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Sunday, March 25, 2012

Bihar Public Service Commission (BPSC)-PT Exam Solved Paper (Exam Held On: 17/04/2011)

1. In which country is 'Takla Makan' desert situated?
(A) Kazakhstan
(B) Turkmenistan
(C) Uzbekistan
(D) China

2. Which strait connects Red Sea and Indian Ocean?
(A) Bab-el-Mandeb
(B) Hormuz
(C) Bosporus
(D) Malacca
3. Where is 'Ninety East Ridge' situated?
(A) Pacific Ocean
(B) Indian Ocean
(C) Atlantic Ocean
(D) Arctic Ocean
4. Which of the following is not a capital city?
(A) Canberra
(B) Sydney
(C) Wellington
(D) Riyadh
5. The highest coal-producing country in the world is
(A) India
(B) USA
(C) China
(D) Russia
6. Folding is the result of
(A) epeirogenetic force
(8) Coriolis force
(C) orogenetic force
(D) exogenetic force
7. Amritsar and Shimla are almost on the same latitude, but their climate difference is due to
(A) the difference in their altitudes
(B) their distance from sea
(C) snowfall in Shimla
(D) pollution in Amritsar
8. Coal mines in Jharkhand are located at
(A) Jharia
(B) Jamshedpur
(C) Ranchi
(D) Lohardaga
9. Major source of oceanic salinity is
(A) rivers
(B) land
(C) wind
(D) ash from volcanoes
10. The large States of India in the order of area are
(A) Rajasthan, Madhya Pradesh, Maharashtra
(B) Madhya Pradesh, Rajasthan, Maharashtra
(C) Maharashtra, Rajasthan, Madhya Pradesh
(D) Madhya Pradesh, Maharashtra, Rajasthan
11. Bihar is the -- largest State of India according to Census 2001.
(A) second
(B) third
(C) fourth
(D) fifth
12. The highest wheat-producing State of India is
(A) Haryana
(B) Punjab
(C) Bihar
(D) Uttar Pradesh
13. TISCO plant is located near
(A) Patna
(B) Darbhanga
(C) Dhanbad
(D) Tatanagar
14. Which States in India are the largest producers of sugarcane?
(A) Bihar and Uttar Pradesh
(B) Uttar Pradesh and Rajasthan
(C) Andhra Pradesh and Jammu and Kashmir
(D) Punjab and Himachal Pradesh
15. Which of the following States has the largest number of people belonging to Scheduled Caste?
(A) Bihar
(B) West Bengal
(C) Uttar Pradesh
(D) Punja
16. According to 2001 Census, what is the total population of Bihar?
(A) 82998509
(B) 76210007
(C) 96878627
(D) 80176197
17. The East Central Railway zone headquarters is located at
(A) Patna
(B) Hajipur
(C) M uzaffarpur
(D) Katihar
18. Where is Industries Commissioner Office of Bihar situated?
(A) Patna
(B) Gaya
(C) Hajipur
(D) Muzaffarpur
19. North Bihar is famous for
(A) agricultural prosperity
(B) heavy industries
(C) flood
(D) famine
20. Which one is not located on National Highway-2 (NH-2)?
(A) Aurangabad
(B) Sasaram
(C) Mohania
(D) Patna
21. Congress passed the 'Swaraj' resolution in the year 1905. The purpose of the resolution was
(A) right to make a constitution for themselves but it was not done
(B) to secure self-rule
(C) responsible government
(D) self-government
22. The Provincial were constituted Act of Governments under the
(A) 1935
(B) 1932
(C) 1936
(D) 1947
23. The Indian comprises of Constitution
(A) 395 Articles, 22 Parts and 12 Schedules
(B) 371 Articles, 21 Parts and 11 Schedules
(C) 372 Articles, 20 Parts and 7 Schedules
(D) 381 Articles, 23 Parts and 8 Schedules
24. The Rajya Sabha consists of
(A) 280 members of which 20 members are nominated by the President of India
(B) 275 members of which 18 members are nominated by the President of India
(C) 250 members of which 12 members are nominated by the President of India
(D) 252 members of which 12 members are nominated by the President of India
25. January 26 was selected as the date for the inauguration of the Constitution, because
(A) the Congress had observed it as the Independence Day in 1930
(B) on that day the Quit India Movement was started in 1942
(C) it was considered to be an auspicious day
(D) None of the above
26. The Public Accounts Committee submits its report to
(A) the Comptroller and Auditor General
(B) the Speaker of the Lok Sabha
(C) the Minister of Parliamentary Affairs
(D) the President of India
27. Of the following statements, which one is not correct?
(A) The Rajya Sabha is powerless in money matter
(B) Money Bills originate in the Rajya Sabha
(C) The Rajya Sabha has to pass Bills within 14 days after they are passed by the Lok Sabha
(D) The Rajya Sabha may pass or return the Money Bill with some recommendations to the Lok Sabha
28. Which of the following rights conferred by the Constitution of India is also available to non-citizens?
(A) Right to constitutional remedies
(B) Freedom to speech
(C) Freedom to move and settle in any part of the country
(D) Freedom to acquire property
29. Who is the head of the National Defence Committee?
(A) Home Minister
(B) Prime Minister
(C) President
(D) Vice-President
30. 'National Emergency' may be declared by the President of India in line with
(A) Article 352
(B) Article 370
(C) Article 371
(D) Article 395
31. Of the following statements, which one is not correct?
(A) Supreme Court was constituted in 1950
(B) Supreme Court is the highest court of appeal in the country
(C) Supreme Court can hear from any High Court/Tribunals except from Court-martial
(D) Supreme Court can hear from any High Court/ Tribunals as well as from Court-martial
32. Who is the constitutional head of the State Governments?
(A) Chief Minister
(B) Governor
(C) Speaker
(D) High Court Judge
33. Commercial sources of energy purely consist of
(A) power, coal, oil, gas, hydro-electricity and uranium
(B) coal, oil, firewood, vegetable waste and agricultural waste
(C) power, coal, animal dung and firewood
(D) coal, gas, oil and firewood
34. In India, per capita consumption of energy in 1994 was
(A) 300 kg of oil equivalent
(B) 360 kg of oil equivalent
(C) 243 kg of oil equivalent
(D) 343 kg of oil equivalent
35. When did the first oil crisis/ energy crisis occur in India?
(A) During 1950's and 1960's
(B) During 1930's and 1940's
(C) During 1990's and 2000's
(D) During 1970's and 1980's
36. Consider the following reasons for financial sickness of State Electricity Boards (SEBs) in India:
