Understanding economic indicators is important for UPSC exams because they provide insight into the financial health and challenges facing a nation. Awareness of these indicators, such as GDP, inflation rates, and employment levels, enables candidates to analyze economic policies critically. Economic knowledge is often relevant in the context of both the preliminary and mains exams, particularly in areas like Indian economy and social justice. Candidates can effectively relate theoretical concepts to current affairs, thereby enhancing their answers during interviews and essays, ultimately showcasing their analytical capabilities in this domain.