UPSC Prelims 2021 CSAT Paper II · Q44 of 79 Comprehension medium

Passage

Passage - 4 In India, the objective of macroeconomic policy is to enhance the economic welfare of the people, and any one wing of such macro policy, monetary or fiscal, cannot independently work without active support of another.

Which one of the following statements best reflects the corollary to the passage given above ?

  1. (a) The central bank cannot work independently of the Government. ✓ UPSC's answer
  2. (b) Government should regulate financial markets and institutions closely.
  3. (c) Market economy is not compatible with the socialist policies of the Government.
  4. (d) Financial sector reforms are required for enhancing the economic welfare of the people.

Why the answer is (a)

• The passage states that the objective of macroeconomic policy is to enhance economic welfare.

• It asserts that neither the monetary wing nor the fiscal wing can work independently without the active support of the other.

• In the Indian context, the monetary wing is managed by the central bank, while the fiscal wing is managed by the Government.

• Therefore, the logical corollary is that the central bank (monetary) cannot function independently of the Government (fiscal).

• This directly supports option (a) as the best reflection of the passage's argument on interdependence.

Why the other options are wrong

(b) Government should regulate financial markets and institutions closely.
The passage discusses the interdependence of monetary and fiscal policies, not the specific need for close regulation of financial markets and institutions.
(c) Market economy is not compatible with the socialist policies of the Government.
The passage does not address the compatibility of market economies with socialist policies, focusing instead on the coordination between monetary and fiscal wings.
(d) Financial sector reforms are required for enhancing the economic welfare of the people.
While enhancing economic welfare is the objective, the passage's core argument is about the necessity of coordination between policy wings, not specifically about the requirement for financial sector reforms.

Asked in the CSAT Paper II of the UPSC Civil Services Preliminary Examination 2021, held on 10 October 2021. Question and answer key: Union Public Service Commission. Explanation: UPSC Answer Check.

Reading the answer is not the same as getting it right under a clock. Practise this question with UPSC's negative marking, and anything you miss goes into an error notebook until you get it right twice.

Practise this paper free