Samacheer Kalvi Class 12 Economics Solutions Chapter 11 Economics of Development and Planning

Part - A

Multiple Choice questions

 

Question 1. "Redistribution with Growth” became popular slogan under which approach?
(a) Traditional approach
(b) New welfare oriented approach
(c) Industrial approach
(d) None of the options
Answer: (b) New welfare oriented approach
In simple words: The idea of "Redistribution with Growth" became popular under the approach that focused on new welfare. This approach aimed to make sure economic growth also benefits everyone, especially the poor.

🎯 Exam Tip: When answering questions about economic approaches, remember the key ideas associated with each. "Redistribution with Growth" clearly points to a welfare-oriented strategy.

 

Question 2. Which is not the feature of economic growth?
(a) Concerned with developed nations
(b) Gradual change
(c) Concerned with quantitative aspect
(d) Wider concept
Answer: (d) Wider concept
In simple words: Economic growth usually means things like an increase in output or money, which are quantitative and happen gradually in developed countries. A "wider concept" often refers to economic development, which includes more than just growth.

🎯 Exam Tip: Distinguish between 'economic growth' and 'economic development'. Growth is often about quantity and expansion, while development includes quality of life improvements and structural changes.

 

Question 3. Which among the following is a characteristic of underdevelopment?
(a) Vicious circle of poverty
(b) Rising mass consumption
(c) Growth of Industries
(d) High rate of urbanization
Answer: (a) Vicious circle of poverty
In simple words: A vicious circle of poverty means that poor countries stay poor because they lack the money to invest and improve their economy. This creates a cycle where poverty continues.

🎯 Exam Tip: The "vicious circle of poverty" is a fundamental concept in development economics, describing how low income leads to low savings, low investment, and thus low productivity, perpetuating poverty.

 

Question 4. The non-economic determinant of economic development is _______.
(a) Natural resources
(b) Human resource
(c) Capital formation
(d) Foreign trade
Answer: (b) Human resource
In simple words: Non-economic factors are things like people's skills and health, rather than just money or natural things. Human resources, like a skilled workforce, are crucial for progress, even if they aren't directly about money.

🎯 Exam Tip: Remember that economic development depends on more than just money and natural wealth; human skills, knowledge, and social factors play a huge role.

 

Question 5. Economic growth measures the _______.
(a) Growth of productivity
(b) Increase in nominal income
(c) Increase in output
(d) None of the options
Answer: (c) Increase in output
In simple words: Economic growth measures how much more goods and services a country makes over time. It is mainly about increasing the total amount of things produced.

🎯 Exam Tip: Focus on 'output' as the primary indicator of economic growth; other factors like productivity or income are related but output is the core measure.

 

Question 6. The supply side vicious circle of poverty suggests that poor nations remain poor because _______.
(a) Saving remains low
(b) Investment remains low
(c) There is a lack of effective government
(d) a and b above
Answer: (d) a and b above
In simple words: On the supply side, a country stays poor because people don't save much money, which then means there isn't enough money to invest in new businesses or improvements. Both low savings and low investment create a cycle of poverty.

🎯 Exam Tip: The supply-side view of poverty highlights the lack of resources (savings and investment) as key barriers to economic progress.

 

Question 7. Which of the following plan has focussed on the agriculture and rural economy?
(a) People's Plan
(b) Bombay Plan
(c) Gandhian Plan
(d) Vishveshwarya Plan
Answer: (c) Gandhian Plan
In simple words: The Gandhian Plan specifically focused on improving agriculture and the economy in rural areas, following Mahatma Gandhi's ideas about village self-sufficiency.

🎯 Exam Tip: Associate the Gandhian Plan with its core philosophy of rural development and agricultural self-reliance. This is a common historical question.

 

Question 8. Arrange following plans in correct chronological order
(a) People's Plan
(b) Bombay Plan
(c) Jawaharlal Nehru Plan
(d) Vishveshwarya Plan
Answer choices
(a) (i) (ii) (iii) (iv)
(b) (iv) (iii) (ii) (i)
(c) (i) (ii) (iv) (ii)
(d) (ii) (i) (iv) (iii)
Answer: (b) (iv) (iii) (ii) (i)
In simple words: The correct order from oldest to newest is: Vishveshwarya Plan, Jawaharlal Nehru Plan, Bombay Plan, and then People's Plan. This shows how economic planning ideas developed over time in India.

🎯 Exam Tip: For chronological questions, create a mental timeline of key events or plans. Knowing the decade or key figure associated with each plan can help recall the order.

 

Question 9. M. N. Roy was associated with _______.
(a) Congress Plan
(b) People's Plan
(c) Jawaharlal Nehru Plan
(d) None of the options
Answer: (b) People's Plan
In simple words: M. N. Roy was closely linked to the People's Plan, an economic plan that aimed to give more power and resources to the common people.

🎯 Exam Tip: Remember the key individuals associated with each major economic plan in India's history for quick recall during exams.

 

Question 10. Which of the following country adopts indicative planning?
(a) France
(b) Germany
(c) Italy
(d) Russia
Answer: (b) Germany
In simple words: Indicative planning is a type of economic planning where the government gives general guidance to the economy rather than strict commands. Germany is known for using this type of planning.

