Economy Basics

A monopsony is a market condition in which there is only one buyer, the monopsonist. It is a market structure in which a single buyer substantially controls the market as the major purchaser of goods and services offered by many would-be sellers. 
An oligopoly is a market structure in which a few firms dominate. When a market is shared between a few firms, it is said to be highly concentrated. 
A monopoly contains a single firm that produces goods with no close substitute.

Capital goods are physical assets that a company uses in the production process to manufacture products and services that consumers will later use.
Capital goods include buildings, machinery, equipment, vehicles, and tools.

Capital goods are not finished goods instead; they are used to make finished goods.
Capital goods are one of the four factors of production. The other three are: Natural resources, such as land, oil, and water; Labor, such as workers; and Entrepreneurship.

Nash Equilibriumis(in economics and game theory) a stable state of a system involving the interaction of different participants, in which no participant can gain by a unilateral change of strategy if the strategies of the others remain unchanged.
Price’s square root law: 50% of the work is done by the square root of the total number of people participate in the work.
Pareto principle: for many events, roughly 80% of the effects come from 20% of the causes.
Strategic dominance occurs when one strategy is better than another strategy for one player, no matter how that player’s opponents may play.

The Code on Social Security, 2020 has defined “gig worker” as a person who performs work or participates in a work arrangement and earns from such activities outside of traditional employer-employee relationship.
Traditional workers have a long-term employer-employee relationship in which the worker is paid by the hour or year, earning a wage or salary.
Gig work may include freelancing, temp agency work, self-employment, and subcontracted work.
# NOTE: On September 19, the government withdrew three Bills related to labour laws and replaced them with new versions with some changes as– Industrial Relations Code Bill, 2020, Code on Social Security Bill, 2020 and Occupational Safety, Health and Working Conditions Code Bill, 2020.
Questions have been asked previously on the Blog based on these codes, aspirants are advised to keep track of the major changes introduced [The Hindu, IE-Explained, ForumIAS 9 PM Current Affairs Brief].

Statement 1 is correct. The law of demand states that, if all other factors remain equal, the higher the price of a good, the less people will demand that good. In other words, the higher the price, the lower the quantity demanded.
The amount of a good that buyers purchase at a higher price is less because as the price of a good goes up, so does the opportunity cost of buying that good.
Statement 2 is correct. The law of supply says that at higher prices, sellers will supply more of an economic good.
From the seller’s perspective, the opportunity cost of each additional unit that they sell tends to be higher and higher. Producers supply more at a higher price because the higher selling price justifies the higher opportunity cost of each additional unit sold.

The Financial Stability Reports, published by Reserve Bank of India, after approved by Financial Stability and Development Council (FSDC) Sub-Committee since its inception, taking inputs from financial sector regulators i.e. RBI, SEBI, PFRDA, IRDAI including Ministry of Finance, are periodic exercise for reviewing the nature, magnitude and implications of risks that may have a bearing on the macroeconomic environment, financial institutions, markets and infrastructure.

India’s forex reserves comprise foreign currency assets (FCAs), gold reserves, special drawing rights (SDRs) and India’s reserve position with the International Monetary Fund (IMF).

# The country’s foreign exchange reserves rose to reach a lifetime high of $542.013 billion in the week ended September 4.

# Guidotti Rule suggests that the countries should hold external assets sufficient to ensure that they could live without access to new foreign borrowings for up to twelve months.

Major policy objectives in regard to forex reserves:

-maintaining confidence in monetary and exchange rate policies,

-enhancing capacity to intervene in forex markets,

-limiting external vulnerability by maintaining foreign currency liquidity to absorb shocks during times of crisis including national disasters or emergencies;

-providing confidence to the markets especially credit rating agencies that external obligations can always be met, thus reducing the overall costs at which forex resources are available to all the market participants, and

-incidentally adding to the comfort of the market participants, by demonstrating the backing of domestic currency by external assets.

Statement 1 is correct. Base effect is often a term used in relation to economic indicators such as inflation and GDP data which are primarily based on the base effect of last year.

For inflation, Base effect refers to the distortion in monthly inflation figures from a sudden spike or decline in them during a short period of time. They are caused by seasonal or monthly variations.

Statement 2 is incorrect. It is usually a result of volatility rather than consistency in an economy.

