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CDS – 2 VIRAAT 2023

Unemployment DPP: 6.1

1. What are the various economic and structural factors 7. What is the specific classification of unemployment
that contribute to the emergence of structural that arises when employees are terminated from
unemployment in an economy? their roles within a company as a result of their
(a) Heavy Industry Bias inadequate proficiency in computer skills during the
(b) Inadequate Productive Capacity process of implementing new computer systems?
(c) Shortage of Raw Materials (a) Disguised unemployment
(d) Deflationary Conditions (b) Frictional unemployment
(c) Structural unemployment
2. What is the term used to describe the situation when (d) None of these
a person is actively seeking employment, willing to 8. Which of the provided statements accurately
work at the prevailing wage rate in the market, but is describes the Cash Reserve Ratio (CRR)?
unable to find a job? 1. It can be Used as A direct tool by RBI to curb
(a) Involuntary unemployment deflation or low inflation.
(b) Seasonal unemployment 2. RBI pays interest on CRR to the scheduled
(c) Voluntary unemployment banks.
(d) None of these (a) Only 1
(b) Only 2
3. Which individual or scholar is credited with the (c) Both 1 and 2
development or formulation of the concept of (d) None of the above.
disguised unemployment?
(a) Amartya Sen 9. How will the economy be influenced by an upward
(b) John Robinson adjustment in the repo rate?
(c) Alfred Marshall 1. It will increase the cost of borrowing and
(d) None of these lending of the banks.
2. It will decrease the cost of lending to the banks.
(a) Only 1
4. When was the first international unemployment day
celebrated? (b) Only 2
(a) 7 March 1930 (c) Both 1 and 2
(b) 6 March 1930 (d) None of the above
(c) 8 March 1930 10. Which of the following statements accurately depict
(d) None of these the nature and functions of the Monetary Policy
Committee (MPC)?
5. Which type of unemployment is common in 1. The members of the MPC are appointed by the
developed countries? President upon receiving recommendations
(a) Voluntary Unemployment from the Central Government.
(b) Structural Unemployment 2. The Governor of the Reserve Bank of India
(c) Disguised Unemployment (RBI) assumes the position of the head of the
(d) Cyclical Unemployment MPC.
3. The central objective of the MPC is to establish
the benchmark policy interest rate with the aim
6. Which organization in India is responsible for
of effectively managing inflation within the
calculating and monitoring the unemployment rate?
designated target range.
(a) National Sample Survey Organization (NSSO)
(a) 1 and 2 only
(b) Ministry of Defence
(b) 2 and 3 only
(c) Planning Commission
(c) 1 and 3 only
(d) Reserve Bank Of India
(d) All of the above
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Answer Key
1. (b) 6. (a)
2. (a) 7. (c)
3. (b) 8. (d)
4. (b) 9. (a)
5. (a) 10. (b)

Hints and Solutions
1. (b)
Explanation:
Structural Unemployment usually occurs when there
are changes in the economy or technology which
leads to a mismatch between the skills a person
possesses, and the skills employers require.
2. (a)
Explanation:
Involuntary unemployment is a condition
characterized by the absence of employment for
individuals who actively seek work but are unable to
find suitable job opportunities due to a scarcity of
economic prospects within their country.
It pertains to a situation where individuals express a
strong desire to engage in productive employment
but face significant challenges in securing
employment due to a lack of sufficient economic
opportunities within the domestic labor market.
3. (b)
Explanation:
The concept of disguised unemployment is
attributed to the work and contribution of economist
Joan Robinson, who is recognized for developing
and formulating this concept.
4. (b)
Explanation:
The Executive Committee of the Communist
International (ECCI) proposed March 6, 1930, as a
global unemployment day.
Thousands of people participated in coordinated
marches and demonstrations worldwide, protesting
against the widespread unemployment caused by the
Great Depression.
5. (a)
Explanation:
Voluntary Unemployment refers to a situation in
which individuals choose not to seek employment
despite being physically and mentally capable of
working.
Jobs are easily available in developed countries but
people are not ready to work, so they are voluntarily
unemployed.
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6. (a)
Explanation:
The National Sample Survey Office (NSSO) in
India is in charge of calculating and keeping track of
the unemployment rate.
It conducts surveys like the Employment-
Unemployment Survey (EUS) to collect data on
employment and unemployment.
These surveys help policymakers and researchers
understand how jobs are changing in India and
provide important information about the country's
unemployment situation.
7. (c)
Explanation:
Structural unemployment arises due to a mismatch
between available job opportunities in the market
and the skills possessed by workers.
This mismatch between job requirements and
worker skills results in structural unemployment.
Structural unemployment occurs when the skills of
available workers do not align with the job openings
available in the market.
It is caused by a disparity between the demand for
certain skills in the labor market and the supply of
workers with those skills.
This type of unemployment highlights the need for
workers to acquire the necessary skills or for job
opportunities to align with the skills of the
workforce to reduce structural unemployment.
8. (d)
Explanation:
CRR is the percentage of total deposits of a bank
that it is required to maintain with the central bank.
Statement 1 is incorrect because increasing the CRR
tends to have the opposite effect of curbing deflation
or low inflation.
Statement 2 is also wrong because RBI does not pay
any interest on CRR.
9. (a)
Explanation:
Repo rate is the rate of interest for which the central
bank lends money to commercial banks for a short
period, typically overnight, in exchange for
government securities or other eligible collateral.
So, if the repo rate is increased it will increase the
cost of borrowing and lending of the banks which
will discourage people from borrowing money.
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10. (b)
Explanation:
The Monetary Policy Committee (MPC) comprises
six members.
The Central Government appoints three members,
while the Reserve Bank of India (RBI) selects the
other three.
The Governor of RBI serves as the head of the
committee.
The main task of the MPC is to establish the policy
rate.
The policy rate is set with the objective of keeping
inflation within the specified range determined by
the Central Government.

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