🎯 Exam Tip: Understand the difference between indicative (guidance) and imperative (command) planning, and associate specific countries with each model.

 

Question 11. Short-term plan is also known as _______.
(a) Controlling Plans
(b) De-controlling Plans
(c) Rolling Plans
(d) De-rolling Plans
Answer: (a) Controlling Plans
In simple words: Short-term plans are also called controlling plans because they focus on managing and directing immediate economic activities. These plans usually cover a period of one year.

🎯 Exam Tip: Short-term plans (often annual) are for immediate adjustments and control, distinguishing them from longer-term strategies.

 

Question 12. Long-term plan is also known as _______.
(a) Progressive Plans
(b) Non-progressive Plan
(c) Perspective Plans
(d) Non-perspective Plans
Answer: (c) Perspective Plans
In simple words: Long-term plans are also known as perspective plans because they look far into the future, setting broad goals and directions for the economy over many years.

🎯 Exam Tip: Link 'long-term' with 'perspective' as both terms suggest looking ahead over an extended period. This helps remember the correct terminology.

 

Question 13. The basic philosophy behind long-term planning is to bring _______ changes in the economy?
(a) Financial
(b) Agricultural
(c) Industrial
(d) Structural
Answer: (d) Structural
In simple words: Long-term planning aims to make deep, fundamental changes to how the economy works, not just small adjustments. These are called structural changes.

🎯 Exam Tip: Long-term planning focuses on fundamental reorganisation of the economy, which is described as 'structural change'.

 

Question 14. Sarvodaya Plan was advocated by _______.
(a) Mahatma Gandhi
(b) J.P. Narayan
(c) S. N Agarwal
(d) M. N. Roy
Answer: (b) J.P. Narayan
In simple words: The Sarvodaya Plan, which means "welfare for all," was proposed by J.P. Narayan. This plan was inspired by Gandhi's ideas and focused on community development and welfare.

🎯 Exam Tip: Remember J.P. Narayan's association with the Sarvodaya Plan and its focus on universal welfare, inspired by Gandhian principles.

 

Question 15. Planning Commission was set up in the year _______.
(a) 1950
(b) 1951
(c) 1947
(d) 1948
Answer: (a) 1950
In simple words: The Planning Commission was established in 1950 to help India plan its economic development. This was a big step after India became independent.

🎯 Exam Tip: Know the establishment dates of key economic institutions like the Planning Commission, as these are important historical facts.

 

Question 16. Who wrote the book 'The Road to Serfdom'?
(a) Friedrich Hayek
(b) H. R. Hicks
(c) David Ricardo
(d) Thomas Robert Malthus
Answer: (a) Friedrich Hayek
In simple words: Friedrich Hayek wrote 'The Road to Serfdom', a famous book discussing the dangers of central planning and government control over the economy.

🎯 Exam Tip: For questions about authors and books, direct recall is important. Associate 'The Road to Serfdom' with Friedrich Hayek and his critique of central planning.

 

Question 17. Perspective plan is also known as _______.
(a) Short-term plan
(b) Medium-term plan
(c) Long-term plan
(d) None of the options
Answer: (c) Long-term plan
In simple words: A perspective plan is another name for a long-term plan. It means planning for many years ahead, often 10 to 30 years, to set big goals for the country's future.

🎯 Exam Tip: Remember that 'perspective plan' and 'long-term plan' are interchangeable terms, both referring to strategic planning over extended periods.

 

Question 18. NITI Aayog is formed through _______.
(a) Presidential Ordinance
(b) Allocation of business rules by President of India
(c) Cabinet resolution
(d) None of the options
Answer: (c) Cabinet resolution
In simple words: NITI Aayog was created by a decision from the Union Cabinet, which is a group of top government ministers. It was not formed by a law passed by the President.

🎯 Exam Tip: Know the foundational basis of government bodies like NITI Aayog. A Cabinet resolution signifies a government executive decision rather than a legislative act.

 

Question 19. Expansion of NITI Aayog?
(a) National Institute to Transform India
(b) National Institute for Transforming India
(c) National Institution to Transform India
(d) National Institution for Transforming India
Answer: (d) National Institution for Transforming India
In simple words: NITI Aayog stands for National Institution for Transforming India. It is a government policy think tank that replaced the Planning Commission.

🎯 Exam Tip: Always learn the full form of important acronyms. Pay attention to small word differences like 'Institute' vs 'Institution' or 'to' vs 'for' in options.

 

Question 20. The Chair Person of NITI Aayog is _______.
(a) Prime Minister
(b) President
(c) Vice – President
(d) Finance Minister
Answer: (a) Prime Minister
In simple words: The Prime Minister of India is always the head of NITI Aayog. This shows how important NITI Aayog is for the country's planning and policy-making.

🎯 Exam Tip: Remember that the Prime Minister is the ex-officio Chairperson of NITI Aayog, indicating the body's high-level strategic importance.

 

Part - B

Answer the following questions in one or two sentences.

