UPSC Static Quiz – Economy : 18 March 2026

Solution: A

• Statement 1 is incorrect. The Linear Economy follows a “Take-Make-Waste” model and is inherently non-restorative. It is the Circular Economy that aims to be regenerative and seeks to decouple growth from resource consumption by keeping materials in a continuous loop.
• Statement 2 is incorrect. EPR in India is a mandatory legal framework. Rules such as the Plastic Waste Management Rules, E-Waste (Management) Rules, and Battery Waste Management Rules set binding, phased annual recycling targets for Producers, Importers, and Brand Owners (PIBOs). These targets are monitored through centralized digital portals.
• Statement 3 is correct. The ‘Right to Repair’ movement and the newly introduced Repairability Index are specifically designed to empower consumers. By assigning scores to devices based on how easily they can be disassembled and fixed, the government aims to force manufacturers to move away from ‘Planned Obsolescence’—the practice of designing products to fail or become obsolete quickly. Thus, only Statement 3 is correct.

Solution: A

Bennett’s Law observes that as incomes rise, people eat relatively fewer calorie-dense starchy staples (like cereals and tubers) and more nutrient-dense foods such as meats, oils, fruits, and vegetables. This is known as the declining “starchy-staple ratio”. The law highlights a dietary transition that accompanies economic development. While Engel’s Law focuses on the value of food in the budget, Bennett’s Law focuses on the composition of the food basket itself.

Solution: B

• Statement I is correct as it provides the standard definition of the Worker Population Ratio (WPR), which measures the proportion of the population that is actually employed.
• Statement II is incorrect because a high WPR does not “always” indicate high-quality job creation. In many developing economies, a high WPR may be distress-driven, where people are forced into low-productivity, informal work just to survive. It reflects the quantity of employment, not necessarily its quality or the level of development.
• Statement III is correct; the recent PLFS reports (2017-18 to 2023-24) show a massive upsurge in rural female WPR, which rose from 23.7% to 46.5%. However, a significant portion of this growth (over 60 million workers) is attributed to women entering agriculture as unpaid family helpers.
• This trend highlights the “feminization of agriculture” where participation increases but remains unremunerated.

Solution: B

• The G-Sec Yield Curve depicts the relationship between bond yields and their maturities.
• Statement 1 is correct; in a “Normal Yield Curve,” yields are higher for longer-maturity bonds. This is due to the “Term Premium,” as investors require a higher return to offset risks like inflation and interest rate volatility over a long period.
• Statement 2 is incorrect. An “Inverted Yield Curve” occurs when short-term rates are higher than long-term rates. This is a rare phenomenon and is widely regarded as a leading indicator of a recession, as it suggests that investors expect future interest rates to fall due to weakening economic growth.
• Statement 3 is correct. The “Term Spread” is the yield differential between short-dated and long-dated securities. A widening spread indicates a steepening curve (growth expectations), while a narrowing or negative spread indicates a flattening or inversion (slowdown expectations). For banks, a steeper yield curve is generally beneficial as they borrow short-term (deposits) and lend long-term (loans), thereby earning a wider net interest margin. The yield curve provides a “snapshot” of the aggregate expectations of thousands of market participants regarding inflation, central bank policy, and overall economic health.

Solution: A

• Statement-I is correct because an “accommodative” stance implies that the central bank is willing to expand the money supply and lower interest rates to stimulate economic growth. The primary quantitative tool for achieving this is the OMO purchase, where the RBI buys government securities from the open market, infusing durable liquidity into the system.
• Statement-II is correct as it describes the fundamental mechanism of the OMO purchase. When the RBI buys these securities from commercial banks, it credits their reserve accounts with the central bank. With higher excess reserves, banks are more willing to lend, and the increased supply of loanable funds naturally leads to a reduction in market interest rates (such as the yields on bonds and lending rates).
• Statement-II correctly explains Statement-I because the reason the RBI uses OMO purchases during an accommodative phase is precisely that these purchases create the liquidity conditions (increased reserves and lower rates) necessary to support growth and credit expansion.