Visit: www.civilstap.

com
For Any Query Mail us: [email protected] or call us at - (+91)-8146207241
0
 PREFACE
There is no defined syllabus for the topics mentioned in the previous
notifications of the APFC examination, and without knowing the scope of the
exam, it is impossible to prepare for it. This E-Book consists of the syllabus of
Indian Economy, decoded after a thorough analysis of the previous year's
questions of 2002, 2004, 2012 & 2015. Also, we have provided the previous
year's questions & solutions of Indian Economy, so that you can see the type &
level of questions asked in the exam. Syllabus & PYQs are two best friends in
your preparation journey for any exam. So, go through this E-Book in full and
kick start your preparation for the upcoming APFC examination.

1|P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] / 8146207241

 INDEX

CONTENTS
Component Name - Indian Economy ........................... 3
Decoded Syllabus ........................................................................................................................................... 3
Previous Year QuestionS .............................................. 6
UPSC EPFO APFC - 2002 ................................................................................................................................. 6
UPSC EPFO APFC – 2004 ................................................................................................................................ 6
UPSC EPFO APFC – 2012 ................................................................................................................................ 7
UPSC EPFO APFC - 2015 ................................................................................................................................. 8
SOLUTIONS – Previous Year Questions ...................... 11
UPSC EPFO APFC - 2002 ............................................................................................................................... 11
UPSC EPFO APFC – 2004 .............................................................................................................................. 12
UPSC EPFO APFC – 2012 .............................................................................................................................. 13
UPSC EPFO APFC - 2015 ............................................................................................................................... 16
Our 6-Step Formula to Become an APFC in EPFO ...... 21

2|P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] / 8146207241

COMPONENT NAME - INDIAN ECONOMY

DECODED SYLLABUS
1. INTRODUCTION TO DEMAND AND SUPPLY
• Microeconomics V Macroeconomics
• Basics of Demand
• Basics of Supply
• Equilibrium

2. ELASTICITY OF DEMAND
• Concept and Factors Affecting Demand
• Shift in Demand Curve
• Price Elasticity of Demand
• Cross Elasticity of Demand
• Income Elasticity of Demand

3. MEASUREMENT OF GROWTH
• Basics of Economy
• Circular Flow of Income
• Gross Domestic Product
• Important Macroeconomic Identities
• Growth, Welfare and Development
• Market Structures

4. POVERTY ALLEVIATION AND EMPLOYMENT GENERATION IN INDIA

POVERTY
• Poverty and its Types
• Measurement of Poverty
• Poverty Related Sustainable Development Goals

EMPLOYMENT IN INDIA
• Employment Generation in India
• Types of Unemployment in India
• Measurement of Unemployment
• Status of Employment in India

5. ECONOMIC HISTORY OF INDIA

• Indian Economy: A Brief Overview
• Various Sectors of the Economy
• Features of the Indian Economy
• Concerns Facing the Indian Economy
• Underdevelopment
• Meaning and Types of Economic Planning
• Economic Planning in India Before and After Independence
• Economic Reforms in India
• NITI Aayog

3|P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] / 8146207241

6. MONETARY POLICY
• Basics of Monetary Policy
• Monetary Policy in India
• Instruments of Monetary Policy
• Types of Monetary Policy
• Financial Institutions in India

7. INFLATION
• Meaning and its Causes
• Effects of Inflation
• Important Terms associated with Inflation
• Measures to Control Inflation
• Measuring Inflation
• Inflation Targeting in India
• Trends of Inflation in India

8. FISCAL POLICY
• Basics of Budget
• Basics of Fiscal Policy
• Components of Budget
• Measures of Government Deficit
• Public Debt in India
• Goods and Services Tax

9. REGIONAL ECONOMIC COOPERATION

• Regional Economic Integration
• South Asian Association for Regional Cooperation
• Association of Southeast Asian Nations
• Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation
• Bangladesh, China, India and Myanmar
• Comprehensive and Progressive Agreement for Trans-Pacific Partnership
• Regional Comprehensive Economic Partnership
• One Belt, One Road and Maritime Silk Route
• Shanghai Cooperation Organization
• Indian Ocean Rim Association
• Indian Ocean Commission
• Asia Pacific Economic Cooperation
• BRICS
• India’s Experience with Free Trade Agreements

10. INTERNATIONAL ECONOMIC INSTITUTIONS

• Introduction
• The World Bank
• The International Monetary Fund
• World Trade Organisation

11. OPENING UP OF THE INDIAN ECONOMY, BALANCE OF PAYMENT

• Balance of Payment
• Exchange Rate
• Types of Currencies
• Exchange Rate Management in India

4|P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] / 8146207241

12. INDUSTRIAL AND LABOUR POLICY
• Introduction
• Evolution of India’s Industrial Policy
• Disinvestment
• Micro, Small and Medium Enterprises in India
• Special Economic Zones
• National Investment and Manufacturing Zones
• National Manufacturing Policy
• Industrial Corridors
• Indices/Surveys to Measure Industrial Performance in India
• Labour Policy

13. FINANCE COMMISSION

• Appointment
• Composition of Finance Commission
• Roles & Responsibilities
• Procedures and Functioning
• 14th Finance Commission
• 15th Finance Commission