 

Question 21. Define economic development.
Answer: Economic development is a process where individuals get more goods and services to consume. It also means there is a steady improvement in people's health, education, and standard of living. This includes overall well-being.
In simple words: Economic development is when people consume more goods and services, and their health, education, and living standards steadily improve.

🎯 Exam Tip: When defining economic development, highlight both the increase in consumption of goods and services and the improvements in social indicators like health and education.

 

Question 22. Mention the indicators of development.
Answer: The main indicators used to measure development include Gross National Product (GNP) and GNP Per capita. Other important indicators are overall welfare and various social indicators such as literacy and life expectancy. These help us understand a country's progress.
In simple words: Key ways to measure development are Gross National Product (GNP), GNP per person, general well-being, and social factors like health and education.

🎯 Exam Tip: List both economic (GNP, GNP per capita) and social indicators (welfare, health, education) when asked about indicators of development to provide a complete answer.

 

Question 23. Distinguish between economic growth and development.
Answer:

Economic growth focuses on increasing the quantity of output, while economic development involves qualitative changes like improved living standards. Development is a broader concept than growth.
In simple words: Economic growth is about making more goods and services, usually a slow and steady change. Economic development is a bigger idea that includes growth but also sudden, good changes in people's lives and how the country works, often for poorer countries.

🎯 Exam Tip: When distinguishing between growth and development, remember growth is quantitative and about developed nations, while development is qualitative and broader, often focusing on underdeveloped nations.

 

Question 24. What is GNP?
Answer: Gross National Product (GNP) is the total market value of all final goods and services produced in a country in one year. It also includes income earned by citizens living abroad and subtracts income earned by non-residents in that country. GNP is often used to measure a country's economic health, as a higher GNP generally suggests a higher quality of life.
In simple words: GNP is the total value of everything a country makes and earns in a year, including money from citizens abroad, but not money earned by foreigners inside the country. It's a way to check a country's wealth.

🎯 Exam Tip: Clearly define GNP by mentioning both goods/services produced domestically and the net income from abroad. This comprehensive definition scores full marks.

 

Question 25. Define economic planning.
Answer: Economic planning is defined as "collective control or suppression of private activities of production and exchange," according to Robbins. This means the government guides or manages economic activities to achieve specific goals. It is a way to organize a country's resources.
In simple words: Economic planning means the government controls or limits private businesses to manage what is produced and traded, as described by Robbins.

🎯 Exam Tip: When quoting a definition, remember to include the economist's name if provided (e.g., Robbins here) and capture the essence of government control over economic activities.

 

Question 26. What are the social indicators of economic development?
Answer: Social indicators are measures that show how well the basic and shared needs of the people are met. These include direct provision of essential services like health, education, food, water, sanitation, and housing facilities. These indicators help check for social backwardness.
In simple words: Social indicators are about meeting people's basic needs like health, education, food, water, and housing. They show if a society is progressing or lagging behind.

🎯 Exam Tip: Provide a clear list of basic needs when asked about social indicators, and also state their purpose (e.g., to check social backwardness).

 

Question 27. Write a short note on NITI Aayog.
Answer: NITI Aayog, which stands for National Institution for Transforming India, was created on January 1, 2015, by a Union Cabinet resolution. It acts as a policy think-tank for the Government of India, replacing the former Planning Commission from August 13, 2014. The Prime Minister serves as its Chairperson, with Union Ministers as ex-officio members, and Arvind Panangariya was its first Vice-Chairman. NITI Aayog focuses on fostering cooperative federalism and bottom-up planning.
In simple words: NITI Aayog is India's government think-tank, started in 2015, replacing the Planning Commission. The Prime Minister is its head, and it helps make government policies.

🎯 Exam Tip: For short notes on organizations, include its full form, establishment date, purpose (think-tank, replacement), and key leadership roles (Chairperson, first Vice-Chairman).

 

Part - C

Answer the following questions in one paragraph.

 

Question 28. Elucidate major causes of vicious circle of poverty with diagram.
Answer: The "Vicious Circle of Poverty" explains why poor countries often stay poor. It happens because of low capital income. This problem works on both the demand side and the supply side. On the supply side, low income means people save little, which leads to low investment and a lack of capital. This, in turn, results in low productivity, pushing income down again. On the demand side, low income means people can't buy much, which discourages production. This cycle traps countries in poverty.
In simple words: The vicious circle of poverty means a country stays poor because it doesn't have enough capital. This leads to low income, low savings, low investment, and low production, creating a never-ending cycle of poverty.

🎯 Exam Tip: When drawing the vicious circle, clearly label each component (income, savings, investment, productivity) and ensure the arrows show the continuous cycle that traps poor economies.

 

Question 29. What are the non-economic factors determining development?
Answer: Several non-economic factors are crucial for determining development. These include strong human resources with good health and education, and technical know-how for innovation. Political freedom and stable social organization are also vital, along with a corruption-free administration. The desire for development, strong moral and ethical values, and avoiding unproductive activities like casino capitalism, and patrimonial capitalism which leads to inherited wealth without effort, all contribute significantly.
In simple words: Development isn't just about money; it also needs good human skills, new ideas, political freedom, honest government, social order, strong values, and a community's will to grow.