Both statements are incorrect with definitions interchanged.

The real interest rate adjusts the observed market interest rate for the effects of inflation. It is an interest rate that has been adjusted to remove the effects of inflation to reflect the real cost of funds to the borrower and the real yield to the lender or to an investor.

A nominal interest rate refers to the interest rate before taking inflation into account. The nominal interest rate is generally the one advertised by the institution backing the loan or investment.

Real Interest Rate = Nominal Interest Rate – Inflation (Expected or Actual)

Statement 1 is correct. The Consumer Price Index measures the average change in prices (retail) over time that consumers pay for a basket of goods and services. The National Statistical Office (NSO), Ministry of Statistics and Programme Implementation releases monthly Consumer Price Index (CPI) for Rural, Urban and Combined.

The most important category in the consumer price index is Food and beverages (45.86 percent of total weight). It also includes services like Transport and communication (8.59 percent), health (5.89 percent), and education (4.46 percent).

Statement 2 is correct. The Office of Economic Adviser, Department for Promotion of Industry and Internal Trade is releases monthly Wholesale price Index (WPI). It tracks the changes in the price of goods in the stages before the retail level.

The wholesale market is only for goods, so WPI does not include services.

Statement 1 is incorrect. A concern with UBI is that it would encourage workers to stop working. If people aren’t working, there is less taxable income. However, people may choose to stop working for reasons that benefit society as a whole, such as getting a better education or caring for a relative in need.

Statement 2 is correct. Those with ill or differently abled relatives are often forced to quit their jobs to care for them full-time. UBI would allow care-workers to support themselves, encouraging care work within the home and relieving pressure on public services that provide care to the sick and elderly.

Statement 3 is correct. There exist countless governmental organisations/schemes responsible for helping those in poverty, unemployment benefits, food stamps, subsidised housing, etc. UBI would cut a country’s spending by eliminating these schemes.

Public Debt denotes liabilities payable by the Central Government, which are contracted against the Consolidated Fund of India, as provided under Article 292 of the Constitution of India.

It excludes liabilities contracted against Public Account.

Public Debt has been further classified under two heads, i.e., Internal Debt and External Debt. Internal debt is categorized into marketable and non-marketable securities.

Marketable government securities include G-secs and T-Bills issued through auction. Non-marketable securities include intermediate treasury bills issued to state governments, special securities issued to national Small Savings Fund among others.

Most of the external debt is sourced from multilateral agencies such as International Bank for Reconstruction and Development (IBRD), Asian Development Bank (ADB), etc. and official bilateral agencies.

Public Account Liabilities include liabilities on account of National Small Saving Fund (NSSF), State Provident Funds, Reserve Funds and Deposits, and Other Accounts.

The Index of Eight Core Industries measures the performance of eight core

industries i.e., Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement

and Electricity. The industries included in the Index of Eight Core Industries comprise

40.27 per cent weight in the Index of Industrial Production (IIP).

Invisible hand.

• Scottish Enlightenment thinker Adam Smith introduced the concept Invisible hand

in several of his writings, but it found this economic interpretation in his book An

Inquiry into the Nature and Causes of the Wealth of Nations published in 1776.

• The invisible hand is part of laissez-faire, meaning “let do/let go,” approach to

the market. In other words, the approach holds that the market will find its

equilibrium without government or other interventions forcing it into unnatural

patterns.

• The invisible hand is a metaphor for the unseen forces that move the free

market economy. Through individual self-interest and freedom of production as

well as consumption, the best interest of society, as a whole, are fulfilled.

• The constant interplay of individual pressures on market supply and demand

causes the natural movement of prices and the flow of trade.

Public goods are goods that can be consumed simultaneously by a large

number of people without the consumption by one imposing an opportunity cost on others.

The characteristics of a public good:

• Non excludability i.e., the citizens can enjoy its benefits at no explicit financial

cost.

• Non rival consumption i.e., the marginal cost of supplying this public good to an

extra citizen is zero.

• Non-Rejectable i.e., collective supply for all citizens means that it cannot be rejected.

When a country joins the IMF, it is assigned an initial quota in the same

range as the quotas of existing members of broadly comparable economic size and

characteristics. The IMF uses a quota formula to help assess a member’s relative position.