5|P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] / 8146207241

PREVIOUS YEAR QUESTIONS

UPSC EPFO APFC - 2002

Q1. Consider the following statements:
1. The demand for commodities having a large number of close substitutes is less elastic than the
commodities having a smaller number of substitutes
2. Luxury items have a highly elastic demand
3. The commodities whose consumption cannot easily be postponed have less elastic demand
Which of these statements is/are correct?
(a) 1 only
(b) 2 and 3
(c) 1 and 2
(d) 1, 2 and 3
Q2. Consider the following statements:
1. Launching of Fourth five-year plan was postponed and three annual plans had to be resorted to between
1966 to 1969.
2. Fifth five-year plan was terminated a year earlier.
3. Eighth five-year plan commenced in 1992 instead of 1990.
Which of these statements is/are correct?
(a) 2 and 3
(b) 1 and 2
(c) 1 and 3
(d) 1, 2 and 3
Q3. Assertion (A): Macro-economic deals with the study of aggregates and averages.
Reason (R): Central problem of macro-economics is the determination of income and employment
Codes:
(a) Both A and R are true and R is the correct explanation of A
(b) Both A and R are true but R is NOT the correct explanation of A
(c) A is true but R is false
(d) A is false but R

UPSC EPFO APFC – 2004

Q1. Consider the following statements:

India had plan holiday during 1966-69 due to
1. Indo-Pakistan conflict in 1965.
2. Severe drought for two successive years.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

6|P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] / 8146207241

UPSC EPFO APFC – 2012

Q1. It is said that, in order to control inflation, foreign inflow needs to be sterilized. Sterilization here refers
to
(a) Ensuring that counterfeit currency does not enter circulation
(b) Ensuring that black money is accounted for
(c) Withdrawing equivalent local currency to maintain a desirable rate of exchange
(d) Compliance with import-export regulations

Q2. Which of the following are the main causes of the slow rate of growth of per capita income in India?
1. High rate of capital formation
2. High level of fiscal deficits
3. High rate of growth of population

a) 1, 2 and 3
b) 1 and 2 only
c) 1 and 3 only
d) 2 and 3 only

Q3. If the RBI adopts an expansionist open market operations policy, this means it will:
a) Sell securities in the open market
b) Buy securities from non-government holders
c) Openly announce to the market that it intends to expand credit
d) Offer commercial banks more credit in the open market

Q4. Structural Planning refers to:

(a) Centralized planning
(b) Laying down broad goals and strategies
(c) Changing existing institutions or creating new ones
(d) Fixing flexible targets

Q5. Which of the following is NOT one of the features of the Special Economic Zones (SEZ) being set up for
promoting exports?
(a) Foreign workers will be allowed free entry without Visa restrictions
(b) The SEZ area will be treated as foreign territory for trade operations, duties and tariff
(c) There will be no routine examination by customs authorities of import/export cargo
(d) No license is required for import into the zone

Q6. Which one of the following expresses the relation between normal price and market price?
(a) Market price is greater than normal price
(b) Market price is equal to normal price
(c) Market price tends to be equal to normal price
(d) Market price is lesser than normal price

Q7. Bancassurance is:

(a) An insurance scheme to insure bank deposits
(b) An insurance scheme exclusively for bank employees
(c) A composite financial service offering both bank and insurance products
(d) A bank deposit scheme exclusively for employees of insurance companies

7|P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] / 8146207241

Q8. Inflation can be controlled by:
(a) Increase in wages
(b) Decrease in taxation
(c) Reduction in public expenditure
(d) Making the rupee dearer

Q9. Which of the following can be termed an infrastructural bottleneck in the development of India's
economy?
(a) The federal nature of Indian Polity.
(b) Existence of a large variety of financial institutions
(c) Delay in the administration of justice relating to land acquisition and displacement
(d) The volatility of the Indian rupee

Q10. Which of the following statements is true about Industrial Policy since 1991?
(a) Only 5 industries related to security, strategic and environmental concerns require industrial License
(b) An investor need not file an industrial entrepreneur Memorandum
(c) There is no reservation of products for production in small scale sectors
(d) The number of industries reserved for public sector has been enhanced

UPSC EPFO APFC - 2015

Q1. Special Economic Zones (SEZ) are developed to

(a) Generate additional economic activity throughout the country
(b) Beautify suburban areas
(c) Upgrade the facilities in the countryside
(d) Promote investment from domestic and foreign sources

Q2. Unbalanced' Growth is hypothesized when

(a) Expansion can take place simultaneously on several growth routes
(b) Supply of labour is fixed
(c) Supply of capital is unlimited
(d) Active sectors need to, and do energize sluggish sectors

Q3. Transportation plays a great role in any economy. Which of the following modes of transportation has
the highest elasticity?
(a) Air
(b) Rail
(c) Road
(d) Water

Q4. How does an expansionary monetary policy affect the rate of interest and level of income?
(a) Raises the level of income but lowers the rate of interest
(b) Raises the rate of interest but lowers the level of income
(c) Raises both, the rate of interest and the level of income
(d) Lowers both, the rate of interest and the level of income

8|P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] / 8146207241

Q5. When the Government ownership in Public Sector Undertakings is diluted, it is called
(a) Privatization
(b) Public-Private Partnership
(c) Disinvestment
(d) Deflation

Q6. Consider the following items:

1. Consumer goods and services
2. Gross private domestic investment
3. Goods and services produced by the Government
4. Net income from abroad

Which of the above items are included in GNP?