🎯 Exam Tip: When discussing non-economic factors, aim to provide a diverse list that covers human capital, governance, social structures, and cultural values, as these are often interconnected.

 

Question 30. How would you break the vicious circle of poverty?
Answer: To break the vicious circle of poverty, Nurkse suggested a strategy of balanced growth on the demand side. This means investing in many industries at the same time to create mutual demand, which can break the cycle of low capital formation. On the supply side, a country needs to keep its marginal rate of savings higher than its average rate of savings. This encourages more investment and growth, gradually lifting the economy out of poverty.
In simple words: To break this cycle, Nurkse suggested balanced growth by investing in many industries at once. Also, a country needs to save more money than it usually does to boost investment.

🎯 Exam Tip: Remember Nurkse's balanced growth strategy and the importance of increasing the marginal rate of savings to counter the vicious circle of poverty.

 

Question 31. Trace the evolution of economic planning in India.
Answer: The evolution of planning in India has several key milestones.
(I) Sir M. Vishveshwarya (1934): A notable engineer and politician, he made the first attempt to plan India's economy in 1934 with his book, "Planned Economy of India." This was a 10-year plan.
(II) Jawaharlal Nehru (1938): He established the "National Planning Commission" through a committee. However, due to political changes and World War II, this plan never came to be.
(III) Bombay Plan (1940): Eight leading industrialists from Bombay presented this "Bombay Plan." It was a 15-year investment plan.
(IV) S.N Agarwal (1944): He put forward the "Gandhian Plan," which focused on supporting the agricultural and rural economy.
(V) M.N. Roy (1945): He drafted the "People's Plan," which aimed for the state to mechanize agricultural production and manage distribution.
(VI) J.P. Narayan (1950): He promoted the "Sarvodaya Plan," inspired by the Gandhian Plan and Vinoba Bhave's ideas. This plan emphasized agriculture and also encouraged small and cottage industries.
In simple words: Economic planning in India started with ideas from Sir M. Vishveshwarya in 1934, followed by Nehru's committee, the Bombay Plan by industrialists, and various other plans like the Gandhian, People's, and Sarvodaya Plans, each with its own focus.

🎯 Exam Tip: When tracing the evolution of planning, list the key plans chronologically, mentioning the associated person and their primary focus or contribution.

 

Question 32. Describe the case for planning.
Answer: Economic planning is justified for several important reasons. It helps to speed up and strengthen market functions and aims to reduce unemployment. Planning also helps achieve balanced development and works to lessen poverty and inequality. As Arthur Lewis noted, planning is even more necessary in less developed countries to find ways to increase national income through focused efforts.
In simple words: Planning helps economies grow faster, reduce joblessness, achieve balanced development, and lower poverty. It's especially useful for poorer countries to boost their national income.

🎯 Exam Tip: When describing the benefits of planning, use keywords like "accelerate market mechanism," "remove unemployment," "balanced development," and "remove poverty and inequalities."

 

Question 33. Distinguish between functional and structural planning.

🎯 Exam Tip: Remember that functional planning makes changes within the existing economic structure, while structural planning aims to change the fundamental framework of the economy itself.

 

Question 33. Distinguish between functional and structural planning.
Answer: Functional planning aims to solve economic problems by directing all planning within the existing economic and social system. Structural planning, on the other hand, involves making significant changes to the country's social and economic framework. This type of planning is often used in developing countries to bring about fundamental shifts.
In simple words: Functional planning works within the current system, while structural planning changes the system itself.

🎯 Exam Tip: Remember that functional planning adjusts existing structures, whereas structural planning creates new ones to achieve development goals.

 

Question 34. What are the functions of NITI Aayog?
Answer: The functions of NITI Aayog are many, focusing on collaborative development.
(I) Cooperative and Competitive Federalism: It helps states actively participate in national policy-making.
(II) Shared National Agenda: It works to create a common vision for national development goals and strategies with all states involved.
(III) Decentralized Planning: It changes the planning process to be more bottom-up, starting from local levels.
(IV) Vision and Scenario Planning: It designs long-term and medium-term strategic plans for India's future.
(V) Network of Expertise: It brings in outside ideas and expert knowledge to shape government policies and programs through teamwork.
(VI) Harmonization: It helps different parts of the government work together smoothly, especially on complex issues that cross many sectors, through good communication and teamwork.
(VII) Conflict Resolution: It offers a platform for different departments, states, and central government to agree on solutions for speedy execution of government programs.
(VIII) Coordinating Interface with the World: It acts as a central point to use global knowledge and resources from international groups for India's growth.
(IX) Internal Consultancy: It provides advice to central and state governments on policy and programs.
(X) Capacity Building: It helps build skills and upgrades technology across the government, setting standards based on global trends and providing management expertise.
(XI) Monitoring and Evaluation: It checks how policies and programs are being put into action and looks at their results. These roles make NITI Aayog a key player in India's policy framework.
In simple words: NITI Aayog helps states work together, plans for the future, gets expert advice, and makes sure government plans are carried out well. It's like a central helper for India's progress.

🎯 Exam Tip: When listing functions, group similar points to show clear understanding of NITI Aayog's multi-faceted role in national governance.

