c) A situation when labour market is unable to provide jobs for everyone who wants one.
(d) A situation when the marginal productivity of some workers is zero.
Answer: (d) Explanation: Option (a) is incorrect. This is called under-representation of that group in the labour force. For ex. Women are under-represented in the Indian labour force. Option (b) is incorrect. Underemployment is not related to slowdown of economy. Option (c) is incorrect. This is called Structural Unemployment. It happens because there is a mismatch between the skills of the unemployed workers and the skills needed for the available jobs. Option (d) is correct. The marginal productivity of an input (factor of production) is the change in output resulting from employing one more unit of a particular input. Underemployment is a situation when even if you move a few people out, production will not be affected. Thus, the marginal productivity of some workers is zero. Additional Information: In case of underemployment, everyone is working, no one remains idle, but in actual fact, their labour effort gets divided. Each one is doing some work but no one is fully employed. This is the situation of underemployment, where people are apparently working but all of them are made to work less than their potential. This kind of underemployment is hidden in contrast to someone who does not have a job and is clearly visible as unemployed. Hence, it is also called disguised unemployment.
Source: X NCERT: Understanding Economic Development: Chapter 2: Sectors of Indian Economy: Page26.
2. Consider the following statements with respect to ‘Self Help Groups’ (SHG):
(1) These are non-profit organizations working for a number of social issues.
(2) The members of SHG include people of civil society volunteering for development of underprivileged sections of society.
(3) These help borrowers overcome the problem of lack of collateral for bank loans.
Which of the statements given above is/are correct?
(a) 1 and 2 only
(b) 2 only
(c) 3 only
(d) None of the above
Answer: (c) Explanation: Statement 1 is incorrect. SHGs are not necessarily non-profit organizations. Statement 2 is incorrect. SHGs are organizations of rural poor usually belonging to one neighbourhood, who pool their resources in order to take up loans from banks for a number of purposes like releasing mortgaged land, for meeting working capital needs (e.g. buying seeds, fertilisers, raw materials like bamboo and cloth), for housing materials, for acquiring assets like sewing machine, handlooms, cattle, etc. Statement 3 is correct. Most of the important decisions regarding the savings and loan activities are taken by the group members. Also, it is the group which is responsible for the repayment of the loan. Any case of non-repayment of loan by any one member is followed up seriously by other members in the group. Because of this feature, banks are willing to lend to the poor women when organized in SHGs, even though they have no collateral as such. Thus, the SHGs help borrowers overcome the problem of lack of collateral.
Source: X NCERT: Understanding Economic Development: Chapter 3: Money and Credit Page51.
3. Which of the following does not include liberalization of foreign trade for any country?
(1) Domestic content requirements
(2) Removal of custom duties
(3) Removal of excise duties
(4) Easing up of trade sanctions
Select the correct answer using the code given below:
(a) 1 and 3 only
(b) 2 and 4 only
(c) 2 and 3 only
(d) 1, 2 and 3 only
Answer: (a) Explanation: Removing barriers or restrictions set by the government is known as liberalization. Statement 1 is correct. Domestic content requirement means that some firm has to mandatorily source some percentage of its input from local sources. This will increase restrictions on import and hence does not include liberalization. Statement 2 is incorrect. Customs duties are a type of tax charged on goods from outside the country. Removal of custom duties will remove restrictions and hence is included in liberalization. Statement 3 is correct. An excise duty is a type of tax charged on goods produced within the country. Their removal will not cause liberalization as these are not related to foreign trade. Statement 4 is incorrect. Sanctions are a type of Non-tariff barrier to trade. Easing up of sanctions will lead to liberalization.
Source: X NCERT: Understanding Economic Development: Chapter 4: Globalization and Indian Economy Page 64 + general economics concepts.
4. Which of the following include the intended/potential benefits of Special Economic Zones (SEZs)?
(1) Generation of additional economic activity
(2) Promotion of exports of goods and services
(3) Promotion of imports of goods and services
(4) Promotion of investment from domestic sources
(5) Promotion of investment from foreign sources
Select the correct answer using the code given below:
(a) 1, 2, 3 and 5 only
(b) 1, 2, 4 and 5 only
(c) 1, 2 and 5 only
(d) 1, 2, 3, 4 and 5
Answer: (b) Explanation: After extensive consultations, the SEZ Act, 2005, came into effect in2006, providing for drastic simplification of procedures and for single window clearance on matters relating to central as well as state governments. The main objectives of the SEZ Act are:
• generation of additional economic activity
• promotion of exports of goods and services
• promotion of investment from domestic and foreign sources
• creation of employment opportunities
• development of infrastructure facilities
Promotion of imports is not an objective of SEZs. Hence, statement 3 is not correct.
Source: X NCERT: Understanding Economic Development: Chapter 4: Globalization and Indian Economy Page 67 http://sezindia.nic.in/cms/introduction.php.
5. Which of the following is incorrect about ‘Consumers International’?
(a) It was formerly known as International Organisation of Consumers Unions.
(b) Its members include independent consumer organizations from many countries.
(c) It is a body formed under the UN Guidelines for Consumer Protection, 1985.
(d) It is working globally as a champion of consumer’s rights.
Answer: (c) Explanation: Statement a, b and d are correct. Statement c is incorrect. It is not formed under the guidelines. Instead the adoption of these guidelines by UN is an achievement of the organization. Consumers International, formerly known as the International Organization of Consumers Unions (IOCU), was started in 1960 by a group of five consumer organizations from the US, Western Europe and Australia. Originally it was established as a global information exchange between the increasing number of consumer product-testing organizations that had sprung up in the post-war years. However it quickly established a reputation as an agent for change on the consumer issues of the day. In 1985 United Nations adopted the UN Guidelines for Consumer Protection (Consumer International was formed before these were adopted). This was a tool for nations to adopt measures to protect consumers and for consumer advocacy groups to press their governments to do so. At the international level, this has become the foundation for consumer movement. Today, Consumers International has become an umbrella body to over 220 member organizations from over 115 countries.
Source: X NCERT: Understanding Economic Development: Chapter 5: Consumer Rights Page 78 https://www.consumersinternational.org/who-we-are/our-history/ https://www.consumersinternational.org/