(a) 1, 2 and 3 only
(b) 1, 2 and 4 only
(c) 3 and 4 only
(d) 1, 2, 3 and 4

Q7. Which of the following statement best describes the content of the theory of distribution?
a) The distribution of income among different individuals in the economy
b) The distribution of income between the Centre and the State Governments
c) The principle of just distribution of wealth and income
d) The distribution of income between the owners of factor resources

Q8. The demand for a factor of production is said to be derived demand because
1. It is a function of the profitability of an enterprise
2. It depends on the supply of complementary factors
3. It stems from the demand for the final product
4. It arises out of means being scarce in relation to wants
Which of the above reasons is/are correct?
a) 1 only
b) 3 only
c) 2 and 4 only
d) 1, 2, 3 and 4

Q9. Whenever countries set up a Free Trade Area, they abolish all restrictions on trade among themselves
and
a) They establish a common external tariff on imports from outside countries
b) They abolish all restrictions on imports from outside countries
c) They abolish all restrictions on imports from other Free Trade Areas
d) Each country maintains its own set of tariffs and quotas on imports from outside countries

Q10. The term 'Dear Money' refers to

a) Low rate of interest on housing loans
b) Value of money at the recession stage
c) High rate of interest
d) Savings gained due to decrease in rate of interest on housing loans

9|P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] / 8146207241

Q11. Which of the following are the roles of the Finance Commission in India?
1. The distribution of money collected through taxes
2. Evaluation of Centrally sponsored schemes
3. Evolve principles based on which funds are allotted among States
4. To develop Five Year Plans
Select the correct answer using the codes given below:
a) 1 and 4 only
b) 1 and 3 only
c) 2 and 4 only
d) 2 and 3 only

Q12. Which of the following statements are correct regarding the International Monetary Fund (IMF)?
1. India is a founder member of the IMF
2. India's quota in the IMF is more than 4 percent
3. Finance Minister is represented ex-officio on the IMF
4. IMF conducts regular review of India's economic status under Article IV
Select the correct answer using the codes given below:
a) 1, 2 and 3 only
b) 1, 3 and 4 only
c) 2 and 4 only
d) 1, 2, 3 and 4

Q13. Statement (1): The effects of an income tax on consumption, saving and investment are micro effects
Statement (II): Income tax is an example of direct tax.
Codes:
(a) Both Statement (I) and Statement (II) are individually true and Statement (II) is the correct explanation
of Statement (I)
(b) Both Statement (I) and Statement (II) are individually true but Statement (II) is not the correct
explanation of Statement (I)
(c) Statement (I) is true but Statement (II) is false
(d) Statement (I) is false but Statement (II) is true

Q14. Statement (1): Trade between two countries takes place on account of differences in costs.
Statement (II): Different countries have different factor endowments
Codes:
(a) Both Statement (I) and Statement (II) are individually true and Statement (II) is the correct explanation of
Statement (I)
(b) Both Statement (I) and Statement (II) are individually true but Statement (II) is not the correct explanation
of Statement (I)
(c) Statement (I) is true but Statement (II) is false
(d) Statement (I) is false but Statement (II) is true

Q15. Statement (1): Foreign investment may affect a country's export performance.
Statement (II): Inflow of foreign exchange may cause appreciation of local currency leading to a rise in the
price of export commodities.
Codes:
(a) Both Statement (I) and Statement (II) are individually true and Statement (II) is the correct explanation
of Statement (I)
(b) Both Statement (I) and Statement (II) are individually true but Statement (II) is not the correct
explanation of Statement (I)
(c) Statement (I) is true but Statement (II) is false
(d) Statement (I) is false but Statement (II) is true
10 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] / 8146207241
SOLUTIONS – PREVIOUS YEAR QUESTIONS

UPSC EPFO APFC - 2002

Q1. Consider the following statements:
1. The demand for commodities having a large number of close substitutes is less elastic than the
commodities having a smaller number of substitutes
2. Luxury items have a highly elastic demand
3. The commodities whose consumption cannot easily be postponed have less elastic demand
Which of these statements is/are correct?
(a) 1 only
(b) 2 and 3
(c) 1 and 2
(d) 1, 2 and 3
Answer: B
Explanation:
• The extent of responsiveness of demand with change in the price is not always the same. The demand
for a product can be elastic or inelastic, depending on the rate of change in the demand with respect to
change in price of a product. Elastic demand is the one when the response of demand is greater with a
small proportionate change in the price. On the other hand, inelastic demand is the one when there is
relatively a less change in the demand with a greater change in the price.
• Therefore, the demand for commodities having a large number of close substitutes is more elastic than
the commodities having a smaller number of substitutes because whenever there is a change in prices
of commodities having close substitutes there will be drastic change in the demand of that commodity.
Hence, statement 1 is incorrect.
• Luxury items Luxury items have a highly elastic demand. Since these items are not necessity therefore,
change in prices of these items lead to drastic change in the demands of these items. Hence, statement
2 is correct.
• The commodities whose consumption cannot easily be postponed have less elastic demand. Since these
commodities belong to the necessity class of goods e.g., flour, salt, sugar etc. Therefore, irrespective of
change in prices of these goods, demand of these commodities does not get affected too much. Hence,
statement 3 is correct.
• Therefore, B is the right answer.