• The current quota formula is a weighted average of GDP (weight of 50 percent),

openness (30 percent), economic variability (15 percent), and international

reserves (5 percent).

• For this purpose, GDP is measured through a blend of GDP—based on market

exchange rates (weight of 60 percent) and on PPP exchange rates (40 percent).

• The formula also includes a “compression

Economic Census.

Statement 1 is incorrect: The Economic Census is being conducted by Ministry of

Statistics and Programme Implementation (MoSPI) to provide disaggregated information on

various operational and structural aspects of all establishments in the country.

Statement 2 is correct: All entrepreneurial units in the country which are involved in any

economic activities of either agricultural or non-agricultural sector which are engaged in

production and/or distribution of goods and/or services not for the sole purpose of own consumption.

In India, the first official attempt to compute the Index of Industrial

Production (IIP) was made much earlier than the first recommendation on the subject came

at the international level.

• The Office of the Economic Advisor, Ministry of Commerce and Industry made the

first attempt of compilation and release of IIP with base year 1937, covering 15

important industries, accounting for more than 90% of the total production of the

selected industries.

• The all-India IIP is being released as a monthly series since 1950. With the

inception of the Central Statistical Organization in 1951, the responsibility for

compilation and publication of IIP was vested with the same.

• When the index was commenced in India, the base year adopted was 1937 and

this was revised successively to 1946, 1951, 1956, 1960, 1970, 1980-81, 1993-

94, 2004-05 and recently to 2011-12.

• The IIP number measures the industrial production for the period under review,

usually a month, as against the reference period. IIP is a key economic indicator of

the manufacturing sector of the economy. There is a lag of six weeks in the publication of the IIP index data after the reference month ends.

Both statements are correct.

Terms of trade are defined as the ratio between the index of export prices and the index of

import prices. It measures how many units of exports are required to purchase a single

unit of imports.

If the export prices increase more than the import prices, a country has a positive Terms of

Trade, as for the same amount of exports, it can purchase more imports.

The ratio is calculated by dividing the price of the exports by the price of the imports and

multiplying the result by 100.

When more capital is leaving the country than is entering into the country then the

country’s TOT is less than 100%. When the TOT is greater than 100%, the country is

accumulating more capital from exports than it is spending on imports.

 The National Statistics Office coordinates the statistical activities in the

country and evolves statistical standards. NSO brings out important economic indicators

such as Gross Domestic Product (GDP), Index of Industrial Product (IIP), Consumer Price

Index (CPI) and other official statistics to support Government decision making and framing

of appropriate socio-economic polices/programmes.

Statement 1 is incorrect. The National Statistical Office (NSO), Ministry of Statistics and

Programme Implementation publishes Consumer Price Index (CPI) on Base year 2012=100

for Rural, Urban and Combined.

Statement 2 is correct. As per the Reserve Bank of India Act, the Central Government

shall, in consultation with the Bank, determine the inflation target in terms of the

Consumer Price Index, once in every five years.

Further, the Monetary Policy Committee shall determine the Policy Rate required to

achieve the inflation target

Statement 1 is correct. The purchasing managers’ index (PMI) is an economic indicator that surveys purchasing managers at businesses that make up a given sector. The purchasing managers’ index consists of several different surveys that are compiled into a single numerical result depending on one of several possible answers to each question.

It is an index of the prevailing direction of economic trends in the manufacturing and service sectors. It consists of a diffusion index that summarizes whether market conditions, as viewed by purchasing managers, are expanding, staying the same, or contracting.

Statement 2 is incorrect. For India, the PMI Data is published by Japanese firm Nikkei but compiled and constructed by Markit Economics.

NSO is mandated with the following responsibilities among others:

–prepares national accounts as well as publishes annual estimates of national product, government and private consumption expenditure, capital formation, savings, estimates of capital stock and consumption of fixed capital, as also the state level gross capital formation of supra-regional sectors and prepares comparable estimates of State Domestic Product (SDP) at current prices;

–compiles and releases the Index of Industrial Production (IIP) every month in the form of ‘quick estimates’; conducts the Annual Survey of Industries (ASI); and provides statistical information to assess and evaluate the changes in the growth, composition and structure of the organized manufacturing sector;

Core Inflation is a measure of inflation which excludes certain volatile and seasonal prices. It is the trend increase of the cost of factors of production that originates in the long-term expectations of inflation.

