UPSC & BANKING General Awareness (GK QUIZ): UPSC PRELIMS TEST SERIES ECONOMY PAPER ENGLISH

ECONOMY TEST PAPER 4

1. The monetary policy in India uses which of the following tools?

1. Bank rate

2. Open market operations

3. Public debt

4. Public revenue

Select the correct answer using the code given below.

(a) 1 and 2 only

(b) 2 and 3 only

(d) 1, 2, 3 and 4

2. Consider the following statement about Net national product (NNP):

1. Net national product (NNP) is the monetary value of a nation's final goods and services (GNP) minus depreciation.

2. It is always lower than Net domestic product (NDP).

Which of the above statement is correct?

Select the correct answer using the code given below:

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

3. In case of economic slowdown, which of the following factors is/are responsible for increase in demand of goods in economy?

1. Increase in the income of consumer causes increase in demand for normal goods.

2. Rise in price of substitute goods increases demand.

Select the correct answer using the code given below:

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

4. Devaluation of currency will be more beneficial if prices of

(a) Domestic goods remain constant

(b) Exports become cheaper to importers

(d) Exports rise proportionately

5. Which of the following best represents the functions of RBI?

1. RBI has the sole autonomy to print notes and mint Rs 1 coins.

2. RBI is responsible for both monetary policy and fiscal policy in India.

Select the correct answer using the code given below:

(a) 1 only

(b) 1 and 3 only

(d) None of the above

6. In India, the term 'hot money' is used to refer to

(a) Currency + Reserves with the RBI

(b) Net GDR

(d) Foreign Portfolio Investment

7. Arrange the following events in sequential order as they happened in India:

1. Mahalanobis Model

2. Plan Holiday

3. Rolling Plan

Select the correct answer using the code given below.

(a) 1, 2, 3

(b) 3, 2, 1

(d) 1, 3, 2

8. The Most Favoured Nation (MFN) Clause under WTO regime is based on the principle of

(a) Non-discrimination between nations

(b) Discrimination between nations

(d) Uniform tariff across commodities

9. TRIPS Agreement pertains to

(a) international tariff regime

(b) intellectual property protection

(d) international taxation ofproperty

10. Which of the following is/are considered as a form of transfer payment?

1. Pension

2. Scholarship

3. Dividend

4. Subsidy

Select the correct statement:

(a) 1 and 4 only

(b) 2 and 3 only

(d) 1, 2, 3 only

11. Which of the following will be the outcome if an economy is under the inflationary pressure?

1. Domestic currency heads for depreciation.

2. Exports become less competitive with imports getting costlier.

3. Cost of borrowing decreases.

4. Bondholders get benefited.

Select the correct answer using the code given below.

(a) 1 and 2

(b) 2 and 3

(d) 1, 3 and 4

12. Consider the following statements about GDP:

(a) GDP is the measure of welfare or happiness.

(b) GDP is the measure of Disposable Personal Income.

(d) None of the above

13. 'Inflation tax' often used in economic parlance refers to:

1. It is legal tax paid to a government for holding cash at a time of high inflation.

2. It is the degree of decrease in the value of cash held by people.

Select the correct statement using the code given below:

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

14. Which of the following statements is/are correct related to the concept of Marginal Standing Facility?

1. It is the rate at which RBI borrows from its clients generally against government securities.

2. It helps in reducing the volatility in the overnight lending rates in the inter-bank market.

Select the correct statement using the code given below:

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

15. Promoting digital payments has been mandated to which of the following authority?

1. Ministry of IT and Electronics(MeiTY)

2. NITI Aayog

3. Ministry of Finance

Select the correct answer using the code given below:

(a) 1 only

(b) 2 and 3 only

(d) All of the above

16. Which of the following is not a 'Public Good'?

(a) Electricity

(b) National Defence

(d) Public Parks

17. Consider the following statement about Regional Rural Banks (RRBs)

1. It was set up on the basis of the recommendations of the Narasimham Working Group (1975).

2. The equity of a regional rural bank is held by the Central Government, concerned State Government and the Sponsor Bank in the proportion of 50:35:15.

Select the correct statement using the code given below

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

18. Which one of the following terms is used in Economics to denote a technique for avoiding a risk by making a counteracting transaction?

