Static Quiz 02 April 2025 (Economy)
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Static Quiz 02 April 2025 (Economy) For UPSC Exam
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- Question 1 of 5
1. Question
Consider the following events and their associated economic recoveries:
1. Post-2008 Global Financial Crisis in the US – U-shaped recovery
2. COVID-19 pandemic recovery in India – K-shaped recovery
3. Japan’s Lost Decade (1990s stagnation) – L-shaped recovery
4. The Great Depression (1929-1939) – V-shaped recovery
Which of the above pairs are correctly matched?CorrectCorrect Answer: (c) 1, 2, and 3 only
Explanation:
• The 2008 Global Financial Crisis led to a U-shaped recovery as the US economy took years to recover.
• India’s COVID-19 recovery was K-shaped, where technology and financial sectors recovered fast, but MSMEs and informal labor lagged.
• Japan’s Lost Decade was an L-shaped recovery with prolonged stagnation due to bad loans and policy missteps.
• The Great Depression did not follow a V-shaped recovery. Instead, it was closer to an L-shaped recovery, as it lasted over a decade.IncorrectCorrect Answer: (c) 1, 2, and 3 only
Explanation:
• The 2008 Global Financial Crisis led to a U-shaped recovery as the US economy took years to recover.
• India’s COVID-19 recovery was K-shaped, where technology and financial sectors recovered fast, but MSMEs and informal labor lagged.
• Japan’s Lost Decade was an L-shaped recovery with prolonged stagnation due to bad loans and policy missteps.
• The Great Depression did not follow a V-shaped recovery. Instead, it was closer to an L-shaped recovery, as it lasted over a decade. - Question 2 of 5
2. Question
Which of the following factors can lead to a K-shaped recovery in an economy?
1. Unequal policy stimulus benefiting certain sectors over others
2. High labor market segmentation and skill gaps
3. Rapid technological adoption by some industries leaving others behind
4. Fiscal austerity measures during the recovery phase
Select the correct answer using the codes below:CorrectCorrect Answer: (d) 1, 2, 3, and 4
Explanation:
• Unequal policy stimulus (such as bailouts for large corporations but limited MSME support) leads to sectoral imbalances.
• Labor market segmentation prevents lower-skilled workers from benefiting from economic growth.
• Technological advances accelerate growth in certain industries, widening income gaps.
• Fiscal austerity (cutting spending too soon) can slow recovery and worsen inequalities.IncorrectCorrect Answer: (d) 1, 2, 3, and 4
Explanation:
• Unequal policy stimulus (such as bailouts for large corporations but limited MSME support) leads to sectoral imbalances.
• Labor market segmentation prevents lower-skilled workers from benefiting from economic growth.
• Technological advances accelerate growth in certain industries, widening income gaps.
• Fiscal austerity (cutting spending too soon) can slow recovery and worsen inequalities. - Question 3 of 5
3. Question
Which of the following correctly explains why an L-shaped recovery is considered the most damaging?
CorrectCorrect Answer: (b) The economy remains in a prolonged recession with minimal or no growth for years, leading to structural stagnation.
Explanation:
• An L-shaped recovery occurs when the economy fails to rebound significantly after a crisis.
• Examples include Japan’s Lost Decade (1990s) and Greece’s economic crisis post-2010.
• It results in long-term unemployment, slow investment, and declining productivity.IncorrectCorrect Answer: (b) The economy remains in a prolonged recession with minimal or no growth for years, leading to structural stagnation.
Explanation:
• An L-shaped recovery occurs when the economy fails to rebound significantly after a crisis.
• Examples include Japan’s Lost Decade (1990s) and Greece’s economic crisis post-2010.
• It results in long-term unemployment, slow investment, and declining productivity. - Question 4 of 5
4. Question
Consider the following trends:
1. Rising unemployment despite positive GDP growth
2. Corporate earnings improving while wage growth remains stagnant
3. High GDP growth driven by asset price inflation rather than real productivity gains
4. Persistent informal sector distress despite recovery in formal sectors
Which of the above trends are typically observed in a jobless recovery?CorrectCorrect Answer: (d) 1, 2, 3, and 4
Explanation:
• Jobless recoveries occur when economic growth does not translate into widespread employment.
• Corporate earnings rise due to automation and capital investments, but wage growth remains stagnant.
• Stock market gains (asset price inflation) can drive GDP up, without corresponding improvements in real sector productivity.
• Informal workers suffer disproportionately, as seen after India’s COVID-19 recoveryIncorrectCorrect Answer: (d) 1, 2, 3, and 4
Explanation:
• Jobless recoveries occur when economic growth does not translate into widespread employment.
• Corporate earnings rise due to automation and capital investments, but wage growth remains stagnant.
• Stock market gains (asset price inflation) can drive GDP up, without corresponding improvements in real sector productivity.
• Informal workers suffer disproportionately, as seen after India’s COVID-19 recovery - Question 5 of 5
5. Question
The term “Nike Swoosh Recovery” is often used to describe an economic recovery where:
CorrectCorrect Answer: (a) The economy rebounds in a slow, gradual, and prolonged manner rather than a sharp
bounce-back.Explanation:
• A Nike Swoosh recovery is gradual and prolonged.
• Unlike V-shaped recoveries, which are rapid, this pattern indicates slow but consistent growth over time.IncorrectCorrect Answer: (a) The economy rebounds in a slow, gradual, and prolonged manner rather than a sharp
bounce-back.Explanation:
• A Nike Swoosh recovery is gradual and prolonged.
• Unlike V-shaped recoveries, which are rapid, this pattern indicates slow but consistent growth over time.
