UPSC Prelims 2007 · General Studies
Question 98: Economy and Social Development
Consider the following statements:
- 1.The repo rate is the rate at which other banks borrow from the Reserve Bank of India.
- 2.A value of 1 for the Gini Coefficient in a country implies that there is perfectly equal income for everyone in its population.
Which of the statements given above is/are correct?
AnswerThe answer is (a).
The repo rate is the rate at which the Reserve Bank lends short-term funds to banks against government securities, so statement 1 is right. The Gini coefficient measures inequality: 0 means perfect equality, and 1 means perfect inequality, where one person holds all the income. Statement 2 reverses this and is wrong.
- 1. Repo is the rate at which banks borrow from the RBI.
- 2. A Gini of 1 means perfect inequality, not equality.
How you could have got this
- If you were sure statement 1 is correct, (b) and (d) go: each of them leaves 1 out.
What you needed to know: Repo is the rate at which banks borrow from the RBI.
- Then, if you were sure statement 2 is not correct, (c) goes: it includes 2.
What you needed to know: A Gini of 1 means perfect inequality, not equality.
Only (a) is left. This one needs every statement.
This follows an unofficial answer: UPSC has not published its key for this year, and if that answer is wrong, so is this path.
Which options go is worked out from UPSC’s key and the options, not by a model.
Why each option is right or wrong
- (a) Correct: only statement 1 holds.
- (b) Statement 2 is wrong; a Gini of 1 means maximum inequality.
- (c) Statement 2 is wrong, so both cannot hold.
- (d) Statement 1 is right, so this fails.
Explanation: written by UPSC Grade, not by UPSC.
Source: UPSC, Civil Services (Preliminary) Examination 2007, General Studies. UPSC's own paper isn't online; the words are from a published compilation. The paper on upsc.gov.in.