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UPSC General Studies Sample Paper General Studies Sample Paper-10

  • question_answer
    Consider the following statements regarding Capital Output Ratio (COR).
    1. High Capital Output Ratio (COR) means the capital available is cheaper than other inputs.
    2. High Capital Output Ratio (COR) means the capital available is costlier than other inputs.
    3. When the country uses natural resource instead of capital, COR reduces.
    4. Attracting capital through FBI, FII denotes the low capital output ratio of India.
    Which of the statements given above are correct?

    A)  1, 3 and 4                    

    B)  2, 3 and 4

    C)  1 and 4           

    D)  2 and 4

    Correct Answer: A

    Solution :

    [a] COR, will be high, when the capital available is more i.e. cheaper than other resources. So, Statement 1 is correct and 2 is wrong. Because of low COR, India needs capital to fulfil the commitments. So, FDI, FII are used as a means for this. When we use FDI, FII, we are attracting capital to fill the gap in capital.


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