Question

Match List I with List II

List I & List II
A. Government's spending and revenue producing activity & I. Evaluation
B. Careful and continuous assessment of the changes that occur in agro, socio and economic environment & II. Shadow prices
C. Charges reflecting the estimates of wear and tear of physical capital & III. Fiscal policy
D. The present value of additional consumption generated by an additional unit of investment in a project & IV. Capital consumption allowance
Choose the correct answer from the options given below:

• A. A - III, B - IV, C - II, D - I
• B. A - III, B - I, C - IV, D - II
• C. A - II, B - IV, C - I, D - III
• D. A - I, B - II, C - IV, D - III

Hint:

Exam Tip: For such matching questions, understand the key terms. Fiscal policy is about government revenue and spending. Evaluation is about assessment. Capital consumption allowance is depreciation. Shadow prices are used in project evaluation to reflect true economic costs and benefits.

Answer 1

The Correct Option is B

Step 1: Understanding the Concept:
This is a matching question from economics, covering public finance, project evaluation, and environmental economics.

Step 2: Detailed Matching:
Let's match each item from List I with the correct description in List II:
• A. Government's spending and revenue producing activity: This refers to the government's role in the economy through taxation and expenditure. This is the definition of Fiscal Policy.
_ _ _ _ Match: A - III
• B. Careful and continuous assessment of the changes that occur in agro, socio and economic environment: This describes the process of monitoring and assessing the impact of projects or policies. This is called Evaluation.
_ _ _ _ Match: B - I
• C. Charges reflecting the estimates of wear and tear of physical capital: The wear and tear of physical capital (machinery, buildings) is called depreciation. The monetary value of this is referred to as Capital Consumption Allowance.
_ _ _ _ Match: C - IV
• D. The present value of additional consumption generated by an additional unit of investment in a project: This is a concept used in cost-benefit analysis. It refers to the value of the consumption benefits generated by a project, often measured in terms of Shadow Prices, which reflect the true economic value of a resource.
_ _ _ _ Match: D - II

Step 3: Final Answer:
The correct matching is A-III, B-I, C-IV, D-II, which corresponds to option (B).