It excludes transitory or temporary price volatility as in the case of some commodities such as food and fuel. If temporary price shocks are taken into account, they may affect the estimated overall inflation numbers in such a way that they are different from actual inflation. To eliminate this possibility, core inflation is calculated to gauge the actual inflation apart from temporary shocks and volatility.

Capital formation is a term used to describe the net capital accumulation

during an accounting period for a particular country. The term refers to additions of capital

goods, such as equipment, tools, transportation assets, and electricity.

Statement 1 is incorrect: GFCF in India is not following a particular trend in last 12 years.

Statement 2 is incorrect: Gross capital formation (formerly gross domestic investment)

consists of outlays on additions to the fixed assets of the economy plus net changes

in the level of inventories.

• Fixed assets include land improvements (fences, ditches, drains, and so on); plant,

machinery, and equipment purchases;

• And the construction of roads, railways, and the like, including schools, offices,

hospitals, private residential dwellings, and commercial and industrial buildings.

• Inventories are stocks of goods held by firms to meet temporary or unexpected

fluctuations in production or sales, and work in progress. According to the 1993

SNA, net acquisitions of valuables are also considered capital formation.

Comparative advantage is an economic term that refers to an economy’s

ability to produce goods and services at a lower opportunity cost than that of trade

partners.

• A comparative advantage gives a company the ability to sell goods and services at a

lower price than its competitors and realize stronger sales margins.

• The law of comparative advantage is popularly attributed to English political

economist David Ricardo and his book “On the Principles of Political Economy

and Taxation” in 1817, although it is likely that Ricardo’s mentor James Mill

originated the analysis.

• One of the most important concepts in economic theory, comparative advantage is a

fundamental tenet of the argument that all actors, at all times, can mutually benefit

from cooperation and voluntary trade. It is also a foundational principle in the

theory of international trade

Creative destruction refers to the incessant product and process innovation

mechanism by which new production units replace outdated ones.

• This restructuring process permeates major aspects of macroeconomic performance,

not only long-run growth but also economic fluctuations, structural adjustment and

the functioning of factor markets.

• Over the long run, the process of creative destruction accounts for over 50 per

cent of productivity growth.

• At business cycle frequency, restructuring typically declines during recessions, and

this add a significant cost to downturns.

• Obstacles to the process of creative destruction can have severe short- and long-run

macroeconomic consequences.

• It was coined by Joseph Schumpeter (1942), who considered it ‘the essential fact

about capitalism

The chequered history of evolution, developments, transformations and coming of age of the Directorate General of Commercial Intelligence And Statistics (Ministry of Commerce and Industry) has been a mammoth exercise spread over a span of one hundred and forty years and carried out under the stewardship of capable and pragmatic visionaries.

 The Organization traces its origin to a statistical branch established in the Finance Department of the Government of India way back in 1862. Sir William W. Hunter was the first DG of the DGCI & S or the Director General of Statistics as he was designated, back in 1871.

 The DGCI&S compiles and releases monthly export & import data on merchandise trade.

 It also compiles and releases yearly data on inter-state movement of goods in India by river, rail & air; customs & excise revenue collections of the Indian union, inland coasting trade consignments of India and foreign coastal cargo movements of India.

Consumer Price Index or CPI as it is commonly called is an index measuring retail inflation in the economy by collecting the change in prices of most common goods and services used by consumers. Base Year for CPI is 2012.

 Wholesale Price Index, or WPI, measures the changes in the prices of goods sold and traded in bulk by wholesale businesses to other businesses.

 With an aim to align the index with the base year of other important economic indicators such as GDP and IIP, the base year was updated to 2011-12 from 2004-05 for the new series of Wholesale Price Index (WPI), effective from April 2017.

 The present base year for gross domestic product is 2011-12.

Wholesale Price Index (WPI) measures the average change in the prices of commodities for bulk sale at the level of early stage of transactions.

The index basket of the WPI covers commodities falling under the three major groups namely Primary Articles, Fuel and Power and Manufactured products. (The index basket of the present 2011-12 series has a total of 697items including 117 items for Primary Articles, 16 items for Fuel & Power and 564 items for Manufactured Products.)