 

Part - D

 

Question 35. Discuss the economic determinants of economic development.
Answer: Economic development depends on several key economic factors:
1. Natural Resource: Plenty of natural resources are vital for development. A country without enough resources might struggle to grow quickly.
2. Capital Formation: This means adding to the country's existing stock of capital goods. These can be physical items like factories and machines, or intangible assets like health, education, and research. Investing in these areas is crucial for progress.
3. Size of the Market: A large market helps boost production, creates more jobs, and increases the national income per person. This encourages businesses to grow.
4. Structural change: This refers to shifts in how people work across different sectors of the economy. For example, moving from farming jobs to manufacturing or service jobs is a sign of development.
5. Financial System: A well-organized and efficient banking system is necessary for a country's financial health. It helps manage money and investments.
6. Marketable Surplus: This is the extra farm produce farmers have after feeding their own families. This surplus can be sold to earn money, supporting the agricultural economy.
7. Foreign Trade: Countries with a good balance of trade often develop well. They tend to have large foreign exchange reserves and stable exchange rates.
8. Economic system: Countries that use a free market system often see better growth rates compared to those with controlled economies. This allows for more innovation and competition.
In simple words: Economic development is affected by natural wealth, how much a country invests, the size of its markets, changes in jobs, good banking, extra farm products, strong foreign trade, and whether the economy is free or controlled.

🎯 Exam Tip: Always elaborate on each determinant with a clear explanation of how it impacts economic development, using examples if possible.

 

Question 36. Describe different types of Planning.
Answer: Planning can be classified in several ways, each with its own approach:
(I) Democratic Vs Totalitarian: In a democratic system, the government works to keep overall control but allows public and private lives to flourish. In a totalitarian system, the government controls almost everything, including people's private lives.
(II) Centralized Vs Decentralized:
1. Under centralized planning, a single central authority manages the entire planning process for the country.
2. This central authority sets the overall plan, including goals, targets, and priorities for every part of the economy.
3. This is also called 'planning from above', meaning decisions come from the top down.
(III) Planning by Direction Vs Inducement: Planning by direction means a central authority plans, directs, and orders how the plan will be carried out to meet set targets. Planning by inducement, on the other hand, guides the private sector through incentives and policies, rather than direct orders.
(IV) Indicative Planning: This type is common in mixed economies, like France's Monnet Plan (1947-50). In mixed economies, both private and public sectors work together. The government prepares a general plan, then discusses it with business leaders, unions, consumers, and financial institutions to get their input and cooperation.
(V) Short, Medium and Long term Planning:
1. Short-term plans are often called 'controlling plans' and usually last up to one year.
2. These plans are also known as 'annual plans'. Medium-term plans usually cover 5-8 years, while long-term plans extend for 10-30 years, setting broad, future-oriented goals.
(VI) Financial Vs Physical Planning: Financial planning focuses on allocating resources using money, while physical planning deals with allocating real resources like people, materials, and machinery.
(VII) Functional Vs Structural Planning: Functional planning aims to resolve economic difficulties by guiding all planning activities within the existing economic and social system. Structural planning involves significant changes to the country's socio-economic framework.
(VIII) Comprehensive Vs Partial Planning: Comprehensive planning addresses major issues for the entire economy. Partial planning, however, focuses only on a few important sectors. Every type of planning serves a specific purpose, from managing small tasks to reshaping entire economic systems.
In simple words: Planning can be democratic or totalitarian, from the top down (centralized) or involving local input (decentralized). It can direct actions, guide with incentives (indicative), or focus on short, medium, or long periods. It also involves managing money (financial) or actual goods (physical), fixing current issues (functional), or changing the whole system (structural). It can be for the whole country (comprehensive) or just parts of it (partial).

🎯 Exam Tip: When distinguishing between planning types, provide clear, concise definitions for each, highlighting their core differences and objectives.

 

Question 37. Bring out the arguments against planning.
Answer: While economic planning aims for stability and growth, it also has limitations and drawbacks. Here are the arguments against it:
1. Loss of Freedom: When a central authority makes all key decisions, consumers, producers, and workers lose their freedom of choice. Hayek argued that this central control can lead to less personal freedom and slower economic progress. Government decisions may not always be rational, and producers might misuse their freedom if profit is the only priority, pushing welfare aside.
2. Elimination of Initiative: Centralized planning can remove the motivation for new ideas and innovations. Planning often follows rigid procedures, which can cause stagnation and a lack of progress.
* The absence of private ownership and profit motives can discourage business owners from taking bold risks and making strong decisions.
* Giving equal rewards to everyone can make people less interested in trying new and challenging ventures.
* Bureaucracy and red tape are common features of planned economies, adding to inefficiency.
3. High Cost of Management: The expense of managing economic activities can outweigh the benefits. Inaccurate forecasts and poor execution of plans can lead to wasted resources, causing either too much or too little of certain goods.
4. Difficulty in Advance Calculations: It is very hard to make precise calculations in advance for consumption and production. This makes it difficult to make decisions and put plans into practice under a planned system.
In simple words: Planning can take away people's freedom, reduce new ideas, cost a lot to manage, and it's hard to guess exact numbers for the future.

