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Question No. 245Interactive Test Mode
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Q245. With reference to the Indian Public Finance, consider the following statements: 1. External liabilities reported in the Union Budget are based on historical exchange rates 2. The continued high borrowing has kept the real interest rates high in the economy 3. The upward trend in the ratio of Fiscal Deficit of GDP a recent years has an adverse effect on private investment 4. Interest payments is the single largest component of the non-plan revenue expenditure of the Union Government Which of these statements are correct?

With reference to the Indian Public Finance, consider the following statements:

  1. External liabilities reported in the Union Budget are based on historical exchange rates
  2. The continued high borrowing has kept the real interest rates high in the economy
  3. The upward trend in the ratio of Fiscal Deficit of GDP a recent years has an adverse effect on private investment
  4. Interest payments is the single largest component of the non-plan revenue expenditure of the Union Government Which of these statements are correct?
Select the correct option below (or cross out options to eliminate)

Official Answer Key & Detailed Solution

Ready to check the official UPSC Answer Key?

Click any option above to test yourself under exam conditions, or reveal the explanation directly.

Official UPSC Answer KeyUPSC Prelims 2002 • Indian Economy

Correct Answer: Option (D) — 1, 2, 3 and 4

Concept & Option Breakdown

Standard Reference Verified

Statement 1 is correct: In Union Budget accounting, external debt and liabilities have traditionally been stated at historical exchange rates prevailing when loans were contracted.

Statement 2 is correct: Heavy government borrowing raises the demand for loanable funds, putting upward pressure on real interest rates.

Statement 3 is correct: A high fiscal deficit crowds out private investment by consuming available domestic financial savings and raising borrowing costs.

Statement 4 is correct: Interest payments consistently form the single largest component of non-plan revenue expenditure in the Union Budget.

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Question Specifications & Syllabus Mapping

Examination & YearUPSC Civil Services Preliminary Examination 2002 (Q245)
Paper & Marking SchemeGS Paper I • 2 Marks (-0.66 Negative for incorrect response)
Syllabus Subject & TopicIndian Economy → Fiscal Policy & Public Finance
Official Answer KeyOption (D) — 1, 2, 3 and 4

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Frequently Asked Questions — UPSC Prelims 2002 Q245

What is the official answer for UPSC Prelims 2002 GS Paper I Question 245 (Indian Economy)?

The official UPSC answer key for this 2002 Indian Economy (Fiscal Policy & Public Finance) question is Option (D): "1, 2, 3 and 4". Correct attempts carry 2 Marks with -0.66 Negative penalty for wrong answers.

Which UPSC Prelims syllabus topic does this 2002 question belong to?

This question belongs to GS Paper I under the subject "Indian Economy" and micro-topic "Fiscal Policy & Public Finance". You can explore all repeated questions from Fiscal Policy & Public Finance in Acme AI's 3D Prelims PYQ Realm or practice 50 full-length and sectional tests in the APT Prelims Test Series.

How can I solve this Fiscal Policy & Public Finance UPSC Prelims question using option elimination?

To solve Fiscal Policy & Public Finance questions in UPSC Prelims, identify extreme modifiers, verify core NCERT conceptual definitions, and eliminate mutually contradictory statement pairs before locking your final option.

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