UPSC Prelims Practice Questions — AI’s next investment cycle belongs to applications

Q1. According to analyses of AI's shift from infrastructure to applications, in which year did global spending on AI applications first cross more than half of all generative-AI spending?

  • A. 2022
  • B. 2023
  • C. 2024
  • D. 2025

Q2. Consider the following statements comparing the infrastructure layer and the application layer of the AI industry in 2025: 1. Global AI-infrastructure spending (~$320 billion) far exceeded spending on AI applications (~$19 billion). 2. The application layer is characterised by lower marginal cost and sticky recurring revenue relative to the infrastructure layer. 3. The application layer is characterised by high capital expenditure and persistently thin margins, unlike the infrastructure layer. Which of the statements given above is/are correct?

  1. Global AI-infrastructure spending (~$320 billion) far exceeded spending on AI applications (~$19 billion).
  2. The application layer is characterised by lower marginal cost and sticky recurring revenue relative to the infrastructure layer.
  3. The application layer is characterised by high capital expenditure and persistently thin margins, unlike the infrastructure layer.
  • A. 1 and 2 only
  • B. 2 and 3 only
  • C. 1 and 3 only
  • D. 1, 2 and 3

Q3. Under the IndiaAI Mission, the 'IndiaAI Innovation Centre (IAIC)' is primarily tasked with which one of the following?

  • A. Spearheading the development and deployment of indigenous foundational models and Large Multimodal Models (LMMs)
  • B. Providing subsidised GPU compute access to startups on an hourly-rental basis
  • C. Reskilling BPO/ITES workers displaced by workplace automation
  • D. Certifying private AI applications for data-privacy and consumer-protection compliance

Q4. Consider the following statements about the IndiaAI Mission: 1. It was approved in 2024 with an outlay of about ₹10,372 crore spread over five years. 2. Skilling and startup financing lie outside the Mission and are handled by NITI Aayog rather than by any of its pillars. 3. The Mission envisages building AI compute capacity of over 10,000 GPUs through public-private partnership. Which of the statements given above is/are correct?

  1. It was approved in 2024 with an outlay of about ₹10,372 crore spread over five years.
  2. Skilling and startup financing lie outside the Mission and are handled by NITI Aayog rather than by any of its pillars.
  3. The Mission envisages building AI compute capacity of over 10,000 GPUs through public-private partnership.
  • A. 1 and 2 only
  • B. 1 and 3 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q5. Manus, the startup Meta agreed to acquire in December 2025, is best described as which one of the following?

  • A. A general-purpose autonomous AI agent that independently performs tasks such as market research, coding and data analysis
  • B. A foundation large-language model built to rival GPT and Gemini
  • C. A cloud provider renting out GPU compute clusters to enterprises
  • D. A semiconductor firm designing AI accelerator chips

Q6. Meta's December 2025 agreement to acquire the AI-agent startup Manus valued the company at approximately how much?

  • A. $2 billion
  • B. $6.6 billion
  • C. $14.3 billion
  • D. $125 million

Q7. With reference to OpenAI's financials during 2025, which of the following statements are correctly identified? 1. Its annualised revenue run rate roughly doubled to about $12 billion. 2. It reported around 700 million weekly active ChatGPT users. 3. It recorded its first full-year net profit in 2024. 4. Its projected cash burn for 2025 was raised to about $8 billion. Which of the statements given above are correct?

  1. Its annualised revenue run rate roughly doubled to about $12 billion.
  2. It reported around 700 million weekly active ChatGPT users.
  3. It recorded its first full-year net profit in 2024.
  4. Its projected cash burn for 2025 was raised to about $8 billion.
  • A. 1, 2 and 3
  • B. 1, 2 and 4
  • C. 2, 3 and 4
  • D. 1, 3 and 4

Q8. OpenAI, whose 2025 revenue-versus-loss figures featured in debates on AI business-model sustainability, counts which one of the following as its principal strategic technology partner and investor?

  • A. Microsoft
  • B. Google
  • C. Amazon
  • D. Meta

Q9. Consider the following item-and-value pairings regarding generative AI's rise since ChatGPT: 1. ChatGPT's public launch — November 2022 2. Developer of ChatGPT — OpenAI 3. Share of generative-AI applications in the global software market within about three years of ChatGPT's launch — about 6% 4. Share of generative-AI applications in the global software market within about three years of launch — about one-third Which of the above are correctly matched?

  1. ChatGPT's public launch — November 2022
  2. Developer of ChatGPT — OpenAI
  3. Share of generative-AI applications in the global software market within about three years of ChatGPT's launch — about 6%
  4. Share of generative-AI applications in the global software market within about three years of launch — about one-third
  • A. 1, 2 and 3
  • B. 1 and 4
  • C. 2, 3 and 4
  • D. 1, 2, 3 and 4

Q10. In discussions of India's shift from traditional BPO/ITES work towards higher-value AI services, the term 'Global Capability Centre (GCC)' refers to which one of the following?

  • A. An in-house offshore unit set up by a multinational to deliver high-value functions such as product development, analytics and AI-enabled digital services
  • B. A third-party call-centre vendor providing outsourced voice-based customer support
  • C. A government-run data centre offering subsidised AI compute to Indian startups
  • D. A multilateral body that coordinates global AI-safety and interoperability standards