(a) Dumping

(b) Hedging

(d) Deflating

19. Which of the following is true regarding Socialist Economy:

1. In this the government decides what goods are to be produced in accordance with the needs of society

2. Distribution under this is supposed to be based on what people can afford to purchase and not according to their need

Select the correct answer using the code given below:

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

20. Which of the following is true about World Trade Organisation (WTO)?

1. The WTO agreements cover trade in goods as well as services

2. Copyrights, Industrial Designs are covered under WTO while Geographical Indication is covered under United Nation convention on Trade and development (UNCTAD)

Select the correct answer using the code given below:

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

21.What are the important sources for Human capital formation?

1. Health Expenditure

2. On the job training to workers by a company

3. Education expenditure

Select the correct answer using the code given below:

(a) 1 and 3 only

(b) 2 and 3 only

(d) All of the above

22. What is meant by price discrimination?

(a) Increase in price of a commodity over

time

(b) A situation where the same product is

sold to different consumers for different

prices

Government to sell it at a lower price

(d) General decrease in price of a

commodity over time

23. Which one of the following represents a progressive tax structure?

(a) Tax rate is the same across all incomes

(b) Tax rate increases as income increases

(d) Each household pays equal amount of tax

24. Which of the following statements in the context of income-environment relationship is /are correct?

1. Pollution trends tend to follow an inverse-U shaped relationship across different stages of economic development.

2. In the beginning stage, pollution increases due to urbanization and industrialization.

3. In the later stage, pollution declines due to structural changes towards services sector.

Select the correct answer using the code given below.

(a) 1 only

(b) 1 and 2 only

(d) 2 and 3 only

25. Consider the following statements regarding Alternative investment funds (AIFs).

1. AIFs are private funds which are not coming under the jurisdiction of any regulatory agency in India.

2. AIFs include venture Capital Fund, hedge funds, private equity funds and Mutual Funds.

Select the correct statement using the code given below:

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

26. Which of the following forms part of Capital receipts of the Government?

Borrowings by Government from Reserve Bank.
Interest income received from foreign Governments
Disinvestment receipts
Loans and advances granted by Central Government to State Governments.

Select the correct code:

(a) 1 and 3 only

(b) 2 and 3only

(d) All of the above

27. Consider the following statements about Real Estate investment Trusts (REITs).

1. REITs are mutual fund like institutions that enable investments mainly in completed and revenue generating real estate assets.

2. REITS are regulated by the RBI in India.

3. A REIT can be launched as an initial public offer (IPO).

Which of the above statements is/are correct?

Select the correct answer using the code given below

(a) 1 only

(b) 1 and 2 only

(d) 1 and 3 only

28. Private investment in Indian agriculture is mostly on labour-saving mechanization. This could be a response to

(a)Rising productivity of agricultural sector

(b) Rising inequality in agriculture

(d) Debt write-off by the Government

29. RBI’s Prompt Corrective Action (PCA) Framework is applicable to

Commercial banks
Co-operative banks
Non-banking financial companies (NBFCs)

Select the correct answer using the code given below

(a) 1 only

(b) 1 and 2 only

(d) 1 and 3 only

30. Under flexible exchange rate system, the exchange rate is determined

(a) Predominantly by market mechanism

(b) by the Central Bank

(d) by the World Trade Organization

31. Consider the following statements about Advance Pricing Agreement (APA).

1. It is an ahead-of-time agreement between a taxpayer and a tax authority on an appropriate transfer pricing methodology.

2. It is only Unilateral in nature, that involves only the taxpayer and the tax authority of the country where the taxpayer is located.

Select the correct statement using the code given below

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

32. Consider the following statements about Unified Payments Interface (UPI).

1. It converts multiple bank accounts into a single mobile application of any participating bank, merging several banking features, seamless fund routing & merchant payments into one hood.

2. It may also be used for Utility Bill Payments, Over the Counter Payments and Barcode based payments.

Select the correct statement using the code given below

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

33. Which of the following measures is/are examples of expansionary fiscal policy?

Decrease in tax rate
Increase in pensions
Increase in tax rate.