Q2. Consider the following statements:

1. Launching of Fourth five-year plan was postponed and three annual plans had to be resorted to between
1966 to 1969.
2. Fifth five-year plan was terminated a year earlier.
3. Eighth five-year plan commenced in 1992 instead of 1990.
Which of these statements is/are correct?
(a) 2 and 3
(b) 1 and 2
(c) 1 and 3
(d) 1, 2 and 3
Answer: D
Explanation:
• The government had to declare "Plan Holidays" (1966-67, 1967-68, and 1968-69). The Sino-Indian War
and the Indo-Pak War, which caused the Third Five Year Plan to fail, were the primary causes of the
plan holidays. Therefore, the Fourth five-year plan was postponed. Hence, statement 1 is correct.

11 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] / 8146207241

• The new approach was “Rolling Plan”. It terminated the fifth five-year plan in 1977-78 and
launched its own sixth five-year plan for period 1978-83 and called it rolling plan. The Janata
Party government rejected the Fifth Five-Year Plan and introduced a new Sixth Five-Year Plan (1978–
1980). The plan was terminated in 1978, its fourth year, due to change in the Government at the
Centre. Hence, statement 2 is correct.
• The Eight Five Year Plan was not introduced in 1990 and the following years 1990-91 and 1991-92 were
treated as Annual Plans. This was largely because of the economic instability. India faced a crisis of
foreign exchange reserves during this time. Therefore, Eighth five-year plan commenced in 1992 instead
of 1990. Hence, statement 3 is correct.
• Therefore, D is the right answer.

Q3. Assertion (A): Macro-economic deals with the study of aggregates and averages.
Reason (R): Central problem of macro-economics is the determination of income and employment.
Codes:
(a) Both A and R are true and R is the correct explanation of A
(b) Both A and R are true but R is NOT the correct explanation of A
(c) A is true but R is false
(d) A is false but R
Answer: B
Explanation:
• Macroeconomics is the branch of economics that deals with the structure, performance, behavior, and
decision-making of the whole, or aggregate, economy. Hence, statement (A) is correct.
• The central issues in Macroeconomics relate to the overall level of employment, growth rate of national
output, general price level and stability of the economy. Hence, statement (R) is correct.
• Though both the statements are correct but R is not the correct explanation of A. Therefore, B is the
right answer.

UPSC EPFO APFC – 2004

Q1. Consider the following statements:

India had plan holiday during 1966-69 due to
1. Indo-Pakistan conflict in 1965.
2. Severe drought for two successive years.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer: A
Explanation:
• The government had to declare "Plan Holidays" (1966-67, 1967-68, and 1968-69). The Sino-Indian War
of 1962 and the Indo-Pak War of 1965, which caused the Third Five Year Plan to fail, were the primary
causes of the plan holidays. Hence, statement 1 is correct.
• During 1966-67, there was the problem of drought but it was not the reason behind the plan holiday.
Hence, statement 2 is incorrect.
• Therefore, A is the right answer.

12 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] / 8146207241

UPSC EPFO APFC – 2012

Q1. It is said that, in order to control inflation, foreign inflow needs to be sterilized. Sterilization here refers
to
(a) Ensuring that counterfeit currency does not enter circulation
(b) Ensuring that black money is accounted for
(c) Withdrawing equivalent local currency to maintain a desirable rate of exchange
(d) Compliance with import-export regulations
Answer: C
Explanation:
• Sterilisation in the context of monetary policy refers to the activity of the RBI of taking away the excess
money supply created due to its foreign exchange market intervention. Hence, C is the right answer.

Q2. Which of the following are the main causes of the slow rate of growth of per capita income in India?
1. High rate of capital formation
2. High level of fiscal deficits
3. High rate of growth of population
a) 1, 2 and 3
b) 1 and 2 only
c) 1 and 3 only
d) 2 and 3 only
Answer: D
Explanation:
• Slow rate of capital formation in the economy leads to slow growth rate of national income which in
turn leads to slow rate of growth of per capita income in India. Hence, statement 1 is incorrect.
• High level of fiscal deficits leads to slow growth rate of GDP which in turn leads to slow rate of growth
of per capita income in India. Hence, statement 2 is correct.
• Per capita income is national income divided by the total population of country. Therefore, when there
is high rate of growth of population, this will automatically lead to slow rate of growth of per capita
income in India. Hence, statement 3 is correct.
• Therefore, D is the right answer.

Q3. If the RBI adopts an expansionist open market operations policy, this means it will:
a) Sell securities in the open market
b) Buy securities from non-government holders
c) Openly announce to the market that it intends to expand credit
d) Offer commercial banks more credit in the open market
Answer: B
Explanation:
• If the RBI adopts an expansionist open market operations policy, this means it will Buy securities from
non-government holders. This will lead to increase in money supply in the economy as for the purchase
of government securities, RBI needs to pay INR in consideration. Hence, B is the right answer.