PLFS is an initiative aimed at generating estimates of various labour force indicators.

 The National Sample Survey Office (NSSO) under the Ministry of Statistics and Programme Implementation conducts the survey.

 Quarterly survey (For urban areas only) – Captures only the current weekly status (CWS) data.

The government will kick off a massive exercise aimed to get a complete count of all economic units in the country-the Seventh Economic Census- from July 29 (2019) from the north eastern state of Tripura.

 The census, conducted by Ministry of Statistics and Programme Implementation (MoSPI), will be held this year after a gap of five years.

 The ministry partnered with CSC e-Governance services India Ltd (CSC SPV) to conduct the census.

 The First Economic Census was conducted throughout the country, except Lakshadweep, during 1977 in collaboration with the States/ Union Territories (UTs).

 The subsequent Censuses were conducted in the years 1980, 1990, 1998, 2005. The 6th and the latest census was conducted in 2013.

Mixed economy is a golden mixture of capitalism and socialism.

 Under this system there is freedom of economic activities and government interferences for the social welfare. Hence it is a blend of both the economies.

 The concept of mixed economy is of recent origin. The developing countries like India have adopted mixed economy to accelerate the pace of economic development.

 Even the developed countries like UK, USA, etc. have also adopted ‘Mixed Capitalist System’.

Mixed economy has following main features:

 Co-existence of Private and Public Sector

 Personal Freedom

 Private Property is allowed

 Economic Planning

 Price Mechanism and Controlled Price

 Profit Motive and Social Welfare

There are two main set of inflation indices for measuring price level changes in India – the Wholesale Price Index (WPI) and the Consumer Price Index (CPI).

 The WPI, where prices are quoted from wholesalers, is constructed by Office of Economic Affairs, Ministry of Commerce and Industries.

 In the case of CPI (prices quoted from retailers), there are several indices to measure it: CPI for industrial labourers (CPI-IL), agricultural labourers (CPI-AL) and rural labourers (CPI-RL) besides an all India CPI.

 In addition, Gross Domestic Product (GDP) deflator and Private Final Consumption Expenditure (PFCE) deflator from the National Accounts Statistics (NAS) provide an implicit economy-wide inflation estimate.

“Integrity Pact” is a vigilance tool that envisages an agreement between

the prospective vendors/bidders and the buyer, committing both (contracting) the parties

not to exercise any corrupt influence on any aspect of the contract. The pact is also to

ensure transparency, equity and competitiveness in public procurement.

The Phillips curve is an economic concept developed by A. W. Phillips stating

that inflation and unemployment have a stable and inverse relationship. The theory claims

that with economic growth comes inflation, which in turn should lead to more jobs and less

unemployment.

# A Lorenz curve is a graphical representation of income inequality.

# The Laffer Curve is a theory developed by supply-side economist Arthur Laffer to show the

relationship between tax rates and the amount of tax revenue collected by governments.

Option 1 is correct. No person shall be eligible for appointment as Governor

unless he is a citizen of India and has completed the age of thirty-five years. [Article 57]

Option 2 is incorrect. There is no such limitation provided for under the Constitution.

Option 3 is correct. The Governor shall not hold any other office of profit. [Article 158(2)]

A regulatory sandbox (RS) usually refers to live testing of new products or

services in a controlled/test regulatory environment for which regulators may (or may not)

permit certain regulatory relaxations for the limited purpose of the testing.

It allows the regulator, the innovators, the financial service providers (as potential deployers

of the technology) and the customers (as final users) to conduct field tests to collect

evidence on the benefits and risks of new financial innovations, while carefully monitoring

and containing their risks.

Foreign Direct Investment (FDI) is the investment of funds by an organisation

from one country into another, with the intent of establishing ‘lasting interest’.

# FPI (Foreign Portfolio Investments) means only equity infusion, and does not imply the

establishment of a lasting interest.

FDI allows the transfer of technology—particularly in the form of new varieties of capital

inputs—that cannot be achieved through financial investments or trade in goods and

services.

Human Capital refers to the knowledge and competence of the workforce. New

technological investments lead to new skills gained and enhanced through training and

experience boost the education and human capital quotient of the country. Once developed,

human capital is mobile and has multiplier effect on the economy.

Many of these products developed by FDI led industries have global markets and can

further assist FDI investors in boosting their exports from other countries..

