UPSC Prelims 2021 · CSAT

Question 44: Reading Comprehension

Passage beginning “In India, the objective of macroeconomic…” — Passage – 4 · as printed by UPSC

Which one of the following statements best reflects the corollary to the passage given above ?

aThe central bank cannot work independently of the Government.

bGovernment should regulate financial markets and institutions closely.

cMarket economy is not compatible with the socialist policies of the Government.

dFinancial sector reforms are required for enhancing the economic welfare of the people.

AnswerUPSC’s answer is (a).

The passage says that India's macroeconomic policy aims at the people's economic welfare, and that monetary and fiscal policy cannot work without each other's active support. Monetary policy is run by the central bank and fiscal policy by the Government, so the corollary is that the central bank cannot work independently of the Government. Nothing says the Government should regulate markets closely, that markets clash with socialist policy, or that financial sector reforms are needed. Remember: a corollary is a direct consequence of the stated rule, so map each term, monetary and fiscal, to its institution.

Why each option is right or wrong

(a) Right: monetary policy (central bank) and fiscal policy (Government) cannot work without each other.
(b) Close regulation of financial markets is not mentioned.
(c) Nothing is said about a market economy being incompatible with socialist policy.
(d) Welfare is the stated aim, but the passage does not call for financial sector reforms.

Answer: UPSC’s key. Explanation: written by UPSC Grade, not by UPSC.

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Source: UPSC, Civil Services (Preliminary) Examination 2021, General Studies Paper II (CSAT), Series A. The paper on upsc.gov.in.