Indian Economic services GE.2

Golden Strategy for analyzing G.E.-02 Indian Economic Services  PYQ’s

The UPSC Indian Economic Service (IES) is held once a year. Preparing for this exam necessitates a significant amount of effort and time. The exam is divided into three days and is followed by an interview after qualifying the written exam.

Some aspirants are qualified for the interview after only 12 months of preparation, while others have failed to qualify even after studying for more than twice as long! As a result, it can be deduced that passing the Indian Economic Services exam is more dependent on your strategy, focus, and acumen, and less on the amount of time you devote!

So, here we will talk briefly about the preparation strategy and focus on the Indian Economic Service’s main paper, i.e., General Economics 2.

Before moving on to the first part, let’s talk about why General Economic 2 is important in the Indian Economic Services exam.

General Economics Paper 2 is worth 200 points out of a possible 1000, accounting for at least 20% of the exam. And 20% is critical to maintaining good standing. Don’t waste that 20% and take advantage of this blog to prepare for the G.E. 2.

Let’s start with the blog.

Model Question and Answer Hints

Every student searches for model answers in the preparation for the exam, to have a reference on how to write answers. So, here with Ecoholics have an idea on understanding the demand of the question and how to answer accordingly.

Module: ECONOMIC THOUGHT

1. How can Quesnay’s Tableau Economique be regarded as a forerunner of the modern circular flow of income and expenditure without government?

  • Quesnay’s Tableau Economique is regarded as a forerunner of the modern circular flow of income and expenditure without government in a way that is just like the circular flow of income and expenditure.
  • The circular flow diagram illustrates the interdependence of the “flows,” or activities, that occur in the economy, such as the production of goods and services (or the “output” of the economy) and the income generated from that production. The circular flow also illustrates the equality between the income earned from production and the value of goods and services produced. 

The model Quesnay created consisted of three economic movers.

1. The “Proprietary” class consisted of only landowners.

2. The “Productive” class consisted of all agricultural laborers.

3. The “Sterile” class is made up of artisans and merchants. The flow of production or cash between the three classes started with the Proprietary class because they own the land and they buy from both of the other classes.

Quesnay believed that only the agricultural sector could produce a

surplus that could then be used to produce more the next year—and therefore help growth. Industry and manufacturing, thought Quesnay, were sterile.

CircularFlow.png

Module: FINANCIAL AND CAPITAL MARKET

Q1.  Illustrate, with the help of an example, how call options can be used for the purpose of speculation.

  • The speculation involves trading a financial instrument involving high risk, in expectation of significant returns. The motive is to take maximum advantage from the price fluctuations in the market.
  • The call options are sold by speculators when the price of the underlying stock is expected to decrease in the near future. If the stock price increases, the strategy of selling a call option would backfire. The maximum loss to a purchaser of a call option is the premium paid for the call option. 
  • For Example, If the speculator believe that the spot rate of a particular foreign currency will rise he or she can purchase the currency now and hold it or deposit in a bank for resale later. If the speculator is correct and the spot rate does rise indeed he or she on the profit on each unit equal to the spread.

Module: Economic Growth & Development

Q1.  Explain the difference between the concepts of convergence and conditional convergence. 

  • The convergence can be defined as a series when the series converges even when one take the absolute value of each term in the series. 
  • Conditional convergence can be defined as the one when the series converges but not absolutely.
  • An infinite series of numbers is said to converge absolutely (or to be absolutely convergent) if the sum of the absolute values of the summands is finite.
  •  Absolute convergence is important for the study of infinite series because its definition is strong enough to have properties of finite sums that not all convergent series possess. 
  • A convergent series that is not absolutely convergent is called conditionally convergent, while absolutely convergent series behave “nicely”.

Module: Balance Of Payments

Q1. Do you agree that an economy cannot simultaneously maintain a fixed exchange rate, free capital movement, and an independent monetary policy? Explain.

An economy cannot simultaneously maintain a fixed exchange rate, free capital movement, and an independent monetary policy.

This can be explained as follows: 

  • When making fundamental decisions about managing international monetary policy, a trilemma suggests that countries have three possible options from which to choose.

According to the Mundell-Fleming trilemma model, these options include:

  1. Setting a fixed currency exchange rate
  2. Allowing capital to flow freely with no fixed currency exchange rate agreement
  3. Autonomous monetary policy.
  • A country can choose to fix exchange rates with one or more countries and have a free flow of capital with others. If it chooses this scenario, independent monetary policy is not achievable because interest rate fluctuations would create currency arbitrage stressing the currency pegs and causing them to break.
  • The country can choose to have a free flow of capital among all foreign nations and also have an autonomous monetary policy. Fixed exchange rates among all nations and the free flow of capital are mutually exclusive. As a result, only one can be chosen at a time. So, if there is a free flow of capital among all nations, there cannot be fixed exchange rates.
  • If a country chooses fixed exchange rates and independent monetary policy it cannot have a free flow of capital. Again, in this instance, fixed exchange rates and the free flow of capital are mutually exclusive.
Two out of three ain't bad | The Economist

These are the top hints regarding question answers of the General Economics 2 module.

To access more model answers of all the modules, click on the link given below.

Model Answers on Ecoholics App

Let’s move forward with the plan of completing these topics if you have less time.

Strategy and Time Management

For clearing any exam, strategy is a must, and if you have less time for preparation and left with a full General Economics 2 module, you are at the right place.

  • Make a timetable, with number of days left.
  • Take 2 module each day.
  • Revise thoroughly
  • Take most important module at first, as analysed with help of PYQ’s
  • Go unsocial for few days, think about the exam only.
  • Read current affairs to be updated and relate to the subject.

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Now, as you have got the idea of writing the answers for Indian Economic Services exam, let get some value additions to it.

What do you mean by “value additions”?

Value additions are the flow charts and steps provided in the answers for a better understanding of the checking panel. One can also add case studies related to the answer in their exam to show clarity about the subject.

Module Wise Analysis

To make the preparation strategy more comfortable and relaxed, use PYQ’s analysis to determine which topics are frequently asked; this will separate the plan and focus on Important Topics.

Now, let’s talk about the preparation strategy of toppers.

How they prepared and their experience during the preparations and what was their exam approach.

  • The first thing you should do before beginning your Indian Economic Service exam preparation is to assess your current knowledge and skills. 
  • Check your score on mock tests and preparation tests
  • Try to answer the questions using related topics that you have prepared. 
  • If the question is about the Indian economy, try to use some current news, RBI reports, and economic surveys.
  • Also go through the full module thoroughly and here’s the attached syllabus with modules. 

Modules with Syllabus

That is all for today, Let’s not bombard you with all the details at once.

For more details, log on to Ecoholics.com 

And start your preparation with the Indian largest platform for Economics.

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