Q4. Structural Planning refers to:

(a) Centralized planning
(b) Laying down broad goals and strategies
(c) Changing existing institutions or creating new ones
(d) Fixing flexible targets
Answer: C

13 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] / 8146207241

Explanation:
• In structural planning, the present social and economic structure is changed and a new structure
emerges. In the developing countries, there is a structure planning. Big economic and social changes
are brought about to usher into a new system. For instance, shift from capitalist to socialist economy
can be called a structural change. Structural planning can help in accelerating the pace of economic
development. The Communist countries like Russia and China followed structural planning. Hence, C is
the right answer.

Q5. Which of the following is NOT one of the features of the Special Economic Zones (SEZ) being set up for
promoting exports?
(a) Foreign workers will be allowed free entry without Visa restrictions
(b) The SEZ area will be treated as foreign territory for trade operations, duties and tariff
(c) There will be no routine examination by customs authorities of import/export cargo
(d) No license is required for import into the zone
Answer: A
Explanation:
• Allowing foreign workers free entry without Visa restrictions is not the feature the Special Economic
Zones (SEZ) being set up for promoting exports. This may create a serious challenge with regard to
internal security. Hence, A is the right answer.

Q6. Which one of the following expresses the relation between normal price and market price?
(a) Market price is greater than normal price
(b) Market price is equal to normal price
(c) Market price tends to be equal to normal price
(d) Market price is lesser than normal price
Answer: A
Explanation:
• Market price is that price which prevails in a market on a single day or on very few days. It is a very
short-period price which prevails at a particular time. On the other hand, normal price is that price which
tends to prevail in the long-run. It is a price which has a tendency to prevail over a period of time. Since
market price caters the inflation, therefore, it is greater than normal price. Hence, A is the right answer.

Q7. Bancassurance is:

(a) An insurance scheme to insure bank deposits
(b) An insurance scheme exclusively for bank employees
(c) A composite financial service offering both bank and insurance products
(d) A bank deposit scheme exclusively for employees of insurance companies
Answer: C
Explanation:
• Bancassurance means selling insurance product through banks. Banks and insurance company come up
in a partnership wherein the bank sells the tied insurance company's insurance products to its clients.
Hence, C is the right answer.

Q8. Inflation can be controlled by:

(a) Increase in wages
(b) Decrease in taxation
(c) Reduction in public expenditure
(d) Making the rupee dearer
Answer: C
Explanation:
• Increase in wages leads to increase in disposable income of people which will lead to increase in demand
and consequent increase in inflation. Hence, A is incorrect.
14 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] / 8146207241
• Decrease in taxes leads to increase in disposable income of people as now they need to pay less taxes
which will lead to increase in demand and consequent increase in inflation. Hence, B is incorrect.
• Reduction in public expenditure leads to decrease in income of people as now they will have less source
of income which they were getting earlier, e.g., MGNREGA wages. This will lead to decrease in demand
and consequent decrease in inflation. Hence, C is correct.
• Making INR dearer means there is a high demand of INR. When demand is high then people will demand
more to spend more and that will lead to increase in inflation. Hence, D is incorrect.
• Therefore, C is the right answer.

Q9. Which of the following can be termed an infrastructural bottleneck in the development of India's
economy?
(a) The federal nature of Indian Polity.
(b) Existence of a large variety of financial institutions
(c) Delay in the administration of justice relating to land acquisition and displacement
(d) The volatility of the Indian rupee
Answer: C
Explanation:
• Delay in the administration of justice relating to land acquisition and displacement leads to delay in
starting of development projects in the country. Therefore, it becomes infrastructural bottleneck in the
development of India's economy. Hence, C is the right answer.

Q10. Which of the following statements is true about Industrial Policy since 1991?
(a) Only 5 industries related to security, strategic and environmental concerns require industrial License
(b) An investor need not file an industrial entrepreneur Memorandum
(c) There is no reservation of products for production in small scale sectors
(d) The number of industries reserved for public sector has been enhanced
Answer: B
Explanation:
• There are only 4 industries at present related to security, strategic and environmental concerns, where
an industrial license is currently required - Electronic aerospace and defence equipment, Specified
hazardous chemicals, Industrial explosives, Cigars and cigarettes of tobacco and manufactured tobacco
substitutes. Hence, A is incorrect.
• Industrial Entrepreneur Memorandum (IEM) is required by the government for statistical purposes
only, similar to Foreign Assets and Liabilities statement filed by the enterprise to the RBI. Through IEM,
the government conduct a limited post facto check to see whether the proposed manufacturing
activities require an industrial license or not. Hence, B is correct.
• The new industrial policy announced on 24th July, 1991 as part of the process of economic reforms
has stated that the policy of reservation of products in the small-scale industries sector will continue.
Hence, C is incorrect.
• Government stakes in Public Sector Enterprises were reduced to enhance their efficiency and
competitiveness. Hence, D is incorrect.
• Therefore, B is the right answer.