🎯 Exam Tip: When discussing arguments against planning, remember to link each point back to its impact on economic efficiency, innovation, and individual liberty.

 

Additional Important Questions and Answers

 

I. Match the following:

 

Question 1.
A) Development- 1) Narrow concept
B) Todaro - 2) Wider concept
C) Economic Growth - 3) Structural change
D) Economic Development - 4) Development

Answer: (b) 3 4 2 1
In simple words: Match each economic concept on the left with its correct description on the right to form a logical pair.

🎯 Exam Tip: For matching questions, eliminate obvious incorrect pairs first to narrow down the choices, and always double-check the final mapping.

 

Question 2.
a) Innovation - 1) Dadabai Naoroji
b) Poverty and un British Rule- in India - 2) Douglas c. North
c) Moral and social values - 3) Thomas Piketty
d) Casino capitalism - 4) Schumpeter

Answer: (d) 4 1 2 3
In simple words: This question asks you to match economic ideas or concepts with the people or events they are most closely linked to.

🎯 Exam Tip: Focus on keywords in each option and connect them to the relevant economists or historical contexts to find the correct match.

 

II. Choose the correct pair

 

Question 1.
(a) Patrimonial capitalism - Douglas c. North
(b) Vicious circle of poverty - Thomas Piketty
(c) Great Depression - 1930
(d) Planning commission - 1951
Answer: (c) Great Depression - 1930
In simple words: The correct match here is the Great Depression with the year 1930, as this major economic crisis started around that time.

🎯 Exam Tip: For "choose the correct pair" questions, identify the most accurately linked concept-to-detail match among the options.

 

Question 2.
(a) M.N. Roy - People's plan
(b) J.P. Narayan - Gandhian plan
(c) S. N. Agarwal - Sarvodaya plan
(d) Jawaharlal Nehru - Bombay plan
Answer: (a) M.N. Roy - People's plan
In simple words: M.N. Roy is correctly matched with the "People's Plan," which he was associated with.

🎯 Exam Tip: Associate key figures with the specific plans or concepts they advocated to answer such matching questions correctly.

 

III. Choose the incorrect pair

 

Question 1.
(a) Planning commission - March 15,1950
(b) Plan era - April 1,1951
(c) First five-year plan - 1951-56
(d) Planning - Gandhi
Answer: (d) Planning - Gandhi
In simple words: The incorrect pair is "Planning - Gandhi" because the Gandhian Plan was created by S.N. Agarwal, not Gandhi himself.

🎯 Exam Tip: Carefully check each pair for historical accuracy or conceptual fit to identify the one that does not belong.

 

Question 2.
(a) Underdeveloped country - high percapita Income
(b) Low-Income countries - $ 906 and below
(c) Middle Income countries - Between $ 906 and $ 11,115
(d) High Income countries - $ 11,116 or more
Answer: (a) Underdeveloped country - high percapita Income
In simple words: The incorrect statement is that an underdeveloped country has a high income per person; usually, it's the opposite.

🎯 Exam Tip: Understand the basic definitions of economic terms like 'underdeveloped country' and 'income categories' to spot mismatches.

 

Choose the correct statement

 

Question 1.
(a) The UDCs are characterized by the predominance of the tertiary sector.
(b) The Prime minister is the functional head of NITI Aayog.
(c) The first vice-chairman of NITI Aayog was Arvind panangariya.
(d) NITI Aayog assist planning commission
Answer: (c) The first vice-chairman of NITI Aayog was Arvind panangariya.
In simple words: The correct statement is about the first Vice-Chairman of NITI Aayog.

🎯 Exam Tip: Pay attention to specific roles and historical facts related to economic institutions and development to choose the correct statement.

 

Question 2.
(a) Centralised planning is called planning from below.
(b) Decentralised planning is called planning from above.
(c) Long-term plans are operational plans.
(d) Medium-term planning is tactical planning.
Answer: (d) Medium-term planning is tactical planning.
In simple words: Medium-term plans are often used for tactical goals, which means they focus on how to achieve specific things.

🎯 Exam Tip: Understand the differences between strategic, tactical, and operational planning terms to correctly classify plan types.

 

V. Choose the incorrect statement

 

Question 1.
(a) Short-term plans are for the period up to 1 year.
(b) Medium-term plans last for 5-8 years
(c) Long term plans last for the period of 10 - 30 years
(d) Short term plans are also known as 'controlling plans'
Answer: (b) Medium-term plans last for 5-8 years
In simple words: The incorrect statement is about the length of medium-term plans, as they typically cover 5 years, not 5-8.

🎯 Exam Tip: Memorize the typical durations associated with short-term, medium-term, and long-term plans to avoid errors.

 

Question 2.
(a) NITI Aayog was formed on January 1, 2015
(b) NITI Aayog replaced the planning commission on 13th August 2014
(c) Ayushmaan Bharat's approach was towards forest conservation.
(d) National medical commission was replaced by the medical council of India.
Answer: (c) Ayushmaan Bharat's approach was towards forest conservation.
In simple words: Ayushman Bharat is a health scheme, so the statement linking it to forest conservation is incorrect.

