20 questionswith explanationsfor RAS, Patwari, VDO and other Rajasthan exams
Who is known as the 'Father of Economics'?
Answer: (1) Adam Smith
Explanation
Adam Smith, author of 'The Wealth of Nations' (1776), is regarded as the father of economics.
Gross Domestic Product (GDP) is the market value of all final goods and services produced:
Answer: (2) Within the domestic territory of a country in a year
Explanation
GDP counts final output produced within the domestic territory of a country during a year, whoever produces it.
Microeconomics mainly studies:
Answer: (3) Individual economic units such as a consumer or a firm
Explanation
Microeconomics studies individual units like a consumer, household or firm; aggregates are studied in macroeconomics.
According to the law of demand, other things remaining constant, when the price of a good rises, its quantity demanded:
Answer: (4) Falls
Explanation
The law of demand states an inverse relationship between price and quantity demanded, ceteris paribus.
The difference between Gross National Product (GNP) and Gross Domestic Product (GDP) is:
Answer: (2) Net factor income from abroad
Explanation
GNP = GDP + Net factor income from abroad. Depreciation separates gross from net measures.
An economy in which both the public sector and the private sector operate side by side is called:
Answer: (4) Mixed economy
Explanation
A mixed economy combines public and private sectors; India adopted this model after independence.
Which of the following activities belongs to the tertiary (service) sector?
Answer: (1) Banking
Explanation
Banking is a service, hence tertiary; fishing and farming are primary, and manufacturing is secondary.
National Income, in national income accounting, refers to:
Answer: (3) Net National Product at factor cost
Explanation
National Income is defined as NNP at factor cost, i.e. the sum of factor incomes earned by normal residents.
'Stagflation' refers to a situation of:
Answer: (4) High inflation along with stagnant growth and high unemployment
Explanation
Stagflation = stagnation + inflation: prices rise while output stagnates and unemployment is high.
J.M. Keynes' famous book 'The General Theory of Employment, Interest and Money' was published in:
Answer: (1) 1936
Explanation
The General Theory was published in 1936, in the backdrop of the Great Depression.
Disguised unemployment, common in Indian agriculture, is a situation where:
Answer: (3) The marginal productivity of some workers is zero
Explanation
In disguised unemployment more people are engaged than needed, so removing some does not reduce output (marginal productivity zero).
The Gini coefficient is used to measure:
Answer: (2) Inequality in income distribution
Explanation
The Gini coefficient (0 to 1), derived from the Lorenz curve, measures income inequality.
Net National Product (NNP) is obtained by deducting which of the following from Gross National Product (GNP)?
Answer: (4) Depreciation
Explanation
NNP = GNP − depreciation (consumption of fixed capital).
'Real GDP' refers to:
Answer: (1) GDP measured at constant (base-year) prices
Explanation
Real GDP values output at base-year (constant) prices, removing the effect of price changes; GDP at current prices is nominal GDP.
The GDP deflator is calculated as:
Answer: (3) (Nominal GDP ÷ Real GDP) × 100
Explanation
GDP deflator = nominal GDP divided by real GDP, multiplied by 100; it reflects the price level of all goods and services in GDP.
In the new series of National Accounts released by MoSPI on 27 February 2026, which year has been adopted as the base year?
Answer: (2) 2022-23
Explanation
The new GDP series released on 27 February 2026 uses 2022-23 as the base year, replacing the 2011-12 series.
In India's national accounts, GDP is derived from Gross Value Added (GVA) at basic prices as:
Answer: (4) GVA + product taxes − product subsidies
Explanation
GDP = GVA at basic prices + product taxes − product subsidies.
If a 10% fall in the price of a good leads to a 25% rise in its quantity demanded, the demand for the good is:
Answer: (1) Relatively elastic
Explanation
Price elasticity = 25% ÷ 10% = 2.5, which is greater than 1, so demand is relatively elastic.
A demand curve that is a vertical straight line indicates a price elasticity of demand equal to:
Answer: (3) Zero
Explanation
A vertical demand curve means quantity demanded does not change with price, so elasticity is zero (perfectly inelastic).
An inferior good on which poor consumers spend a large part of their income, and whose quantity demanded rises when its price rises, is called a:
Answer: (2) Giffen good
Explanation
Giffen goods are an exception to the law of demand: the income effect of a price rise outweighs the substitution effect.