15 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] / 8146207241

UPSC EPFO APFC - 2015

Q1. Special Economic Zones (SEZ) are developed to

(a) Generate additional economic activity throughout the country
(b) Beautify suburban areas
(c) Upgrade the facilities in the countryside
(d) Promote investment from domestic and foreign sources
Answer: D
Explanation:
• Special Economic Zones (SEZ) are developed to create additional economic activity, to boost the export of
goods and services, to generate employment, to boost domestic and foreign investments, to
develop infrastructure facilities. Hence D is the right answer.

Q2. Unbalanced' Growth is hypothesized when

(a) Expansion can take place simultaneously on several growth routes
(b) Supply of labour is fixed
(c) Supply of capital is unlimited
(d) Active sectors need to, and do energize sluggish sectors
Answer: D
Explanation:
• Balanced growth aims at harmony, consistency and equilibrium whereas unbalanced growth suggests
the creation of disharmony, inconsistency and disequilibrium. The implementation of balanced growth
requires huge amount of capital. On the other hand, unbalanced growth requires less amount of capital,
making investment in only leading sectors. Balanced growth is long term strategy because the
development of all the sectors of economy is possible only in long run period. But the unbalanced growth
is a short-term strategy as the development of few leading sectors is possible in short span of period.
Hence, D is the right answer.

Q3. Transportation plays a great role in any economy. Which of the following modes of transportation has
the highest elasticity?
(a) Air
(b) Rail
(c) Road
(d) Water
Answer: C
Explanation:
• The extent of responsiveness of demand with change in the price is not always the same. The demand
for a product can be elastic or inelastic, depending on the rate of change in the demand with respect to
change in price of a product. Elastic demand is the one when the response of demand is greater with a
small proportionate change in the price. On the other hand, inelastic demand is the one when there is
relatively a less change in the demand with a greater change in the price.
• Therefore, in terms of transportation, road transportation has the highest elasticity as it whenever there
is change in fare of road transportation, its demand will change drastically and people may adopt to
other modes in case of increase in fare. On the other hand, if fare of road transportation decreases then
people will more prefer it. Hence, C is correct.

Q4. How does an expansionary monetary policy affect the rate of interest and level of income?
(a) Raises the level of income but lowers the rate of interest
(b) Raises the rate of interest but lowers the level of income
(c) Raises both, the rate of interest and the level of income

16 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] / 8146207241

(d) Lowers both, the rate of interest and the level of income
Answer: A
Explanation:
• Expansionary monetary policy works by expanding the money supply faster than usual or lowering
short-term interest rates. It is enacted by central banks and comes about through open market
operations, reserve requirements, and setting interest rates.
• Expansionary monetary policy aims to increase aggregate demand and economic growth in the
economy. It involves cutting interest rates or increasing the money supply to boost economic activity.
It could also be termed a ‘loosening of monetary policy’. It is the opposite of ‘tight’ monetary policy.
Hence, A is the right answer.

Q5. When the Government ownership in Public Sector Undertakings is diluted, it is called
(a) Privatization
(b) Public-Private Partnership
(c) Disinvestment
(d) Deflation
Answer: C
Explanation:
• Privatisation refers to the sale of the government’s majority stake, or the whole enterprise, to private
investors. In case of privatisation, the government doesn’t hold the resulting control and ownership.
• A public-private partnership (PPP) is a long-term contract between a private party and a government
agency for the provision of a public asset or service, in which the private party assumes major risk and
management responsibilities.
• Disinvestment means the government or an organisation is liquidating or selling its stake in a company.
But it will be less than 50% and the government or the organisation will still be in the saddle, calling the
shots.
• Deflation is when consumer and asset prices decrease over time, and purchasing power increases.
• Hence, C is the right answer.

Q6. Consider the following items:

1. Consumer goods and services
2. Gross private domestic investment
3. Goods and services produced by the Government
4. Net income from abroad
Which of the above items are included in GNP?
(a) 1, 2 and 3 only
(b) 1, 2 and 4 only
(c) 3 and 4 only
(d) 1, 2, 3 and 4
Answer: D
Explanation:
• GNP is the value of all final goods and services produced by the residents of a country in a financial year
• While Calculating GNP, income of foreigners in a country is excluded but income of people who are living
outside of that country is included. The value of GNP is calculated on the basis of GDP.
• GNP = GDP + X – M. Where, X = income of the people of a country who are living outside of the Country.
M = income of the foreigners in a country.
• Hence, D is the right answer.

Q7. Which of the following statement best describes the content of the theory of distribution?
a) The distribution of income among different individuals in the economy
b) The distribution of income between the Centre and the State Governments
17 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] / 8146207241
 c) The principle of just distribution of wealth and income
d) The distribution of income between the owners of factor resources
Answer: D
Explanation:
• Distribution refers to the way total output, income, or wealth is distributed among the factors of
production such as labour, land, and capital. Hence, D is the right answer.

Q8. The demand for a factor of production is said to be derived demand because
1. It is a function of the profitability of an enterprise
2. It depends on the supply of complementary factors
3. It stems from the demand for the final product
4. It arises out of means being scarce in relation to wants
Which of the above reasons is/are correct?
a) 1 only
b) 3 only
c) 2 and 4 only
d) 1, 2, 3 and 4
Answer: B
Explanation:
• In essence, the demand for, say, a factor of production by a firm is dependent on the demand by
consumers for the product produced by the firm. The term was first introduced by Alfred Marshall in his
Principles of Economics in 1890. Demand for all factors of production is considered as derived demand.
Hence, B is the right answer.