🎯 Exam Tip: Keep clear records of the establishment dates and primary objectives of government bodies and schemes to identify false statements.

 

VI. Pick the odd one out:

 

Question 1.
(a) Economic planning
(b) Financial Planning
(c) Physical planning
(d) Perspective Planning
Answer: (a) Economic planning
In simple words: "Economic planning" is the general term, while the others are specific types or aspects of planning.

🎯 Exam Tip: For "odd one out" questions, identify the common category among most options and then find the one that doesn't fit.

 

Question 2.
(a) Low productivity
(b) High Investment
(c) Low percapita Income
(d) Low saving
Answer: (b) High Investment
In simple words: Low productivity, low income, and low savings are all problems in underdeveloped countries, but high investment is a positive factor for growth.

🎯 Exam Tip: Distinguish between positive and negative indicators of economic health to correctly identify the outlier.

 

Analyse the reason:

 

Question 1. Assertion (A): Structural changes refers to change in the occupational structure of the Economy. Reason (R): A country is generally divided into primary, secondary, and tertiary sectors.
(a) Both (A) and (R) are true, (R) is the correct explanation of (A)
(b) Both (A) and (R) are true, (R) is not the correct explanation of (A)
(c) (A) is true; but (R) is false
(d) Both (A) and (R) are false.
Answer: (b) Both (A) and (R) are true, (R) is not the correct explanation of (A)
In simple words: Both the assertion (what structural change is) and the reason (about economic sectors) are correct facts. However, the reason only describes how an economy is divided, not why structural changes happen in the way the assertion describes.

🎯 Exam Tip: For assertion-reason questions, first check if both statements are true individually, then evaluate if the reason directly explains the assertion.

 

Question 2. Assertion(A): Economic development depends on Economic, social, political, and religious factors. Reason (R): Being a wider concept, economic development includes all the aspects of the country.
(a) Both (A) and (R) are true, (R) is the correct explanation of (A)
(b) Both (A) and (R) are true, (R) is not the correct explanation of (A)
(c) Both (A) and (R) is false, d) (A) is true (R) is false
Answer: (a) Both (A) and (R) are true, (R) is the correct explanation of (A)
In simple words: The assertion states that many factors influence economic development, and the reason correctly explains this by saying development covers all parts of a country.

🎯 Exam Tip: When evaluating cause-and-effect in assertion-reason questions, ensure the reason provides a direct and logical justification for the assertion.

 

VIII. Fill in the blanks with the correct option.

 

Question 1. Gross National Product is ...................................
(a) GDP
(b) GNP
(c) GNI
(d) None of the options
Answer: (b) GNP
In simple words: The term "Gross National Product" is abbreviated as GNP.

🎯 Exam Tip: Know the full forms and abbreviations of common economic terms to quickly fill in blanks or answer multiple-choice questions.

 

Question 2. The countries which adopt free-market mechanism are
(a) Socialist
(b) Mixed economy
(c) Laissez-faire
(d) Communist
Answer: (c) Laissez faire
In simple words: Countries that use a free-market system are often described as "laissez-faire" economies, meaning they have minimal government interference.

🎯 Exam Tip: Understand the defining characteristics of different economic systems, such as market economies and planned economies, to correctly identify their terms.

 

Question 3. Capital is a necessary but not a sufficient condition of progress is a statement of
(a) Thomas piketty
(b) Douglas c. North
(c) Schumpeter
(d) Ragnar Nurkse
Answer: (d) Ragnar Nurkse
In simple words: This statement, which means having capital is important but not enough on its own for progress, was made by Ragnar Nurkse.

🎯 Exam Tip: Connect important economic theories and statements with the economists who proposed them for questions that test knowledge of specific quotes or ideas.

 

IX. Choose the best answer.

 

Question 1. The first chairman of the planning commission was
(a) J. P. Narayan
(b) S. N. Agarwal
(c) Jawaharlal Nehru
(d) Sri. M. Vishveshwarya
Answer: (c) Jawaharlal Nehru
In simple words: The first head of India's Planning Commission was Jawaharlal Nehru, who was also the first Prime Minister.

🎯 Exam Tip: Remember key historical figures associated with significant government institutions for questions about leadership roles.

 

Question 2. A declaration of industrial policy was announced in
(a) 1950
(b) 1948
(c) 1947
(d)1951
Answer: (b) 1948
In simple words: India's first industrial policy was announced in the year 1948, shortly after gaining independence.

🎯 Exam Tip: Dates of important policy announcements are often tested; knowing key events and their years is essential.

 

Question 3. The better we try to plan, the more planners we need' is the statement of
(a) Thomas piketty
(b) Douglas c. North
(c) Ragnar Nurkse
(d) Arthur Lewis
Answer: (d) Arthur Lewis
In simple words: This quote about planning and the need for more planners is attributed to economist Arthur Lewis.

🎯 Exam Tip: Link famous economic quotes or principles to their respective authors for questions requiring specific attribution.

