Previous Year Question
With reference to Economic Growth, which of the following statements is/are correct?
Indian Economy is an Underdeveloped Economy.
Indian Economy is a Mixed Economy.
J. M. Keynes is the Father of Economics.
Select the correct answer from the codes given below:
Only 1 and 2 are correct.
Only 3 is correct.
Only 1 is correct.
Only 2 and 3 are correct.
Correct Answer: A
Detailed Solution
Statement 1 is correct. In the conventional development-economics context used in this question, the Indian economy is treated as an economy displaying the characteristics of a developing/underdeveloped economy. This classification considers indicators such as comparatively low per capita income, poverty, underemployment, development gaps and structural constraints.
Here, the term “underdeveloped” does not mean that India's economy is not growing or that its economic size is small. It is essentially a textbook classification related to the level of development and structural characteristics.
Statement 2 is correct. India is a Mixed Economy, in which the public and private sectors coexist. Private enterprise operates in numerous areas of production and investment, while the government also plays an important role through public enterprises, regulation, taxation, fiscal policy and welfare programmes.
Thus, the Indian economy is neither a completely capitalist economy nor a completely socialist economy; it contains elements of both systems.
Statement 3 is incorrect. J. M. Keynes is not the Father of Economics. Adam Smith is generally referred to as the Father of Economics. His famous work An Inquiry into the Nature and Causes of the Wealth of Nations (1776) is regarded as one of the foundational works of classical economics.
J. M. Keynes is principally associated with the development of modern macroeconomics. His The General Theory of Employment, Interest and Money (1936) profoundly influenced the modern understanding of aggregate demand, employment and government intervention.