Q9. Whenever countries set up a Free Trade Area, they abolish all restrictions on trade among themselves
and
a) They establish a common external tariff on imports from outside countries
b) They abolish all restrictions on imports from outside countries
c) They abolish all restrictions on imports from other Free Trade Areas
d) Each country maintains its own set of tariffs and quotas on imports from outside countries
Answer: A
Explanation:
• Whenever countries set up a Free Trade Area, they abolish all restrictions on trade among themselves
and they establish a common external tariff on imports from outside countries. Hence, A is the right
answer.

Q10. The term 'Dear Money' refers to

a) Low rate of interest on housing loans
b) Value of money at the recession stage
c) High rate of interest
d) Savings gained due to decrease in rate of interest on housing loans
Answer: C
Explanation:
• Dear money refers to hard-to-borrow funds created by a high-interest rate environment, making
money more expensive to obtain. When central banks enact tight monetary policy, interest rates go up,
encouraging saving and discouraging lending or investment. Hence C is the right answer.

Q11. Which of the following are the roles of the Finance Commission in India?
1. The distribution of money collected through taxes
2. Evaluation of Centrally sponsored schemes
3. Evolve principles based on which funds are allotted among States
18 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] / 8146207241
 4. To develop Five Year Plans
Select the correct answer using the codes given below:
a) 1 and 4 only
b) 1 and 3 only
c) 2 and 4 only
d) 2 and 3 only
Answer: B
Explanation:
• The Finance Commission helps in maintaining fiscal federalism in India by performing following
functions:
➢ The distribution between the Union and the States of the net proceeds of taxes which are to be
divided between them and the allocation between the States of the respective shares of such
proceeds.
➢ Determination of principles and quantum of grants-in-aid to States which are in need of such
assistance.
➢ Measures needed to augment the Consolidated Fund of a State to supplement the resources of the
Panchayats and Municipalities in the State on the basis of the recommendations made by the
Finance Commission of the State. Hence, statement 1 and 3 are correct.
➢ Evaluation of Centrally sponsored schemes are not a responsibility of Finance Commission. Hence,
statement 2 is incorrect.
➢ Developing five years plan was the responsibility of erstwhile Planning Commission. Hence,
statement 4 is incorrect.
➢ Therefore, B is the right answer.

Q12. Which of the following statements are correct regarding the International Monetary Fund (IMF)?
1. India is a founder member of the IMF
2. India's quota in the IMF is more than 4 percent
3. Finance Minister is represented ex-officio on the IMF
4. IMF conducts regular review of India's economic status under Article IV
Select the correct answer using the codes given below:
a) 1, 2 and 3 only
b) 1, 3 and 4 only
c) 2 and 4 only
d) 1, 2, 3 and 4
Answer: B
Explanation:
• India is a founder member of the IMF. Hence, statement 1 is correct.
• India's quota in the IMF in 2022 is around 2.75 percent. Hence, statement 2 is incorrect.
• Finance Minister is represented ex-officio on the IMF. Hence, statement 3 is correct.
• Country surveillance is an ongoing process that culminates in regular (usually annual) comprehensive
consultations with individual member countries, with discussions in between as needed. The
consultations are known as "Article IV consultations" because they are required by Article IV of the IMF's
Articles of Agreement. During an Article IV consultation, an IMF team of economists visits a country to
assess economic and financial developments and discuss the country's economic and financial policies
with government and central bank officials. IMF staff missions also often meet with parliamentarians
and representatives of business, labor unions, and civil society. Hence, statement 4 is correct.
• Therefore, B is the right answer.

19 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] / 8146207241

Q13. Statement (I): The effects of an income tax on consumption, saving and investment are micro effects
Statement (II): Income tax is an example of direct tax.
Codes:
(a) Both Statement (I) and Statement (II) are individually true and Statement (II) is the correct explanation
of Statement (I)
(b) Both Statement (I) and Statement (II) are individually true but Statement (II) is not the correct
explanation of Statement (I)
(c) Statement (I) is true but Statement (II) is false
(d) Statement (I) is false but Statement (II) is true
Answer: B
Explanation:
• The effects of an income tax on consumption, saving and investment are micro effects. Hence,
statement I is correct.
• In the case of direct tax, the burden can't be shifted by the taxpayer to someone else. These are largely
taxes on income or wealth. Income tax, corporation tax, property tax, inheritance tax and gift tax are
examples of direct tax. Hence, statement II is correct.
• Both statement I and II are correct but Statement (II) is not the correct explanation of Statement (I)
• Therefore, B is the right answer.

Q14. Statement (1): Trade between two countries takes place on account of differences in costs.
Statement (II): Different countries have different factor endowments
Codes:
(a) Both Statement (I) and Statement (II) are individually true and Statement (II) is the correct explanation of
Statement (I)
(b) Both Statement (I) and Statement (II) are individually true but Statement (II) is not the correct explanation
of Statement (I)
(c) Statement (I) is true but Statement (II) is false
(d) Statement (I) is false but Statement (II) is true
Answer: A
Explanation:
• Trade between two countries takes place on account of differences in costs. The reason is that different
countries have different factor endowments. Hence, both the statements are correct and also
Statement (II) is the correct explanation of Statement (I).
• Therefore, A is the right answer.