I. Sale of power to agricultural and domestic consumers below the cost of production
II. Transmission and distribution losses are very high
III. Lack of commercial autonomy for SEBs
IV. State Governments have implemented social subsidy policies through SEBs
37. Which of the above are correct?
(A) I, II and III
(B) I, II, III and IV
(C) I, III and IV
(D) II, III and IV
37. Which type of economy does India have?
(A) Socialist
(B) Gandhian
(C) Mixed
(D) Free
38. When was 'Speed Post Service' launched by the Indian Postal Department as competition to the 'Courier Service'?
(A) 1988
(B) 1987
(C) 1989
(D) 1986
39. We witnessed the first telephones in India in which year?
(A) 1951
(B) 1981
(C) 1851
(D) 1861
40. Consider the following problems being faced by the Indian Coal Industry :
I. Poor quali ty of coal and bottlenecks m the coal movement
II. Low utilisation capacity of washeries
III. Growing dependence on the import of coking coal
IV. Administered prices
Which of the above are correct?
(A) II, III and IV
(B) I, II, III and IV
(C) I, III and IV
(D) I, II and III
41. Name the committee which was set up by the NDC in 1957 for the reorganisation of CDP and NES, which suggested a three tier system of rural local government
(A) Balwant Rai Mehta Committee
(B) Ashok Mehta Committee
(C) Maharashtra Committee on Democratic Decentralisation
(D) Rural-Urban Relationship Committee
42. Ashok Mehta recommended
(A) three-tier government of Panchayati Raj Committee
(B) two-tier government of Panchayati Raj
(C) single-tier government of Panchayati Raj
(D) multiple-tier government of Panchayati Raj
43. Consider the following about the 'Rolling Plan':
I. A plan for the current year which includes the annual budget
II. A plan for a fixed number of years, say 3, 4 or 5
III. It is revised every year as per requirements of the economy
IV. A perspective plan for 10, 15 or 20 years
Which of the above are correct?
(A) I and II
(B) I and III
(C) II and III
(D) I, II, III and IV
44. In which year was the 'Planning Commission' set up in India?
(A) 1950
(B) 1947
(C) 1948
(D) 1951
45. Patna International Airport is directly connected with
(A) Kathmandu (Nepal), New Delhi, Kolkata, Mumbai, Lucknow, Varanasi and Ranchi
(B) Bengaluru, Hyderabad and Dhaka
(C) Islamabad, Dhaka and Bengaluru
(D) Washington, Dhaka and Chennai
46. In Bihar, air services are provided by
(A) only Indian Airlines
(B) only Sahara Airlines
(C) only Royal Nepal Airlines
(D) Indian Airlines, Sahara Airlines and Royal Nepal Airlines
47. For Bihar, in 1993-94, the Planning Commission estimated that percentage of below poverty line (BPL) was
(A) 55
(B) 65
(C) 45
(D) 35
48. In Bihar, though 'Zamindari' was statutorily abolished In 1952, the social base of land control remained in the grip of
(A) Middle Caste Hindus
(B) Scheduled Caste Hindus
(C) Dominant Caste Hindus
(D) Scheduled Tribe Hindus
49. Bihar State (before separation) had how many 'Industrial Area Development Authorities'?
(A) Six, viz., Adityapur, Bokaro, Patna, Ranchi, Darbhanga and Muzaffarpur
(B) Five, viz., Adityapur, Bokaro, Darbhanga, Muzaffarpur and Patna
(c) Seven, viz., Adityapur, Darbhanga, Ranchi and Bokaro, Patna, Muzaffarpur, Bhojpur
(d) Four, viz., Adityapur, Bhojpur and Muzaffarpur, Khagaria
50. In Bihar, name the scheme which aims at building up infrastructural facilities of high standard, required for establishment of 'Export oriented Units'
(A) Integrated Infrastructural Development (IID)
(B) Export Promotion Industrial Park (EPIP)
(C) Concept of Build-Operate- Transfer (BOT)
(D) Software/Hardware Technology Park (STP /HTP)
51. "Swaraj is my birthright and I shall have it." Who said?
(A) M. K. Gandhi
(B) Jawaharlal Nehru
(C) Bal Gangadhar Tilak
(D) Bhagat Singh
52. The Madras Mahajan Sabha was established in the year
(A) 1880
(B) 1881
(C) 1882
(D) 1883
53. How many representatives took part in the First Session of the Indian National Congress?
(A) 52
(B) 62
(C) 72
(D) 82
54. The first Indian Governor General of Independent India was
(A) Raja Gopalachari
(B) Surinder Nath
(C) Rajendra Prasad
(D) B. R. Ambedkar
55. When was the National Council of Education established?
(A) 15th August, 1903
(B) 15th August, 1904
(C) 15th August, 1905
(D) 15th August, 1906
56. The Non-Cooperation Movement was started in
(A) 1918
(B) 1920
(C) 1921
(D) 1922
57. The Montagu-Chelmsford Report formed the basis of
(A) the Indian Independence Act, 1947
(B) the Indian Councils Act, 1909
(C) the Government of India Act, 1919
(D) the Government of India Act, 1935
58. Who is popularly known as 'Sher-e-Punjab,?
(A) Rajguru
(B) Bhagat Singh
(C) Lala Lajpat Rai
(D) Udham Singh
59. Gandhi-Irwin Pact took place in
(A) 1930
(B) 1931
(C) 1932
(D) 1933
60. Which Round Table Conference held in 1932?
(A) First
(B) Second
(C) Third
(D) Fourth
61. Who is associated with 'Abhinav Bharat'?
(A) V. D. Savarkar
(B) C. R. Das
(C) B. G. Tilak
(D) S. C. Bose
62. 'Do or Die' is associated with the following movement
(A) Dandi
(B) Non-Cooperation
(C) Khilafat
(D) Quit India
63. With whose efforts was Second Bihar Provincial Congress Session held?
(A) G. K. Gokhale
(B) Shri Deepnarayan Singh
(C) Shri Krishna
(D) Surendranath Banerjee
64. At which place was the 27th Session of the Indian National Congress held?
(A) Bhagalpur
(B) Patna
(C) Ranchi
(D) Bankipur
65. The 16th Session of Bihari Students' Conference at Hazaribag took place in
(A) 1921
(B) 1922
(C) 1923
(D) 1924
66. The editor of 'Bihari', a leading newspaper of Bihar, was
(A) Babu G. Prasad
(B) Babu Ram Prasad
(C) Babu Gopal Prasad
(D) Babu Maheshwar Prasad
67. Raj Kumar Shukla was resident of the village
(A) Murli Bharhawa
(B) Murli Bheet
(C) Murli Dheer
(D) Murli Kher
68. Shri Nivaranchandra Dasgupta belonged to
(A) Patna
(B) Purulia
(C) Hazipur
(D) Meenapur
69. Kunwar Singh was the King of
(A) Hamirpur
(B) Dheerpur
(C) Jagdishpur
(D) Rampur
Answer:C
70. Lord Sinha had resigned in 1921 from the post of Governor of
(A) Bihar-Orissa
(B) Bengal
(C) Punjab
(D) Madras
71. The value of x - [y - {z - (x - y - z)}j is
(A) x+ y+z
(B) x - y-z
(C) 1
(D) °
72. If the function f : I --? R, f(x) = log x then the value of f(x) + f(y) is
(A) f(xy)
(B) f(x+ y)
(C) f (x/y)
(d) f(y/x)
73. The median of 2, 4, 6, 8, 10, 12, 14, 16 is
(A) 8
(B) 9
(C)10
(D)11
74. The inverse of the matrix is
75. The length of the minute hand of a clock is 12 cm. Then the area swept by the minute hand in one minute will be
(A) 22·12 cm2
(B) 23·10 cm2
(C) 24·12 cm2
(D) None of the above
76. A player completes 2200-metre race in any circular path with 7 revolutions. Then the radius of the circular path is ( 1t = ~2)
(A) 30 metres
(B) 40 metres
(C) 50 metres
(D) 60 metres
77. The coordinates of the mid- point on joining the points P (4, 6) and Q (- 4, 8) will be
(A) (2, 7)
(B) (7, 2)
(C) (7, 0)
(D) (0, 7)
78. The solution of the differential equation
d2 d
-----.l:L - 3-.1{ + 2y = e5x
dx2 dx
is
A) y = C eX + C e2x + ~e5x
1 2 12
B) Y = C e-x + C e2x + ~e5X
1 2 12
C) y = C eX + C e-2x + ~ e5x
1 2 12
79. In triangle PQR if L.P = 1200 and PQ = PR, then L. Q and L.R will be respectively
(A) 60°, 30°
(B) 30°, 40°
(C) 30°, 30°
(D) 20°, 40°
80. The value of is
lim X→0
(A) 0
(B) loge ~ b
(C) log - ea
(D) a- b
81. The visible range of solar radiation is
(A) 100-400 nm (B) 400-700 nm (C) 740-10000 nm (D) None of the above
82. Plants which grow on saline soils are
(A) xerophytes
(B) hydrophytes
(C) halophytes
(D) succulents
83. Environment is a composite state of
(A) biotic factors
(B) physiographic factors (C) abiotic factors
(D) All of the above
84. Water is conducted in vascular plants by
(A) phloem tissue
(B) parenchyma tissue (C) meristems
(D) xylem tissue
85. Which component of plants receives stimulus for flowering?
(A) Stems
(B) Branches
(C) Leaves
(D) Roots
86. Minerals are
(A) liquids
(B) inorganic solids(C) gases
(D) All of the above
87. Development of the natural systems is described as
(A)~nction of the systems
(B) evolution of the systems
(C) self-sustained process of the systems
(D) None of the above
88. Genetics deals with
(A) Mendel's laws
(B) organic evolution
(C) DNA structure
(D) heredity and variations
89. Mendel's principles of inheri- tance are based on
(A) vegetative reproduction (B) asexual reproduction (C) sexual reproduction
(D) All of the above
90. Embryo is found in
(A) flowers
(B) leaves
(C) seeds
(D) buds
91. What soil particles are present in loamy soils?
(A) Sand particles(B) Clay particles (C) Silt particles
(D) All types of particles
92. A single type of atom is found in
(A) compounds of minerals
(B) mixture of minerals
(C) native elements
(D) None of the above
93. Soil water available to plants is maximum in
(A) clayey soil (8) silty soil (C) sandy soil (D) loamy soil
94. Capillaries are most effective in (A) clayey soil
(8) silty soil
(C) sandy soil
(D) loamy soil
95. Photosynthesis occurs in
(A) nucleus
(b) mitochondria
(C) chloroplast
(D) peroxisome
96. Continents have drifted apart because of
(A) volcanic eruptions (8) tectonic activities
(C) folding and faulting of rocks (D) All of the above
97. Which of the following do not belong to solar system?
(A) Asteroids
(8) Comets
(C) Planets
(D) Nebulae
98. Table salt (NaCI) is a product of
(A) weak acid and weak base
(B) strong acid and strong base
(C) weak acid and strong base
(D) strong acid and weak base
99. Sexual reproduction causes genetic variation because of
(A) blending of genes
(B) chromosomal changes
(C) Shuffling of genes
(D) All of the above
100. Average salinity of water of Arabian Sea is
(A) 25 ppt (8) 35 ppt (C) 45 ppt (D) 55 ppt
101. Who among the following is the winner of the Mahatma Gandhi International Award for Peace and Reconciliation, 2009?
(A) Yukia Amano
(B) Aung San Suu Kyi
(C) Bill Gates
(D) Hillary Clinton
102. 'Durand Cup' is associated with the game of
(A) football
(B) polo
(C) cricket
(D) hockey
103. For which word, the letter 'G' has been used in '2G Spectrum'?
(A) Global
(B) Government
(C) Generation
(D) Google
104. Former Central Minister for Communication and Information Technology, Mr. A. Raja belongs to which of the following parties?
(A) Congress
(B) BJP
(C) Communist Party of India
(D) DMK
105. Which one of the following numbered Rajdhani trains covers the longest distance?
(A) 12429 Bangalore City Junction
(B) 12431 Trivandrum Central
(C) 12433 Chennai Central
(D) 12435 Dibrugarh Town
106. What is the minimum age of a person whose photographing, fingerprinting and iris mapping will be done for the Census of 2011?
(A) 12 years
(B) 15 years
(C) 18 years
(D) 21 years
107. The Union Cabinet, on August 2010, decided to form institutes like the All India Institute of Medical Sciences (AIIMS) in which six States?
(A) Bihar, Chhattisgarh, Madhya Pradesh, Orissa, Rajasthan, Uttarakhand
(B) Bihar, Uttar Pradesh, Himachal Pradesh, Haryana, Kerala, Gujarat
(C) Bihar, Uttarakhand, Jharkhand, Orissa, Andhra Pradesh, Maharashtra
(D) Bihar, Tamil Nadu, Karnataka, Uttar Pradesh, Jammu and Kashmir, Assam
108. Which was reported the richest party according to the 'National Election Watch' on August 2010?
(A) BSP
(B) BJP
(C) Socialist Party
(D) Congress
109. Which party-wise performance is correct for Bihar Assembly Elections, 2010 in comparison to the elections of 2005?
JDU BJP RJD WP CONG OTHERS
(A) +40 +25 -30 -10 -7 -19
(B) +25 +34 -20 -5 -3 -11
(C) +27 +36 -32 -7 -5 -19
(D) + 17 +46 -15 -10 -10 -10
110. Till 2010, which State Governments have provided 50 percent reservation for women in local bodies?
(A) Bihar, Uttar Pradesh, Rajasthan
(B) Bihar, Madhya Pradesh, Himachal Pradesh
(C) Bihar, Madhya Pradesh, Kerala
(D) Bihar, Himachal Pradesh, Uttar Pradesh
111. 'AVAHAN', the Indian segment of 'Bill and Melinda Gates Foundation', is engaged in the prevention of
(A) dengue
(B) polio
(C) HIV / AIDS
(D) filariasis
112. A recently held underwater meeting has drawn attention world over. The meeting was held by
(A) Some Somali pirates to make a new strategy for capturing ships for ransom
(B) Some environmental scientists for promoting awareness for saving water
(C) some activists environmental awareness for promoting against air pollution
(D) The cabinet of a country to highlight the threat of rising sea level for any country
113. Which one of the following cities is not located on the bank of river Ganga?
(A) Fatehpur
(B) Bhagalpur
(C) Uttarkashi
(D) Kanpur
114. Which one of the following is a human right as well as a fundamental right under the Constitution of India?
(A) Right to Information
(B) Right to Work
(C) Right to Education
(D) Right to Housing
115. The time at Cairo is 2 hours ahead of Greenwich. Hence, it is located at
(A) 30° W longitude
(B) 30° E longitude
(C) 28° E longitude
(D) 28° W longitude
116. The headquarters of International Court of Justice is at
(A) Hague
(B) New York
(C) Geneva
(D) Paris
117. In the world's best countries' list, compiled by the reputed 'News Week' magazine in 2010, the first position went to Finland. What was the rank of India?
(A)17
(B)48
(C)66
(D)78
118. Which university was ranked first in the list of '2010 Academic Rankings of the World Universities '?
(A) Jawaharlal Nehru University, India
(B) Cambridge University, Britain
(C) Harvard University, USA
(D) Massachusetts Institute of Technology, USA
119. Which date is known as 'Diabetes Day'?
(A) 14th February
(B) 14th May
(C) 14th September
(D) 14th November
120. In which country, Ms. Julia Gillard was made the first woman Prime Minister in the year 2010?
(A) Australia
(B) Canada
(C) Germany
(D) Poland
121. Which country's parliament has banned 'Burqa' by passing a law on 14th September, 2010?
(A) USA
(B) France
(C) Italy
(D) Holland
122. Mr. Arjun Munda was on September 11, 2010 sworn in as the Chief Minister of Jharkhand. How many MLAs in the 81- member Assembly supported him?
(A) 41
(C) 50
(B) 45
(D) 55
123. Mr. P. J. Thomas has been appointed as the Central Vigilance Commissioner on September 7,2010. He is an IAS Officer of the following State's cadre
(A) Assam
(B) Karnataka
(C) Kerala
(D) Tamil Nadu
124. What was the maximum amount which has been provided as financial autonomy by the Ministry of Heavy Industries and Public Enterprises of Union Government to the 'Mini Ratna', category I?
(A) Rs 250 crore
(B) Rs 350 crore
(C) Rs 400 crore
(D) Rs 500 crore
125. When was the Right to Education added through the amendment in the Constitution of India?
(A) 1st April, 2010
(B) 1st August, 2010
(C) 1st October, 2010
(D) 1st December, 2010
126. Match the achievements of India in the XVI Asian Games, 2010 :
1. Rank P. 14
2. Gold Q. 33
3. Silver R. 06
4. Bronze S. 17
(A.) 1 2 3 4
Q R P S
(B) 1 2 3 4
R P S Q
(c.) 1 2 3 4
P Q R S
(D) 1 2 3 4
S R P Q
127. To which institute, Shubha Tole, the first woman awardee of prestigious Shanti Swarup Bhatnagar Prize, 2010 in the field of Science, belongs?
(A) Tata Institute of Fundamental Research, Mumbai
(B) Indian Institute of Science Education and Research, Pune
(C) Indian Institute of Technology, Kanpur
(D) Indian Institute of Science"Bengaluru
128. Which Indian was honoured by the 'World Statesman Award, 2010'?
(A) Mrs. Sonia Gandhi
(B) Atal Bihari Vajpayee
(C) Dr. Manmohan Singh
(D) Lal Krishna Advani
129. India's Third Research Centre at Antarctica is name as
(A) Bharti
(B) Swagatam
(C) Hindustan
(D) Maitri
130. In Commonwealth Games, 2010, India won 101 medals. Out of them, how many medals have been received by team events, women and men respectively?
(A) 0, 37, 64
(B) 2, 35, 64
(C) 1, 37, 63
(D) 1, 36, 64
131. Which of the following is a Harappan port?
(A) Alexandria
(B) Lothal
(C) Mahasthangarh
(D) Nagapattanam
132. The Gupta emperor who defeated the 'Hunas' was
(A) Samudragupta
(B) Chandragupta II
(C) Skandagupta
(D) Ramgupta
133. What is the name of Kalhana's book?
(A) Arthashastra
(B) Indica
(C) Purana
(D) Rajtarangini
134. Which inscription tells about the various achievements of Rudradaman I?
(A) Junagarh
(B) Bhitari
(C) Nasik
(D) Sanchi
135. Who was the first ruler of the Slave dynasty?
(A) Qutubuddin Aibak (B) Iltutmish (C) Razia (D) 'Balban
136. Who was the ruler of Devgiri at the time of Alauddin Khalji's invasion?
(A) Prataprudra bev (B) Ramchandra Dev (C) Malik Kafoor (D) Rana Ratan Singh
137. Who of the following Muslim rulers abolished the pilgrimage tax?
(A) Bahalol Lodi (B) Sher Shah (C) Humayun (D) Akbar
138. What was 'Dar-ul-Shafa' established by Firoz Tughlaq?
(A) An alms house
(B) A free hospital
(C) A library
(D) A guesthouse for pilgrims
139. The 'Permanent Settlement' was made with
(A) Zamindars (B) village communities (C) Muqaddamas (D) peasants
140. Who was the founder of 'Prarthana Samaj?
(A) Atmaram Panduranga (B) Tilak (C) Annie Besant (D) Rasbihari Ghosh
141. Who was the father of Indian Renaissance?
(A) Bal Gangadhar Tilak
(B) Dayananda Saraswati
(C) Shraddhananda
(D) Raja Ram Mohan Roy
142. 'Swaraj Dal' was founded by
(A) Tilak and Chittaranjan Das
(B) Gandhi and Motilal Nehru
(C) Gandhi and Tilak
(D) Chittaranjan Das and Motilal Nehru
143. Who founded the 'Theosophical Society'?
(A)Madame H, P. Blavatsky
(B) Raja Ram Mohan Roy
(C) Mahatma Gandhi
(D) Swami Vivekananda
144. Which one of the following books was written by Tilak?
(A) India in Transition
(B) Gita Rahasya
(C) Gokhale-My Political Guru
(D) Discovery of India
145. Where was Mahaveer Swami born?
(A) Kundagram
(B) Pataliputra
(C) Magadh
(D) Vaishali
146. Where did Mahatma Buddha's 'Mahaparinirvan' take place?
(A) Lumbini
(B) Bodh Gaya
(C) Kushinara
(D) Kapilavastu
147. At which place did Mahatma Buddha give his first 'Dharmachakrapravartan '?
(A) Lumbini
(B) Sarnath
(C) Pataliputra
(D) Vaishali
148. What was the early capital of Magadh?
(A) Pataliputra
(B) Vaishali
(C) Rajagriha (Girivraja)
(D) Champa
149. What was the name of the dynasty of Ajatshatru?
(A) Maurya
(B) Haryanka
(C) Nanda
(D) Gupta
150. The Third Buddhist Council was convented at
(A) Takshashila
(B) Sarnath
(C) Bodh Gaya
(D) Pataliputra


Answer Sheet
1 2 3 4 5 6 7 8 9 10
D A B B C C A A C A
11 12 13 14 15 16 17 18 19 20
B D D A C A B A C D
21 22 23 24 25 26 27 28 29 30
B A A C A B B A A C
31 32 33 34 35 36 37 38 39 40
D B A A D C C D D B
41 42 43 44 45 46 47 48 49 50
A B B A A D D C A B
51 52 53 54 55 56 57 58 59 60
C D C A D B C C B C
61 62 63 64 65 66 67 68 69 70
A D B D A D A B C A
71 72 73 74 75 76 77 78 79 80
C C B C D C D C C B
81 82 83 84 85 86 87 88 89 90
B C D C C C C C C C
91 92 93 94 95 96 97 98 99 100
D C C C C C C C D C
101 102 103 104 105 106 107 108 109 110
B A C A B B A D C B
111 112 113 114 115 116 117 118 119 120
C D C C B A D C D A
121 122 123 124 125 126 127 128 129 130
B B C D A C A C A B
131 132 133 134 135 136 137 138 139 140
B C D A A B D B A A
141 142 143 144 145 146 147 148 149 150
A D A B D C B C B D

Saturday, March 17, 2012

Economics: The Basics

Economics
When wants exceed the resources available to satisfy them, there is scarcity. Faced with scarcity, people must make choices. Economics is the study of the choices people make to cope with scarcity. Choosing more of one thing means having less of something else. The opportunity cost of any action is the best alternative forgone.

Microeconomics - The study of the decisions of people and businesses and the interaction of those decisions in markets. The goal of microeconomics is to explain the prices and quantities of individual goods and services.
Macroeconomics - The study of the national economy and the global economy and the way that economic aggregates grow and fluctuate.  The goal of macroeconomics is to explain average prices and the total employment, income, and production.

Positive statements - Statements about what is.
Normative statements - Statements about what ought to be.
Ceteris paribus - Other things being equal” or “if all other relevant things remain the same.


The fallacy of composition - What is true of the parts may not be true of the whole. What is true of the whole may not be true of the parts.
The post hoc fallacy - The error of reasoning from timing to cause and effect.
Economic efficiency - Production costs are as low as possible and consumers are as satisfied as possible with the combination of goods and services that is being produced.
Economic growth - The increase in incomes and production per person. It results from the ongoing advance of technology, the accumulation of ever larger quantities of productive equipment and ever rising standards of education.
Economic stability - The absence of wide fluctuations in the economic growth rate, the level of employment, and average prices.

The Modern economy
Economy - A mechanism that allocates scarce resources among alternative uses. This mechanism achieves five things: What, How, When, Where, Who.
Decision makers -  Households, Firms, Governments.
Household - Any group of people living together as a decision-making unit.  Every individual in the economy belongs to a household.

Firm - An organization that uses resources to produce goods and services. All producers are called firms, no matter how big they are or what they produce.  Car makers, farmers, banks, and insurance companies are all firms.
Government - A many-layered organization that sets laws and rules, operates a law-enforcement mechanism, taxes households and firms, and provides public goods and services such as national defense, public health, transportation, and education.
Market - Any arrangement that enables buyers and sellers to get information and to do business with each other.

Role of Government
Not so very long ago, economic planning and public ownership of the means of production were the wave of the future. Planners cannot find out what needs to be done to co-ordinate the production of a modern economy. Even if a technically feasible plan could be drawn up, there is no reason to believe it will be implemented.
How could a central planner know better than the consumers what the individual woman wants? Planners can only provide users with what they believe they should want. Because prices bear no relation to costs, there is no way to calculate what production needs to increase and what production needs to be reduced.

The state has three functions:


  • To provide things - known as public goods - that the market cannot provide for itself; 
  • To internalize externalities or remedy market failures; 
  • To help people who, for a number of reasons, do worse from the market or are more vulnerable to what happens within it than society finds tolerable. 

In addition to providing public goods, governments directly finance or provide certain merit goods. Such goods are consumed individually. But society insists on a certain level or type of provision.
The role of the state in a modern market economy is, in short, pervasive. The difference between poor countries and richer ones is not that the latter do less, but that what they do is better directed (on the whole) and more competently executed (again, on the whole).
The first requirement of effective policy is a range of qualities credibility, predictability, transparency and consistency.
The more the government focuses on its essential tasks and the less it is engaged in economic activity and regulation, the better it is likely to work and the better the economy itself is likely to run.
If one needs a large number of bureaucratic permissions to do something in business, the officials have an opportunity to demand bribes.
Once it is known that a government is prepared to create such exceptional opportunities, there will be lobbying to create them.
Then there is not just the corruption of the government, but the waste of resources in such 'rent-seeking' or 'directly unproductive profit-seeking activities'.
Governments are natural monopolies over a given territory. One of the strongest arguments for an open economy is that it puts a degree of competitive pressure on government.


Factors of Production
Factors of production - The economy’s productive resources; Labor, Land, Capital, Entrepreneurial ability.
Land - Natural resources used to produce goods and services. The return to land is rent.
Labor - Time and effort that people devote to producing goods and services.  The  return to labour is wages.
Capital - All the equipment, buildings, tools and other manufactured goods used to produce other goods and services. The return to capital is interest.
Entrepreneurial ability - A special type of human resource that organizes the other three factors of production, makes business decisions, innovates, and bears business risk. Return to entrepreneurship is profit.

Economic Coordination
Markets - Coordinate individual decisions through price adjustments.
Command mechanism - A method of determining what, how, when, and where goods and services are produced and who consumes them, using a hierarchical organization structure in which people carry out the instructions given to them.
Market economy - An economy that uses a market coordinating mechanism.
Command economy - An economy that relies on a command mechanism.
Mixed economy - An economy that relies on both markets and command mechanism.

Production Possibility Frontier
The quantities of goods and services that can be produced are limited by the available resources and by technology.  That limit is described by the production possibility frontier.
Production Possibility Frontier (PPF) - The boundary between those combinations of goods and services that can be produced and those that cannot.
Production efficiency - When it is not possible to produce more of one good without producing less of some other good.  Production efficiency occurs only at points on the PPF.
Economic growth - Means pushing out the PPF. The two key factors that influence economic growth are technological progress and capital accumulation.
Technological progress - The development of new and better ways of producing goods and services and the development of new goods.
Capital accumulation - The growth of capital resources.
Absolute Advantage - If by using the same quantities of inputs, one person can produce more of both goods than some one else can, that person is said to have an absolute advantage in the production of both goods.
Comparative Advantage - A person has a comparative advantage in an activity if that person can perform the activity at a lower opportunity cost than anyone else.

Law of Demand
Demand curve - Shows the relationship between the quantity demanded of a good and its price, all other influences on consumers’ planned purchases remaining the same.
Other things remaining the same, the higher the price of a good, the smaller is the quantity demanded.

  1. Substitution effect
  2. Income effect.

As the opportunity cost of a good increases, people buy less of that good and more of its substitutes.
Faced with a high price and an unchanged income, the quantities demanded of at least some goods and services must be decreased.
Substitute - A good that can be used in place of another good.
Complement - A good that is used in conjunction with another good.
Normal goods - Goods for which demand increases as income increases.
Inferior goods - Goods for which demand decreases as income increases.
If the price of a good changes but everything else remains the same, there is a movement along the demand curve.
If the price of a good remains constant but some other influence on buyers’ plans changes, there is a change in demand for the good.
A movement along the demand curve shows a change in the quantity demanded and a shift of the demand curve shows a change in demand.

Law of Supply
Law of supply – Other things remaining the same, the higher the price of a good, the greater is the quantity supplied.
Supply of a good depends on:

  1. The price of the good; 
  2. The prices of factors of production; 
  3. The price of other goods produced; Expected future prices; 
  4. The number of suppliers; 
  5. Technology.

Supply curve - Shows the relationship between the quantity supplied and the price of a  good, everything else remaining the same.
If the price of a good changes but everything else influencing suppliers’ planned sales remains constant, there is a movement along the supply curve.
If the price of a good remains the same but another influence on suppliers’ planned sales changes, supply changes and there is a shift of the supply curve.
A movement along the supply curve shows a change in the quantity supplied.  The entire supply curve shows supply.  A shift of the supply curve shows a change in supply.

Equilibrium
Equilibrium: A situation in which opposing forces balance each other.  Equilibrium in a market occurs when the price is such that the opposing forces of the plans of buyers and sellers balance each other.  The equilibrium price is the price at with the quantity demanded equals the quantity supplied. The equilibrium quantity is the quantity bought and sold at the equilibrium price.
When both demand and supply increase, the quantity increases. The price may increase, decrease, or remain constant.
When both demand and supply decrease, the quantity decreases. The price may increase, decrease, or remain constant.
When demand decreases and supply increases, the price falls. The quantity may increase, decrease, or remain constant.
When demand increases and supply decreases, the price rises and the quantity increases, decreases, or remains constant.

Elasticity
The total revenue from the sale of a good equals the price of the good multiplied by the quantity sold. An increase in price increases the revenue on each unit sold.  But an increase in price also leads to a decrease in the quantity sold. Whether the total expenditure increases or decreases after a price hike, depends on the responsiveness of demand to the price.
Price elasticity of demand – A measure of the responsiveness of the quantity demanded of a good to a change in its price, other things remaining the same. It is the percentage change in demand divided by percentage change in price.
Inelastic demand - If the percentage change in the quantity demanded is less than the percentage change in price, then the magnitude of the elasticity of demand is between zero and 1, and demand is said to be inelastic.
If the quantity demanded remains constant when the price changes, then the elasticity of demand is zero and demand is said to be perfectly inelastic.
Elastic demand - If elasticity is greater than 1, it is elastic.
If the quantity demanded is indefinitely responsive to a price change, then the magnitude of the elasticity of demand is infinity, and demand is said to be perfectly elastic.

When markets do not work 
Price ceiling -  A regulation that makes it illegal to charge a price higher than a specified level. When a price ceiling is applied to rents in housing markets, it is called a rent ceiling.
Black market - An illegal trading arrangement in which buyers and sellers do business at a price higher than legally imposed price ceiling.
Minimum wage law - A regulation that makes hiring labor below a specified wage illegal.
Externalities – Social costs, but no private costs.

Consumption & Utility
A household’s consumption choices are determined by

  • Budget constraint
  • Preferences

Utility - The benefit or satisfaction that a person gets from the consumption of a good or service.
Total utility - The total benefit or satisfaction that a person gets from the consumption of goods and services.
Marginal utility - The change in total utility resulting from a one-unit increase in the quantity of a good consumed.
Consumer equilibrium - A situation in which a consumer has allocated his or her income in the way that, given the prices of goods and services, maximizes his or her total utility.

Understanding Costs
Short run - Period of time in which the quantity of at least one input is fixed and the quantities of the other inputs can be varied.
Long run - Period of time in which the quantities of all inputs can be varied. Inputs whose quantity can be varied in the short run are called variable inputs. Inputs whose quantity cannot be varied in the short run are called fixed inputs.
Firm’s total cost - The sum of the costs of all the inputs it uses in production.
Fixed cost -The cost of a fixed input.
Variable cost - The cost of a variable input.
Total fixed cost - The total cost of fixed inputs.
Total variable cost - The cost of the variable inputs.
Marginal cost - The increase in total cost for increasing output by one unit.
Average fixed cost (AFC) - Total fixed cost per unit of output.
Average variable cost (AVC) - Total variable cost per unit of output.
Average total cost (ATC) - Total cost per unit of output.
Long-run average cost curve - Traces the relationship between the lowest attainable average total cost and output when both capital and labor inputs can be varied.
Economies of scale - As output increases, long-run average cost decreases.
Diseconomies of scale - As output increases, long run average cost increases.

Perfect Competition
There are many firms, each selling an identical product.
There are many buyers.
There are no restrictions on entry into the industry.
Firms in the industry have no advantage over potential new entrants.
Firms and buyers are completely informed about the prices of the product of each firm in  the industry.
Firms in perfect competition are said to be price takers. A price taker is a firm that cannot influence the price of a good or service.

Imperfect Competition
Monopoly - An industry that produces a good or service for which no close substitute exists and in which there is one supplier that is protected from competition by a barrier preventing the entry of new firms.
Price discrimination - The practice of charging some customers a lower price than others for an identical good or of charging an individual customer a lower price on a large purchase than on a small one, even though the cost of servicing all customers is the same.
Monopolistic competition - A market structure in which a large number of firms compete with each other by making similar but slightly different products.
Oligopoly - A market structure in which a small number of producers compete with each other.

Business Cycles
Economic developments should be judged in the context of trends and cycles.
Trends - The trend is the long-term rate of economic expansion.
Cycles - The cycle reflects short-term fluctuations around the trend. There are always a few months or years when growth is above trend, followed by a period when the economy contracts or grows below trend.
Long-term growth - In the long term the growth in economic output depends on the number of people working and output per worker. Output per worker grows through technical progress and investment in new plant, machinery and equipment. Investment and productivity are therefore the basis for continued and sustained economic expansion.
Recession -  A period during which real GDP decreases – the growth rate of real GDP is negative – for at least two successive quarters.
Consumption expenditure - The amount spent on consumption goods and services. Saving is the amount of income remaining after meeting consumption expenditures.
Savings – What remains out of income after consuming.
Capital - The plant, equipment, buildings, and inventories of raw materials and semi-finished goods that are used to produce other goods and services. The amount of capital in the economy is a crucial factor that influences GDP growth.
Investment - The purchase of new plant, equipment, and buildings and the additions to inventory.  Investment increases the stock of capital.  Depreciation is the decrease in the stock of capital that results from wear and tear and the passage of time.
Government Purchases - Governments buy goods and services, called government purchases, from firms.
Net taxes - Taxes paid to governments minus transfer payments received from governments.
Transfer payments - Cash transfers from governments to households and firms such as social security benefits, unemployment compensation, and subsidies.

Measuring Economic Activity
Total economic activity may be measured in three different but equivalent ways.
Add up the value of all goods and services produced in a given period of time, such as one year. Money values may be imputed for services such as health care which do not change hands for cash. Since the output of one business (for example, steel) can be the input of another (for example, automobiles), double counting is avoided by combining only "value added", which for anyone activity is the total value of production less the cost of inputs such as raw materials and components valued elsewhere.
A second approach is to add up the expenditure which takes place when the output is sold.
Since all spending is received as incomes, a third option is to value producers' incomes.

Gross domestic product - GDP is the total of all economic activity in one country, regardless of who owns the productive assets. For example, India’s GDP includes the profits of a foreign firm located in India even if they are remitted to the firm's parent company in another country.
Gross national product - GNP, is the total of incomes earned by residents of a country, regardless of where the assets are located. For example, India’s GNP includes profits from Indian-owned businesses located in other countries.

Omissions in GDP
Deliberate omissions: There are many things which are not in GDP, including the following.

  • Transfer payments - For example, social security and pensions.
  • Gifts. For example, $10 from an aunt on your birthday.
  • Unpaid and domestic activities. If you cut your grass or paint your house the value of this productive activity is not recorded in GDP, but it is if you pay someone to do it for you.
  • Barter transactions. For example, the exchange of a sack of wheat for a can of petrol.
  • Second-hand transactions. For example, the sale of a used car (where the production was recorded in an earlier year). 
  • Intermediate transactions. For example, a lump of metal may be sold several times, perhaps as ore, pig iron, part of a component and, finally, part of a washing machine (the metal is included in GDP once at the net total of the value added between the initial production of the ore and its final sale as a finished item).
  • Leisure. An improved production process which creates the same output but gives more recreational time is recorded in the national accounts at exactly the same value as the old process.
  • Depletion of resources. For example, oil production is recorded at sale price minus  production costs and no allowance is made for the fact that an irreplaceable part of the nation's capital stock of resources has been consumed.
  • Environmental costs. GDP figures do not distinguish between green and polluting industries. 
  • Allowance for non-profit-making and inefficient activities. The civil service and police force are valued according to expenditure on salaries, equipment, and so on (the appropriate price for these services might be judged to be very different if they were provided by private companies).
  • Allowance for changes in quality. You can buy very different electronic goods for the same inflation-adjusted outlay than you could a few years ago, but GDP data do not take account of such technological improvements.


Unrecorded transactions
GDP may under-record economic activity, not least because of the difficulties of keeping track of new small businesses and because of tax avoidance or evasion.
Deliberately concealed transactions form the black, grey, hidden or shadow economy. This is largest at times when taxes are high and bureaucracy is heavy. Estimates of the size of the shadow economy vary enormously. For example, differing studies put America's at 4-33%, Germany's at 3-28% and Britain's at 2-15%. What is agreed, though, is that among the industrial countries the shadow economy is largest in Italy, at perhaps one-third of GDP, followed by Spain, Belgium and Sweden, while the smallest black economies are in Japan and Switzerland at around 4% of GDP.
The only industrial countries that adjust their GDP figures for the shadow economy are Italy and America and they may well underestimate its size.

Expenditure
The expenditure measure of GDP is obtained by adding up all spending:
 consumption (spending on items such as food and clothing)
+ investment (spending on houses, factories, and so on)
= total domestic expenditure
+ exports of goods and services (foreigners' spending)
= total final expenditure
- imports of goods and services (spending abroad)
= GDP

Government consumption - The level of government spending reflects the role of the state. Government consumption is generally 10-20% of GDP, although it is higher in countries such as Denmark and Sweden where the state provides many services. Changes in government spending tend to reflect political decisions rather than market forces.
Private consumption - This is also called personal consumption or consumer expenditure. It is generally the largest individual category of spending. In the industrialised countries, consumption is around 60% of GDP. The ratio is much higher in poor countries which invest less and consume more.
Investment - Investment is perhaps the key structural component of spending since it lays down the basis for future production. It covers spending on factories, machinery, equipment, dwellings and inventories of raw materials and other items. Investment averages about 20% of GDP in the industrialised countries, but is nearer 30% of GDP in East Asian countries.

Income
The income measure of GDP is based on total incomes from production. It is essentially the total of:
wages and salaries of employees;
income from self-employment;
trading profits of companies;
trading surpluses of government corporations and enterprises;
income from rents.
These are known as factor incomes. GDP does not include transfer payments such as interest and dividends, pensions, or other social security benefits. The breakdown of incomes sheds additional light on economic behaviour because it is the counterpart to expenditure in what economists call the circular flow of money. It also provides a useful basis for forecasting inflation.

Unemployment
Labour force or workforce - The number of people employed and self-employed plus those unemployed but ready and able to work.
Three factors affect the size of the labour force: population, migration and the proportion participating in economic activity.
Population. Birth rates in most industrial countries fell to replacement levels or lower in the 1980s. This implies an older workforce and higher old-age dependency rates (the number of retired people as a percentage of the population of working age) in the future. 15-20% of the population in industrial economies will be over 65 years of age.
Developing countries have young populations with up to 50% under 15 years. This suggests an expanding working-age population with potential problems for housing and job creation.
Migration. In the industrial countries inflows of foreign workers increased since the late 1980s and a substantial number of illegal immigrants were granted amnesty in America, France, Italy and Spain. Foreign-born persons account for over 5% of the labour force in America, Germany and France; around 20% in Switzerland and Canada; and over 25% in Australia.
Inward migration may be a bonus for some economies. For example, German unification  boosted that country's productive potential. However, large numbers of refugees seeking asylum can have significant adverse effects on income per head.
Wealthier developing countries, especially oil producers, have large proportions of foreigners in their labour forces. Workers frequently make a substantial contribution to the balance of payments in their home countries by remitting savings from their salaries.
Participation. Participation rates (the labour force as a percentage of the total population) generally increased in the 1980s and 1990s with earlier retirement for men, especially in France, Finland and the Netherlands, generally offset by more married women entering the labour force, especially in America, Australia, Britain, New Zealand and Scandinavia.
Women account for a smaller proportion of the workforce in Muslim countries (20%) and a greater proportion in Africa (up to 50%) where they traditionally work on the land.
The unemployment rate. Usually defined as unemployment as a percentage of the labour force (the employed plus the unemployed). National variations are rife: Germany excludes the self-employed from the labour force; Belgium produces two unemployment rates expressing unemployment as a percentage of both the total and the insured labour force. By changing the definition, which governments are inclined to do, the unemployment rate can be moved up or, more usually, down by several percentage points.

The Balance Of Payments
Accounting conventions- Balance of payments accounts record financial flows in a specific period such as one year. Financial inflows are treated as credits or positive entries. Outflows are debits or negative entries. When a foreigner invests in the country, there is a capital inflow which is a credit entry. Conversely, the acquisition of a claim on another country is a negative or debit entry.
Debits = credits. The accounts are double entry, that is, every transaction is entered twice. For example, the export of goods involves the receipt of cash (the credit) which represents a claim on another country (the debit). By definition, the balance of payments must balance. Debits must equal credits.
Current = capital. One side of each transaction is treated as a current flow (such as a receipt of payment for an export). The other is a capital flow (such as the acquisition of a claim on another country). Arithmetically current flows must exactly equal capital flows.
Balances
The accounts build up in layers. Balances may be struck at each stage. What follows reflects the IMF'S methodology in the fifth edition of the


Balance of Payments Manual
Net exports of goods (exports of goods less imports of goods)
= the visible trade or merchandise trade balance
+ net exports of services (such as shipping and insurance)
= the balance of trade in goods and services
+ net income (compensation of employees and investment income)
+ net current transfers (such as payments of international aid and workers' remittances)
= the current-account balance (all the following entries form the capital and financial account)
+ net direct investment (such as building a factory overseas)
+ other net investment (such as portfolio investments in foreign equity markets)
+ net financial derivatives
+ other investment (including trade credit, loans, currency and deposits)
+ reserve assets (changes in official reserves), sometimes known as the bottom line
= overall balance
+ net errors and omissions
= zero

Thus the current account covers trade in goods and services, income and transfers. Non-merchandise items are known as invisibles. All other flows are recorded in the capital and financial account. The capital part of the account includes capital transfers, such as debt forgiveness, and the acquisition and/or disposal of non-produced, non-financial assets such as patents. The financial part includes direct, portfolio and other investment.
The balance of payments must balance. When we talk about a balance of payments deficit or surplus, we mean a deficit or surplus on one part of the accounts.


Fiscal Indicators
Fiscal indicators are concerned with government revenue and expenditure.
Level of government - Various problems of definition arise because of different treatment of financial transactions by central government, local authorities, publicly owned enterprises, and so on.
In an attempt to standardise, international organisations such as the OECD focus on general government, which covers central and local authorities, separate social security funds where applicable, and province or state authorities in federations such as in North America, Australia, Germany, Spain and Switzerland.
There is scope for manipulation, Spending can be shifted to publicly owned enterprises which are generally classified as being outside general government. Net lending to such enterprises is part of government spending, but it is not always included in headline expenditure figures.
Classification
Public spending may be classified in several different ways.
By level of government: central and local authorities, state or provincial authorities for federations, social security funds and public corporations.
By department: agriculture, defence, trade, and so on.
By function: such as environmental services, which might be provided by more than one department.
By economic category: current, capital, and so on.
Breaking down the economic effect of public spending into current and capital spending is a useful way to interpret it.

Current spending
Major categories of current spending include the following.
Pay of public-sector employees: this generally seems to rise faster than other current spending.
Other current spending: on goods and services such as stationery, medicines, uniforms, and so on.
Subsidies: on goods and services such as public housing and agricultural support.
Social security: including benefits for sickness, old age, family allowances, and so on; social assistance grants and unfunded employee welfare benefits paid by general government.
Interest on the national debt.

Taxes
Taxes can be Progressive or regressive
Progressive taxes take a larger proportion of cash from the rich than from the poor, such as income tax where the marginal percentage rate of tax increases as income rises.
Proportional taxes take the same percentage of everyone's income, wealth or expenditure, but the rich pay a larger amount in total.
Regressive taxes take more from the poor. For example, a flat rate tax of Rs. 5000, takes a greater proportion of the income of a lower-paid worker than of a higher-paid worker.
Indirect taxes. Levied on goods and services, these include the following:
Value-added tax (VAT) charged on the value added at each stage of production; this amounts to a single tax on the final sale price.
Sales and turnover taxes which may be levied on every transaction (for example, wheat, flour, bread) and cumulate as a product is made.

Customs duties on imports.
Excise duties on home-produced goods, sometimes at penal rates to discourage activities such as smoking.
Indirect taxes tend to be regressive, as poorer people spend a bigger slice of their income. They are charged at either flat or percentage rates.

Budget deficits (spending exceeds revenues) boost total demand and output through a net injection into the circular flow of incomes. As with personal finances, a deficit on current spending may signal imprudence. However, a deficit to finance capital investment expenditure helps to lay the basis for future output and can be sustained so long as there are pri­vate or foreign savings willing to finance it in a non-inflationary way.
 Budget surpluses (revenues exceed expenditure) may be prudent if a government is building up a large surplus on its social security fund in order to meet an expected increase in its future pensions bill as  the population ages.
Tighter or looser. Fiscal policy is said to have tightened if a deficit is reduced or converted into a surplus or if a surplus is increased, after taking into account the effects of the economic cycle. A move in the opposite direction is called a loosening of fiscal policy.