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RBI Grade B General / DEPR Development Economics: practice questions

RBI Grade B (DR) General / DEPR · India · Reserve Bank of India

Original practice questions written to the published syllabus · not past papers
10worked here, free
31written to this exam in this subject
8syllabus units

About RBI Grade B General / DEPR

RBI Grade B (DR) General / DEPR is a government recruitment exam run by Reserve Bank of India, for candidates in India. Reported: Phase II of 300 marks covering Economic & Social Issues, English (writing), and Finance & Management.

Official site: opportunities.rbi.org.in.

We have not been able to confirm these details against the exam body's own specification, so fees, dates and pass marks are left out on purpose. Check the current format, eligibility, fees and dates on the official site.

Development Economics in RBI Grade B General / DEPR

What development means, how it is measured, the classic growth models, and the roles of state, market, civil society and international institutions.

Our 31 RBI Grade B General / DEPR questions in this subject: 14 easy, 17 medium, 0 hard, across 8 units.

10 practice questions, worked

Choose an answer, then open the working. Each explanation says why the right answer is right and why the others are not.

These 10 were written to RBI Grade B General / DEPR and are not shown on any other exam's page.

Question 1 · medium

How many Sustainable Development Goals were adopted by the United Nations in 2015, and which goal includes doubling the agricultural productivity and incomes of small-scale food producers?

  1. 17 goals; Goal 2 (zero hunger)
  2. 17 goals; Goal 8 (decent work and economic growth)
  3. 8 goals; Goal 1 (end poverty in all forms)
  4. 169 goals; Goal 2 (zero hunger)
Answer and working

A. 17 goals; Goal 2 (zero hunger)

There are 17 SDGs with 169 targets; the smallholder productivity target sits under SDG 2, zero hunger. Eight was the number of Millennium Development Goals (2000-2015), and 169 is the number of targets, not goals.

Question 2 · easy

Using the rule of 70, how many years does it take for income per head to double if it grows at 2 per cent a year?

  1. About 70 years
  2. About 14 years
  3. About 50 years
  4. About 35 years
Answer and working

D. About 35 years

Doubling time is about 70/2 = 35 years (exactly ln 2 / ln 1.02 = 35.0). Seventy years is the answer at 1 per cent; 14 years would need 5 per cent growth.

Question 3 · medium

Real GDP grows at 5 per cent a year and population at 1.5 per cent. Using the rule of 70, approximately how long will it take for real income per head to double?

  1. 20 years
  2. 47 years
  3. 10.8 years
  4. 14 years
Answer and working

A. 20 years

Per-capita growth is about 5 - 1.5 = 3.5 per cent, so doubling takes about 70/3.5 = 20 years. Using total GDP growth gives 14 years (the tempting slip), dividing by 1.5 gives 47 years, and adding the rates (6.5) gives 10.8 years.

Question 4 · medium

A household earns 150,000 units of local currency a year. The market exchange rate is 80 per US dollar and the PPP conversion factor is 20 per dollar. Its income is

  1. 1,875 dollars at both rates
  2. 12,000,000 dollars at market rates
  3. 7,500 dollars at market rates and 1,875 PPP dollars
  4. 1,875 dollars at market rates and 7,500 PPP dollars
Answer and working

D. 1,875 dollars at market rates and 7,500 PPP dollars

Market: 150,000/80 = 1,875. PPP: 150,000/20 = 7,500. PPP income is higher because non-traded goods are cheap in poorer countries. Swapping the two, or multiplying instead of dividing, are the usual errors.

Question 5 · medium

In a district of 1 million people the poverty line is 2 dollars a day and the poverty gap index is 0.20. With perfect targeting, the minimum daily transfer needed to bring every poor person up to the line is

  1. 2,000,000 dollars
  2. 200,000 dollars
  3. 100,000 dollars
  4. 400,000 dollars
Answer and working

D. 400,000 dollars

Minimum cost = PG x z x N = 0.20 x 2 x 1,000,000 = 400,000 dollars a day. Forgetting to multiply by z gives 200,000, and dividing by z gives 100,000; multiplying z x N alone (2,000,000) gives the cost of giving everyone the full line.