# Total FDI inflow grew by 55%, i.e. from US$ 231.37 billion in 2008-14 to US$ 358.29 billion

in 2014-20.

#FDI equity inflow also increased by 57% from US$ 160.46 billion during 2008-14 to US$ 252.42 billion (2014-20).

Both statements are correct.

The Labour Bureau, an attached office of the M/o Labour & Employment, has been

compiling Consumer Price Index for Industrial Workers every month on the basis of the

retail prices of selected. The index is compiled for 78 centres and All-India and is released

on the last working day of succeeding month.

The Labour and Employment Ministry has recently revised the base year of the Consumer

Price Index for Industrial Workers (CPI-IW) from 2001 to 2016.

The number of items directly retained in the index basket has increased to 463 items as

against 392 items in the 2001 series. The weight to food and beverage was reduced from 46.2% to 39%, while spending on housing increased from 15.2% to 17%.

Nash Equilibrium is (in economics and game theory) a stable state of a

system involving the interaction of different participants, in which no participant can gain

by a unilateral change of strategy if the strategies of the others remain unchanged.

Price’s square root law: 50% of the work is done by the square root of the total number of

people participate in the work.

Pareto principle: for many events, roughly 80% of the effects come from 20% of the causes.

Strategic dominance occurs when one strategy is better than another strategy for one player, no matter how that player’s opponents may play.

Public Debt denotes liabilities payable by the Central Government, which are

contracted against the Consolidated Fund of India, as provided under Article 292 of the

Constitution of India.

It excludes liabilities contracted against Public Account.

Public Debt has been further classified under two heads, i.e., Internal Debt and External

Debt. Internal debt is categorized into marketable and non-marketable securities.

Marketable government securities include G-secs and T-Bills issued through auction. Nonmarketable

securities include intermediate treasury bills issued to state governments,

special securities issued to national Small Savings Fund among others.

Most of the external debt is sourced from multilateral agencies such as International Bank

for Reconstruction and Development (IBRD), Asian Development Bank (ADB), etc. and

official bilateral agencies.

Public Account Liabilities include liabilities on account of National Small Saving Fund

(NSSF), State Provident Funds, Reserve Funds and Deposits, and Other Accounts.

The Code on Social Security, 2020 has defined “gig worker” as a person

who performs work or participates in a work arrangement and earns from such activities

outside of traditional employer-employee relationship.

Traditional workers have a long-term employer-employee relationship in which the worker

is paid by the hour or year, earning a wage or salary.

Gig work may include freelancing, temp agency work, self-employment, and subcontracted

work.

# NOTE: On September 19, the government withdrew three Bills related to labour laws and

replaced them with new versions with some changes as– Industrial Relations Code Bill, 2020,

Code on Social Security Bill, 2020 and Occupational Safety, Health and Working Conditions

Code Bill, 2020.

Questions have been asked previously on the Blog based on these codes, aspirants are

advised to keep track of the major changes introduced [The Hindu, IE-Explained, ForumIAS 9

PM Current Affairs Brief].

Both statements are correct.

Terms of trade are defined as the ratio between the index of export prices and the index of

import prices. It measures how many units of exports are required to purchase a single

unit of imports.

If the export prices increase more than the import prices, a country has a positive Terms of

Trade, as for the same amount of exports, it can purchase more imports.

The ratio is calculated by dividing the price of the exports by the price of the imports and

multiplying the result by 100.

When more capital is leaving the country than is entering into the country then the

country’s TOT is less than 100%. When the TOT is greater than 100%, the country is

accumulating more capital from exports than it is spending on imports.

The National Statistics Office coordinates the statistical activities in the

country and evolves statistical standards. NSO brings out important economic indicators

such as Gross Domestic Product (GDP), Index of Industrial Product (IIP), Consumer Price

Index (CPI) and other official statistics to support Government decision making and framing

of appropriate socio-economic polices/programmes.

Statement 1 is incorrect. The National Statistical Office (NSO), Ministry of Statistics and

Programme Implementation publishes Consumer Price Index (CPI) on Base year 2012=100

for Rural, Urban and Combined.

Statement 2 is correct. As per the Reserve Bank of India Act, the Central Government

shall, in consultation with the Bank, determine the inflation target in terms of the

Consumer Price Index, once in every five years.

Further, the Monetary Policy Committee shall determine the Policy Rate required to

achieve the inflation target

Statement 1 is correct. The purchasing managers’ index (PMI) is an economic indicator that surveys purchasing managers at businesses that make up a given sector. The purchasing managers’ index consists of several different surveys that are compiled into a single numerical result depending on one of several possible answers to each question.

It is an index of the prevailing direction of economic trends in the manufacturing and service sectors. It consists of a diffusion index that summarizes whether market conditions, as viewed by purchasing managers, are expanding, staying the same, or contracting.

Statement 2 is incorrect. For India, the PMI Data is published by Japanese firm Nikkei but compiled and constructed by Markit Economics.

Statement 1 is correct. The purchasing managers’ index (PMI) is an economic indicator that surveys purchasing managers at businesses that make up a given sector. The purchasing managers’ index consists of several different surveys that are compiled into a single numerical result depending on one of several possible answers to each question.

It is an index of the prevailing direction of economic trends in the manufacturing and service sectors. It consists of a diffusion index that summarizes whether market conditions, as viewed by purchasing managers, are expanding, staying the same, or contracting.

Statement 2 is incorrect. For India, the PMI Data is published by Japanese firm Nikkei but compiled and constructed by Markit Economics.

NSO is mandated with the following responsibilities among others:

–prepares national accounts as well as publishes annual estimates of national product, government and private consumption expenditure, capital formation, savings, estimates of capital stock and consumption of fixed capital, as also the state level gross capital formation of supra-regional sectors and prepares comparable estimates of State Domestic Product (SDP) at current prices;

–compiles and releases the Index of Industrial Production (IIP) every month in the form of ‘quick estimates’; conducts the Annual Survey of Industries (ASI); and provides statistical information to assess and evaluate the changes in the growth, composition and structure of the organized manufacturing sector;

Core Inflation is a measure of inflation which excludes certain volatile and seasonal prices. It is the trend increase of the cost of factors of production that originates in the long-term expectations of inflation.

It excludes transitory or temporary price volatility as in the case of some commodities such as food and fuel. If temporary price shocks are taken into account, they may affect the estimated overall inflation numbers in such a way that they are different from actual inflation. To eliminate this possibility, core inflation is calculated to gauge the actual inflation apart from temporary shocks and volatility.

The Financial Stability Reports (FSR), published by Reserve Bank of
India, after approved by FSDC Sub-Committee since its inception, taking inputs from
financial sector regulators i.e. RBI, SEBI, PFRDA, IRDAI including Ministry of Finance, are
periodic exercise for reviewing the nature, magnitude and implications of risks that may
have a bearing on the macroeconomic environment, financial institutions, markets and
infrastructure.
•These reports will also assess the resilience of the financial sector through stress
tests.
•FSR is a biannual publication.

In June 2019, the Union government formed two cabinet committees —
one on Investment, the other on Employment and Skill Development.
The Prime Minister constitutes Standing Committees of the Cabinet and sets out the
specific functions assigned to them. He can add or reduce the number of committees.
Investment: The Cabinet Committee on Investment will “identify key projects required to be
implemented on a time-bound basis”, involving investments of Rs 1,000 crore or more, or
any other critical projects, as may be specified by it, with regard to infrastructure and
manufacturing.
•It will prescribe time limits for giving requisite approvals and clearances by the
ministries concerned in identified sectors.
•It will also monitor the progress of such projects.
Employment: The Cabinet Committee on Employment and Skill Development is supposed
to provide “direction to all policies, programmes, schemes and initiatives for skill
development aimed at increasing the employability of the workforce for effectively meeting
the emerging requirements of the rapidly growing economy and mapping the benefits of
demographic dividend”.
•It is required to enhance workforce participation, foster employment growth and
identification, and work towards removal of gaps between requirement and
availability of skills in various sectors.
•The panel will set targets for expeditious implementation of all skill development
initiatives by the ministries and to periodically review the progress in this regard.
The addition of the two committees is indicative of the new focus areas for the government.
The goal of both is new jobs.

There are many ways of looking at the problem of human development. Some of the important approaches are: (a) The income approach; (b) The welfare approach; (c) Minimum needs approach; and (d) Capabilities approach