Select the correct answer using the codes given below:

(a) 1 and 2 only

(b) 2 and 3 only

(d) All of the above

34. The value of all final goods and services produced by the normal residents of a country and their property, whether operating within the domestic territory of the country or outside in a year is termed as :

(a) Gross National Income

(b) Net National

(d) Net Domestic Product

35. Consider the following statements relating to only the World Trade Organization (WTO):

1. The WTO deals with the global rules of trade between nations.

2. The goal of the WTO is to help producers of goods and services, exporters, and importers conduct their business.

3. The WTO, which is a successor body of the General Agreement on Tariffs and Trade, came into being following the Uruguay Round of Negotiations.

4.The WTO distances itself in framing of rules on trade in intellectual property rights.

Which of the statements given above are correct?

(a) 1, 2 and 3

(b) 2, 3 and 4

(d) 1 and 3 only

36. Consider the following statements about Peer to peer (P2P) lending.

It is a form of crowd funding used to raise unsecured loans which are re-paid with interest.
Only individuals can borrow money.
RBI enabled P2P entities as Non-Banking Financial Company (NBFC).

Which of the above statements is/are correct?

Select the correct answer using the code given below

(a) 1 and 2 only

(b) 2 and 3 only

(d) All of the above

‘

37. Consider the following statements relating to the World Bank:

1. The World Bank was established in 1946, which is headquartered in New York.

2. The World Bank Group has set for itself the goal to end extreme poverty from the World by 2030.

3. The World Bank is a vital source of financial and technical assistance to developing countries around the world. It. is not a bank in the ordinary sense but a unique partnership to reduce poverty and support development.

4. The World Bank Group comprises five institutions managed by their member countries in order to promote shared prosperity by fostering the income growth of the bottom 40% for every country.

Which of the statements given above are correct?

(a) 1, 2 and 3

(b) 2, 3 and 4

(d) 2 and 4 only

38. In India, mergers and acquisition of firms are regulated by

(a)National Manufacturing

competitiveness Council

(b) Competition Commission of India

(d) Department of Industrial Policy and Promotion

39. The value of money varies

(a) Directly with the, interest rate

(b) Directly with the price level

(c)Directly with the volume of employment

(d) Inversely with the price level

40. The main functioning of the banking system is

(a) Accept deposits and provide credit

(b) Accept deposits and subsidies

(d)Accept deposits, provide credit and subsidies

41. Which of the following developments may not likely reduce the fiscal deficit?

1. Increasing Foreign Direct Investment (FDI)

2. Providing budgetary support to public sector enterprises

3. Waiving off farm loans.

4. Austerity measures should be adopted.

Select the correct answer using the code given below:

(a) 1 and 2 only

(b) 2 and 3 only

(d) 3 and 4 only

42. Which of the following are the factors in the determination of Minimum Support Prices (MSP).

Cost of production (CoP)
Price trend in the domestic and international markets
Inter-crop price parity

Select the correct code:

(a) 1 only

(b) 2 only

(d) All of the above

43. The concept which tries to ascertain the actual deficit in the revenue account after adjusting for expenditure of capital nature is termed as

(a) Revenue deficit

(b) Effective revenue deficit

(d) Primary deficit

44. Which of the following are included in the category of direct tax in India?

1. Corporation tax

2. Tax on income

3. Wealth tax

4. Customs duty

5. Excise duty

Select the correct answer using the codes given below

(a) 1, 2 and 3

(b) 1, 2, 4 and 5

(d) 1, 3, 4 and 5

45. Consider the following statements regarding ‘Treasury Bills’

T-bills are long term securities issued on behalf of the government by the RBI .
T-Bills are issued on discount to face value, while the holder gets the face value on maturity.
T-Bills are issued by both Central government and State government in India.

Which of the above statements is/are correct?

(a) 1 only

(b) 1 and 3 only

(d) 2 only

46. Consider the following statements.

A cess is levied on the tax payable and not on the taxable income.
A cess can be levied on only indirect tax.

Which of the above statements is/are correct?

(a) 1 only

(b) 2 only

(d) Neither 1 nor

47. Consider the following statement about Fiat currency:

1. Fiat money is currency that a government has declared to be legal tender.

2. The value of fiat money is derived from the relationship between supply and demand rather than the value of the material from which the money is made.

Select the correct statement using the code given below:

(a) 1 only

(b) 2 only

(d) Neither 1 nor

48. Consider the following statement about the impact of government borrowing:

1. Government borrowing are inflationary in nature

2. Government borrowing leads to crowding out effect.

Select the correct statement

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

49. Which one among the following is an appropriate description of deflation?

(a) It is a sudden fall in the value of a currency against other currencies

(b) It is a persistent recession in the economy

(d) It is fall in the rate of inflation over a period of time

50. Consider the following statement about Gross Domestic Product (GDP):

1. GDP ensures proper income distribution among population on the principle of equity.

2. While calculating GDP, it also takes into account volunteer work.

3. It emphasizes material output without considering overall well-being.

Select the correct statement using the code given below:

(a) 1 only

(b) 2 and 3 only

(d) 3 only

51. In the parlance of financial investment, the term bear denotes

(a) An investor, who feels that the price of a particular security is going to fall

(b) An investor, who expects the price of a particular share to rise

(d) Any lender, whether by making a loan or buying a bond

52. Consider the following statement regarding Fiscal Responsibility and Budget Management (FRBM) act, 2003:

1. This act ensures inter-generational equity in fiscal management by legalising fiscal consolidation and fiscal discipline.

2. As per the act, government has to table four annual reports before the parliament.

Select the correct answer using the code given below:

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

53. Consider the following statement regarding Cash reserve ratio:

1. It is the percentage of deposits which a bank must keep as cash reserves with itself.

2. Higher is the CRR, higher will be the liquidity available with the bank for lending out.

Select the correct answer using the code given below:

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

54. Which of the fallowing are responsible for the decrease of per capita holding of cultivated land in India?

1. Low per capita income.

2. Rapid rate of increase of population.

3. Practice of dividing land equally among the

heirs.

4.Use of traditional techniques of ploughing.

Select the correct answer using the codes given below

(a) 1 and 2

(b) 2 and 3

(d) 2,3 and 4

55. Consider the following statements

1. High growth will lead to inflation.

2. High growth will lead to deflation.

Which of the statements given above is/are correct?

(a) Only 1

(b) Only 2

(d) Neither I nor 2

56. Consider the following statement about Pradhan Mantri Kaushal VikasYojana (PMKVY):-

1. Under the scheme, a monetary reward is given to trainees on assessment and certification by third party assessment bodies.

2. Pradhan Mantri Kaushal VikasYojana (PMKVY) is the flagship scheme of the Ministry of labour and employment.

Select the correct answer using the code given below:

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

57. Which of the following statements is/are correct?

1.NIFTY is based upon 50 firms in India.

2.NIFTY is governed and regulated by the Reserve Bank of India.

3.NIFTY does not trade in mutual funds.

Select the correct answer using the codes given below

(a) Only 1

(b) Only 2

(d) 1 and 3

58. When the productive capacity of the economic systems of a state is inadequate to create sufficient number of jobs, it is called

(a) Seasonal unemployment

(b) Structural unemployment

(d) Cyclical unemployment

59. The Human Capital Report is published by which organisation?

(a) World bank

(b) World economic forum

(d) OECD

60. National income ignores

(a) Sales of a firm

(b) Salary of employees

(d) Sale of land

61. Consider the following statement about organic farming:

1. Organic agriculture offers a means to substitute costlier agricultural inputs (such as HYV seeds, chemical fertilizers, pesticides, etc.) with locally produced organic inputs.

2. organic farming requires more labor input than conventional farming

3. organic produce may also have more blemishes and shorter shelf life than sprayed produce.

Select the correct answer using the code given below:

(a) 1 only

(b) 2 and 3 only

(d) All of the above

62. Match the following

List-I List-II

(Five Year Plan) (Emphasis)

A. First 1. Food security and women empowerment

B. Second 2. Heavy industries

C. Fifth 3. Agriculture

And community

D. Ninth 4. Removal of

Poverty

Code:-

A B C D

(a) 1 2 4 3

(b) 1 4 2 3

(d) 3 4 2 1

63. Consider the following statement about Micro-insurance policies:

1. These policies are regulated by the Reserve Bank of India (RBI).

2. Non-Government Organisations and self-Help Groups can also undertake Microinsurance business.

Select the correct answer using the code given below:

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

64. Brent index is associated with

(a) Crude oil prices

(b) Copper future prices

(d) Shipping rate index

65. Consider the following statements with regard to Statutory Liquidity Ratio (SLR)

1.To meet SLR, Commercial banks can use cash only.

2.SLR is maintained by the banks with themselves.

3.SLR restricts the banks leverage in pumping more money into the economy.

Which of the statements given above is/are correct?

(a) 1, 2 and 3

(b) 1 and 3

(d) only 2

66. Which one of the following events is not correctly matched with the year in which it happened?

(a) Inauguration of the SWIFT system of

electronic interbank fund transfers

worldwide-1985

(b) Conclusion of the Uruguay Round of

GATT-1994

(d) Establishment of the first wholly electronic stock exchange (Nasdaq)-1971

67. Which one of the following statements about Exchange-Traded Fund (ETF) is not correct?

(a) It is a marketable security.

(b) It experiences price changes throughout the day.

(d) An ETF does not have its net asset value calculated once at the end of every day.

68. Which one of the following is not an exclusive right of the concerned coastal nations over Exclusive Economic Zone (EEZ):

(a) Survey and exploitation of mineral resources of ocean deposits

(b) Exploitation of marined water energy and marine organisms including fishing

(d) Navigation of ships and laying down submarine cables

69. Consider the following about Inflation-Indexed Bond (IIB):

1. The main objective of Inflation Indexed Bonds is to provide a hedge and to safeguard the investor against macroeconomic risks in an economy.

2. RBI adopted a consumer price index (CPI -combined) as the key measure of inflation for its monetary policy stance.

Select the correct statement:

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

70. With reference to the payment bank, consider the following statement:

1. It provides small savings/ current accounts below Rs. 2 lakh.

2. They are not bound by the reserve requirement rules of RBI (CRR, SLR etc.).

3. They are required to invest a minimum 75 percent of its "demand deposit balances" in Statutory Liquidity Ratio (SLR) eligible Government securities/treasury bills.

Select the correct answer using the code given below:

(a) 1 only

(b) 1 and 2 only

(d) 3 only

71. Consider the following statement about deficit:

1. If a government has revenue deficit that means its income isn't enough to cover its basic operations.

2. The growth of revenue deficit as a percentage of fiscal deficit points to a deterioration in the quality of government expenditure involving lower capital formation.

Select the correct answer using the code given below:

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

72. Which of the following indicators have been used by the World Economic Forum to calculate Global Competitiveness Index for 2018-2019?

1. Efficiency enhancer sub index

2. Innovation and sophistication factors sub index

3. Life expectancy enhancer sub index

Select the correct answer using the code given below.

(a) 1 and 2 only

(b) 2 and 3 only

(d) 1, 2 and 3

73. Consider the following statements regarding the Gender Inequality Index (GII) released by the UNDP:

1. GII measures gender inequalities in three important aspects of human development-reproductive health, the labour market participation and empowerment.

2. Higher the GII value the more disparities between females and males and the more loss to human development.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

74. Which of the following brings out the ‘Index of Industrial Production’?

(a) NITI Aayog

(b) Central Statistics Organisation

(d) Ministry of Labour, Govt. of India

75. Consider the following statements about Special Drawing Rights (SDR).

1. SDRs also called paper gold are international financing instrument created by the International Monetary Fund (IMF).

2. SDR is backed by currency or precious metal.

Which of the above statements is/are correct?

(a) Only 1

(b) Only 2

(d) Neither 1 nor 2

76. Consider the following statement about Financial Stability and Development Council:

1. It is a Constitutional body set up in 2010 to deal with macro prudential and financial regularities in the entire financial sector of India.

2. Council is chaired by finance minister

Select the correct answer from the given code.

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

77. Which of the following measure is helpful to control the problem of NPA in Indian Banking sector?

1. Central Repository of Information on Large Credits (CRILC)

2. Prompt corrective action

3. Mudra Scheme

4. Insolvency and bankruptcy code of India

Select the correct answer using the code given below:

(a) 1 and 2 only

(b) 1, 2 and 3 only

(d) 1, 2 and 3 Only

78. What is the purpose of the Tier 1 in the BASEL norms?

(a) It can absorb losses without a bank being required to cease trading.

(b) It can absorb losses in the event of a winding-up and so provides a lesser degree of protection to depositors.

(d) None of the above

79. Consider the following statement about NBFC:

1. They can only accept time deposits and not demand deposits

2. NBFCs do not form part of the payment & settlement system & cannot issue cheques to its customers

Select the correct answer using the code given below:

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

80. Consider the following statement about Shell companies:

1. Shell companies typically refer to companies without active business operations or significant assets.

2. In India, shell companies are defined under Companies Act, 2013

Select the correct answer using the code given below:

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

81. Which of the following are the impact of falling rupee:

1. Imports will become expensive

2. The value of remittances in bank accounts in India rises.

3. Boost tourism in India.

Select the correct statement:

(a) 1 and 2 only

(b) 1 only

(d) 2 and 3 only

82. Consider the following statement regarding GST council:

1. It is a statutory body set up to decide on issues relating to GST.

2. It is headed by prime minister of India

Select the correct answer using the code given below

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

83. In order to increase tax collection, government has launched a project Insight. In this context consider the following option:

(a) It offers an opportunity to tax defaulters to disclose their income under the IT Act.

(b) It is an app to help users, to understand the various nuances of direct taxes, file income tax, apply for PAN, check TDS statement etc.

(c) It will monitor high-value transactions with use big data analytics to find out any discrepancy between a taxpayer’s income and expenses.

(d) None of the above

84. Consider the following statements regarding Economic Census:

1. Economic Census is being conducted by Ministry of finance.

2. Till date eight economic census is being conducted starting from 1977

Select the correct answer using the code given below

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

85. Consider the following statements regarding Geographical indicator (GI):

1. in India Karnataka has highest GI tagged products.

2. Tamil Nadu has highest GI tagged handicraft products while Maharastra leads in Agricultural products.

3. GI tagged is related to specific territory and being provided for 7 years

Select the correct statement using the code given below:

(a) 1 and 3 only

(b) 2 and 3 only

(d) All of the above

86. Recently Ministry of Finance conducted 1st National Time Release Study. This study pertains to:

(a) Logistic sector

(b) Disbursal of loan

(d) None of the above

87. RESIDEX, A index for real estate sector is published by:

(a) HUDCO

(b) RBI

(d) None of the above

88. Recently software named URKUND was in news. What is this?

(a) An AI enabled platform for face recognition

(b) A programme to decipher Indus script

(d) Programme which was used in Chandrayan 2 Mission

89. Kajin Sara lake was discovered in which country?

(a) NEPAL

(b) INDIA

(d) Bhutan

90. Consider the following pairs:

Mission Country

1.Baresheet NASA

2. Parker Probe JAPAN

3.TESS ESA

Which of the above pair(s) is/are correctly matched?

(a) 1 only

(b) 2 only

(d) None of the above

91. In cosmology Red shift phenomena was/were predicted by:

1. Newtonian theory of gravity

2. Special Theory of relativity

Select the correct answer using the code given below:

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

92. Recently Capital Conservation buffer was in news. This term is related with?

(a) Basel Norms

(b) IMF Quota

(d) Master Card

93. Consider the following rivers:

1.Subansiri

2. JiaBhareli

3. Dhansiri

4.Puthimari

5.Pagladiya

6. Manas

Which of the above is/are tributaries of Brahmaputra

(a) 1, 2, 3,4 and 5 only

(b) 2, 3,4,5 and 6 only

(d) All of the above

94. Which one of the following is true regarding the Pradhan Mantri Ujjwala Yojana?

(a) It aims to provide 8 crore deposit free LPG connections to women from BPL households by 2022

(b) LPG Connection is released in the

name of head of the BPL Family

of the country

(d) Scheme was launched in 2015 in Ballia, Uttar Pradesh

95. Consider the following statements:

Green Box Subsidies under WTO:

1.Are allowed without limits because it does not distort trade, or at most causes minimal distortion.

2. Must be government-funded and must not involve price support.

3. Tend to be programs that are not directed at particular products, and they may include direct income supports for farmers that are decoupled from current production levels and/or prices.