Question 6 · medium

GDP is 2,000 billion. The government targets 7 per cent growth, and the ICOR is 4.5. Using Harrod-Domar, the required investment is

  1. 31 billion
  2. 90 billion
  3. 630 billion
  4. 140 billion
Answer and working

C. 630 billion

Required increase in output = 0.07 x 2,000 = 140; investment = ICOR x change in output = 4.5 x 140 = 630 billion (31.5 per cent of GDP). 140 is the output increase, not investment; 31 divides the output increase by the ICOR (140/4.5 = 31.1) instead of multiplying; 90 is 4.5 per cent of 2,000.

Question 7 · easy

The Grameen Bank model, formalised in Bangladesh in 1983, is known for

  1. group lending without collateral
  2. crop insurance based on weather indices
  3. large loans to agribusiness corporations
  4. central bank refinancing of commercial banks
Answer and working

A. group lending without collateral

Muhammad Yunus's Grameen Bank used joint liability groups to lend without collateral, mainly to women; Yunus and the bank shared the 2006 Nobel Peace Prize. Its borrowers were mainly poor rural women.

Question 8 · medium

The 'World Bank' in the narrow sense consists of

  1. IBRD, IDA and IFC
  2. IBRD and IDA
  3. IBRD and the IMF
  4. all five World Bank Group institutions
Answer and working

B. IBRD and IDA

The World Bank refers to IBRD and IDA; the World Bank Group adds IFC, MIGA and ICSID. The IMF is a separate Bretton Woods institution.

Question 9 · medium

The International Fund for Agricultural Development (IFAD), which finances projects for rural poverty reduction, was established in

  1. 1961, alongside the World Food Programme
  2. 1945, alongside FAO
  3. 1977, following the 1974 World Food Conference
  4. 1995, alongside the WTO
Answer and working

C. 1977, following the 1974 World Food Conference

IFAD was created in 1977 as a result of the 1974 World Food Conference. FAO dates from 1945 and the WFP from the early 1960s.

Question 10 · medium

The IMF's main lending role is to

  1. provide finance to members with balance-of-payments problems, usually with policy conditions
  2. insure foreign investors against political risk, usually through guarantees
  3. finance long-term infrastructure projects such as dams, roads and power stations in poor countries
  4. invest equity in private firms in developing countries alongside commercial banks
Answer and working

A. provide finance to members with balance-of-payments problems, usually with policy conditions

The IMF lends for balance-of-payments needs and conducts surveillance. Long-term project finance is the World Bank's (IBRD/IDA) role, equity investment the IFC's, and political-risk insurance MIGA's.

A study plan for Development Economics in RBI Grade B General / DEPR

This plan follows where our questions actually fall, so the time goes where the marks are likely to be. It is our reading of the syllabus, not the exam body's weighting.

  1. First, the heavy units (55% of the 31 questions): International development institutions (7, 23%); Indicators of development (6, 19%); Comparative development (4, 13%).

    Read the manual chapters for these first and do every worked question you can find on them.

  2. Then the middle band: Conceptions of development (3, 10%); Growth and development distinguished (3, 10%); Harrod-Domar growth model (3, 10%).

    Aim for one sitting per unit, then mixed questions across them.

  3. Then the lighter units: Role of the state and markets (3, 10%); Role of civil society and institutions (2, 6%).

    Learn the definitions, classifications and standard numbers; these units are more often recalled than worked.

  4. Bank the easy marks: Role of civil society and institutions (2 easy of 2); Role of the state and markets (2 easy of 3).

    Do these early in revision so they are fast on the day.

  5. Finish timed. Sit the subject as a timed set without notes, mark it, and send each wrong answer back to its unit above.

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