Q15. Statement (1): Foreign investment may affect a country's export performance.
Statement (II): Inflow of foreign exchange may cause appreciation of local currency leading to a rise in the
price of export commodities.
Codes:
(a) Both Statement (I) and Statement (II) are individually true and Statement (II) is the correct explanation
of Statement (I)
(b) Both Statement (I) and Statement (II) are individually true but Statement (II) is not the correct
explanation of Statement (I)
(c) Statement (I) is true but Statement (II) is false
(d) Statement (I) is false but Statement (II) is true
Answer: A
Explanation:
• Foreign investment may affect a country's export performance as inflow of foreign exchange may cause
appreciation of local currency leading to a rise in the price of export commodities. Hence, both the
statements are correct and also Statement (II) is the correct explanation of Statement (I).
• Therefore, A is the right answer.
20 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] / 8146207241
OUR 6-STEP FORMULA TO BECOME AN APFC IN EPFO
The only preparation tips you will ever need to dominate this exam - yes, we guarantee it!

1. Set a Clear Goal

Always remember that if you are not sure about why you want to take certain actions, it is most
likely that the action won’t yield results. Even if it does, you will not be satisfied with the result.
Same is the case with APFC exam, you need to have the clarity in your mind that why you wish to
prepare, is it because of money & power, prestige, job security, social service or is it the postings in
metro cities that motivates you to take this exam. Whatever may be the factor, but you have to
have your goal crystal clear to be always motivated & act consistently to get success.

2. Understand the scope of exam

The syllabus and previous year questions are like the 2 headlights of your car of preparation. You
miss one of these and your car will meet with an accident, let me guarantee you this right here! The
biggest blunder aspirants like you commit is that they do not define the scope of the syllabus of the
examination and prepare under the impression that anything and everything can be asked in the
examination which is even remotely related to the syllabus! Hell no! This is NOT the case.
Download and print a copy of the syllabus and then do the same for previous year questions (link
has been provided above). Go through the syllabus atleast 10 times and then go through the
previous year questions (year wise) and see for yourself what are the important topics and in what
depth they need to be studied for the examination. Believe me, more than 90% of the so-called
sincere aspirants do not do this.

3. Shortlist your study sources

Based on step 2 above, now is the time to shortlist your study sources - be it coaching material,
books, websites, magazines, or the like! And remember, once you prepare a list of the resources
that you are going to follow, DO NOT get swayed by new material that keeps flooding the market
through telegram, Facebook, websites, advertisements, etc! Keep your head down and focus on
completing your study sources. Yes, once you are done with your sources, you can move to a
secondary source but not before that!

4. Design a time table for yourself

This is a very important step - you must design a time table for yourself. This time table is for ‘you’
and ‘you’ alone. Do not compare your time table with others, some like studying early in the
morning, some like to burn the midnight oil, some can sit at a stretch for 6 hours, some study for 2
hours and take a break and then study again. Some study on all 7 days, some study for 5 days and
take a 2-day break. Whatever! The point or the goal is to have a time table that ‘works’ for ‘you’. It
is not meant to earn shower of praises from your parents, friends or peers!

5. Develop consistency
Ah consistency! The ever-elusive thing! The secret to developing consistency is to make ‘micro easy
targets’. How? Let's compare 2 situations. Student A makes a plan that he will study 8 hours
everyday starting tomorrow and sets a goal for himself for the next day - cover 50 pages of current
affairs magazine, 20 pages of constitution of India from a book, 50 questions of arithmetical
reasoning and read 20 pages of history. He starts his day full of energy but towards the end of the
day finds himself in quite an uncomfortable position realizing that only 50% of the target has been
covered. He is not able to sleep comfortably that night and gets up the next morning tired and
frustrated. Now he has to complete the pending tasks of Day 1 as well as cover whatever he
decided foe Day 2 as well! Quite an uphill task, don’t you think?

21 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] / 8146207241

 On the other hand, Student B makes a plan that he will also study 8 hours a day and sets a goal
of completing 20 pages of current affairs magazine, 10 pages of constitution of India and 10
questions of arithmetical reasoning. What will happen is that this student will complete his
target ahead of schedule and having done that feel elated, joyful and full of confidence! This
will lead to a good night’s sleep and hence even higher energy for the next day!
Getting my rhythm? This is how you make ‘micro and ‘easy’ targets and achieve them daily and
move ahead with consistency.

6. Develop faith in yourself and your mentors

Always think from your mind and feel from your heart. If you reverse this sentence, you will get
trapped in ‘emotions’. Being emotional isn’t bad at all, it’s good! Getting trapped in emotions is
what is bad! Once you complete step 1-5, you will start to develop faith in yourself. Have a little
trust on your mentors as well, talk to them, mail them, get in touch and see how they can help you!

After you learn and understand this 6 Step Formula to dominate APFC Exam, you can literally apply it on
any examination you are taking or might take in the future!
The above formula will always help you set a clear goal and plan all your activities around that one clear
goal.

22 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] / 8146207241

23 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] / 8146207241
24 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] / 8146207241