 

X. Answer the following in one or two sentences.

 

Question 1. Define "Traditional Approach"?
Answer: The traditional approach defines development purely in economic terms. It sees development as an increase in Gross National Product (GNP) and a shift from agriculture to manufacturing and service sectors. This view mainly focuses on numbers.
In simple words: The traditional approach defines development as simply growth in a country's economy, measured by how much it produces and how jobs change.

🎯 Exam Tip: For definitions, always include the core idea and any key metrics or characteristics associated with the term.

 

Question 2. State the meaning of Under development.
Answer: Underdevelopment refers to an economy where most people have a very low standard of living. This is due to very low income per person, poor production, and a high population growth rate. It is a state where basic needs are often not met.
In simple words: Underdevelopment means a country where people live with very low income, low productivity, and high population growth, leading to a poor quality of life.

🎯 Exam Tip: When defining underdevelopment, highlight the key socio-economic indicators like low per capita income, low productivity, and high population growth.

 

Question 3. Write "UDC” characteristics?
Answer: Underdeveloped Countries (UDCs) are often defined by several key characteristics. These include a primary economic sector, mainly agriculture, low income per person, and widespread poverty. There is also a lot of inequality in how income and wealth are shared, overpopulation, and not much money saved for investment. Many people are jobless, technology is old, and there is often a mix of traditional and modern economic systems. These factors often create difficulties in achieving broad-based prosperity.
In simple words: Underdeveloped countries usually have a lot of farming, low income for people, a lot of poverty, and many people without jobs.

🎯 Exam Tip: When listing characteristics, aim to cover economic, social, and technological aspects for a complete answer.

 

Question 4. What are the pillars of NITI Aayog?
Answer: NITI Aayog operates on several key principles or "pillars" to achieve its goals. These include focusing on people, encouraging active participation from all, promoting inclusion of all sections of society, and empowering different groups. Equality and transparency are also important foundations for its work. The aim is to ensure fair and open governance for everyone.
In simple words: NITI Aayog focuses on people, participation, empowerment, inclusion, equality, and transparency.

🎯 Exam Tip: Remember these pillars as they represent the core values and operational framework of NITI Aayog.

 

Question 5. Define "Financial system."?
Answer: A financial system means having an effective and well-organized banking system in a country. It includes all the rules, institutions, and markets that help money flow between savers and borrowers. A good financial system also needs a strong money market to make sure funds are easily available. This helps businesses get the money they need to grow and expand.
In simple words: A financial system is a country's organized way of handling money, like banks, to help people save and borrow easily.

🎯 Exam Tip: When defining financial systems, always mention both the "efficient and organized banking system" and the "money market" aspects.

 

Question 6. What is GNP Per Capita?
Answer: GNP Per Capita refers to the increase in the real income per person in an economy over a long period. It shows how much money, on average, each person in a country makes when looking at the country's total output. This measure is often used to see if people's living standards are improving. A higher GNP per capita usually indicates better economic well-being for the citizens.
In simple words: GNP Per Capita is the average real income each person in a country earns, measured over a long time.

🎯 Exam Tip: Highlight "real income" and "long period" when explaining GNP Per Capita, as these are crucial components of the definition.

 

Question 7. Define "Sarvodaya plan"?
Answer: The "Sarvodaya Plan" was inspired by Mahatma Gandhi's principles and Vinoba Bhave's ideas. This plan emphasized not only farming but also supported small and cottage industries. It aimed for the welfare of all, prioritizing the needs of the weakest sections of society, rather than just economic growth. The goal was holistic development where everyone benefits.
In simple words: The Sarvodaya Plan was a development idea based on Gandhi's thoughts, focusing on farming and small industries for everyone's well-being.

🎯 Exam Tip: Mention both Gandhian principles and Vinoba Bhave as key inspirations for the Sarvodaya Plan.

 

XI. Answer the following questions in paragraph

 

Question 1. Briefly explain the Measurement of Economic Development?
Answer: Economic development is typically measured using four main criteria:

(I) Gross National Product (GNP):
1. GNP is the total market value of all final goods and services a nation produces in a year. It also includes income earned by its citizens abroad, minus income earned by non-residents in that country.
2. GNP helps measure a country's economic health, assuming a higher GNP generally means a better quality of life.

(II) GNP per capita:
1. This measures the increase in the average real income per person over a long time.
2. It highlights that for real economic development, the growth in per capita income should be faster than population growth.

(III) Welfare:
1. Economic development is also seen as a process where people consume more goods and services.
2. From a welfare point of view, it means a continuous improvement in health, education, and living standards. Real development improves human lives.

(IV) Social Indicators:
1. Social indicators are basically the fundamental needs of the people.
2. Providing basic needs like health, education, food, water, sanitation, and housing helps check social backwardness. These indicators tell us about people's overall well-being. This comprehensive approach ensures that development is not just about money, but also about human progress.
In simple words: We measure economic development by looking at the total value of goods and services produced (GNP), how much each person earns (GNP per capita), how much people's welfare improves, and important social factors like health and education.

🎯 Exam Tip: When discussing economic development measurements, ensure you cover both monetary aspects like GNP and quality-of-life aspects like welfare and social indicators for a complete understanding.

 

Question 2. Distinguish Between Economic Growth and Economic Development.
Answer: