UPSC Static Quiz – Economy : 17 July 2025

Solution: A

• Statement-I is correct. A progressive taxation system is characterized by an increasing average tax rate as an individual’s or entity’s income increases. This means that higher earners pay a larger percentage of their income in taxes compared to lower earners. This is typically achieved through tax brackets where higher portions of income are taxed at higher marginal rates.
• Statement-II is correct. One of the primary objectives of a progressive taxation system is to achieve greater equity in the distribution of the tax burden and to reduce income inequality. The principle underlying it is that individuals with higher incomes have a greater ability to pay taxes, and thus should contribute a larger proportion of their income to public revenue.

Statement-II explains the rationale or objective behind the structure described in Statement-I. Therefore, Statement-II is the correct explanation for Statement-I.

Solution: D

1. Stagflation: It describes an economic condition characterized by slow economic growth (stagnation), high unemployment, and rising prices (inflation) occurring simultaneously.
2. Disinflation: It refers to a situation where the rate of inflation decreases over time, but remains positive. For example, inflation falling from 5% to 3%.
3. Deflation: It is a sustained decrease in the general price level of goods and services, meaning inflation is negative.
4. Skewflation: This term describes a situation where there is a significant and persistent price rise in one or a small group of commodities (e.g., specific food items) while prices for other goods and services in the economy remain relatively stable or rise much less.

Solution: C

• Perfect Competition (A) is characterized by a large number of buyers and sellers dealing in a homogeneous product, with free entry and exit of firms, and perfect information. This matches with 4.
• Monopoly (B) is a market structure where there is a single seller controlling the entire supply of a unique product that has no close substitutes. This matches with 1.
• Monopolistic Competition (C) features many sellers offering differentiated products (similar but not identical, e.g., through branding, quality, or design). There is also relative ease of entry and exit. This matches with 3.

Oligopoly (D) is a market dominated by a few large sellers. A key characteristic is the interdependence of firms in their decision-making regarding price, output, and advertising, as the actions of one firm significantly impact others. This matches with 2. Therefore, the correct matching is A-4, B-1, C-3, D-2.

Solution: B

• Statement 1 is correct: The National Infrastructure Pipeline (NIP) was launched with the vision to provide world-class infrastructure across various sectors in India, thereby improving the ease of living, creating jobs, and enhancing overall economic competitiveness.
• Statement 2 is incorrect: The funding for NIP projects is envisaged through a combination of sources, including the Central Government, State Governments, and the private sector. It is not exclusively funded by the Central Government; a significant portion is expected from state and private investments.
• Statement 3 is correct: The NIP encompasses a broad array of infrastructure sectors, including energy (power, renewables), roads, railways, ports, airports, urban infrastructure (water supply, sanitation, housing), irrigation, digital infrastructure, and social infrastructure (health, education).

Solution: B

• Statement 1 is correct: The Sustainable Development Goals (SDGs), also known as the Global Goals, were adopted by all United Nations Member States in 2015 as a universal call to action to end poverty, protect the planet, and ensure that all people enjoy peace and prosperity by 2030. They are part of the 2030 Agenda for Sustainable Development.
• Statement 2 is correct: There are 17 interconnected SDGs that address global challenges, including poverty, hunger, health, education, climate change, gender equality, water, sanitation, energy, environment, and social justice. They recognize that action in one area will affect outcomes in others and that development must balance social, economic, and environmental sustainability.
• Statement 3 is incorrect: The SDGs are not legally binding on member states. They represent a global consensus and a political commitment by countries to work towards achieving these goals. Progress is monitored through voluntary national reviews, but there are no legal penalties for non-achievement.