Select the correct answer using the codes given below:

(a) 1 and 3 Only

(b) 2 and 3 Only -*

(d) All of the above

96. What is Marginal cost based lending rate

(a) It is the rate which is offered by RBI to give credit to Banks

(b) Rate of interest which if offered by Banks to its best customer

the bank can’t lend the loan

(d) None

97. Back-propagation technique which was in news recently, associated with:

(a) Quantum Cryptography

(b) Spectroscopy technique

(d) Technique to prevent vehicle thief

98. Which of the following authorities were set up under Company act 2013?

1. National Company law Tribunal

2.National Company law Appellate Tribunal

3. Insolvency and bankruptcy code of India

4. National Financial Reporting Authority

Select the correct option from code given below:

(a) 1 and 2 only

(b) 1, 2 and 4 only

(d) All of the above

99. Which one of the following sectors has very low employment elasticity?

(a) Mixed farming

(b) Construction

(d) Apparel Industry

100. The term ‘Sand box regulation’ is sometimes seen in the news. Which of the following best illustrate it:

(a) Mechanism to regulate financial technology sector

(b) Mechanism for developing regulation that keeps up with the fast pace of innovation.

(d) Method adopted by RBI to regulate banking system

Economy test no. 04

1. Answer: a

Monitory policy in India uses 7 tools viz. cash reserve ratio, statutory liquidity ratio, repo and reserve repo rates, bank rate, marginal standing funding and open market operations.

2. Answer a

Ø Net national product (NNP) is the market value of a nation's goods and services (GNP) minus depreciation (often referred to as capital consumption).

Ø It can also be found out by adding the NFIA (National Factor Income from Abroad) to the NDP. If the NFIA is positive, that is, the inflow of factor income from abroad is more than the outflow; NNP will be more than NDP. Conversely, if NFIA is negative, NNP will be less than NDP and it would be equal to NDP in case the NFIA is zero.

3. Answer c

Ø Increase in Income - When there is an increase in the consumer's income, there will be an increase in demand for a good. If the consumer's income falls then there will be a fall in demand.

Ø Substitutes - An increase in the price of substitutes will affect the demand curve. Substitutes are goods that can be bought in place of the other like how Coca Cola & Pepsi are very close substitutes. If the price of one goes up, the demand for the other will rise.

Other factors:

Ø Complimentary Goods - When there is a decrease in the price of compliments, then the demand for its compliments will increase. Complimentary goods are goods you usually buy together, like bread and butter, tea and milk. If the price of one goes up, the demand for the other good will fall.

Ø Market Size - If the size of the market increases, like if a country's population increases or there is an increase in the number of people in a certain age group then the demand for products would increase.

4. Answer: (a) Devaluation of currency will be more beneficial if prices of domestic goods remains constant.

5. Answer d

RBI has seven major functions:

Ø Print Notes: RBI has the sole autonomy to print notes. Government of India has the sole authority to mint coins and one rupee notes NOT RBI.

Ø Banker to the Government: It manages government's deposit accounts. It also represents govt. as a member of the IMF and World Bank.

Ø Custodian of Commercial Bank Deposits

Ø Custodian to Country's Foreign Currency Reserves

Ø Lender of Last Resort: Commercial banks come to RBI for their monetary needs in case of emergency.

Ø Central Clearance and Accounts Settlement: As RBI keeps cash reserves from commercial banks therefore it rediscounts their bills of exchange easily.

Ø Credit Control: It controls supply of money in the economy through its monetary policy

6. Answer: d

7. Answer: a

Ø Mahalanobis model in India occurred as an analytical framework for India's Second Five Year Plan in 1955.

Ø The duration of plan holiday was from 1966 to 1969. The main reason behind the plan holiday was the Indo-Pakistan war & failure of third plan.

Ø During this plan annual plans were made and equal priority was given to agriculture its allied sectors and the industry sector. Rolling Plan was started with an annual plan for 1978-79 and as a continuation of the terminated fifth year plan.

8. Answer: a

9. Answer: b

10. Answer c

In economics, a transfer payment (or government transfer) is a redistribution of income and wealth (payment) made without goods or services being received in return. These are one-way payment of money.

11. Answer: c

(c) If an economy is under inflationary pressure the most likely effects include the depreciation of domestic currencies and the cost of borrowing also decreases

12. Answer d

GDP stands for gross domestic product and represents the total production of a nation within its domestic borders. But the rise in GDP doesn't guarantee the welfare of the masses. This is because the rise in GDP may be concentrated in the hands of very few individuals or firms.

Disposable income, also known as disposable personal income (DPI), is the amount of money that households have available for spending and saving after deduction of income taxes.

13. Answer b

Ø Inflation tax is not an actual legal tax paid to a government; instead "inflation tax" refers to the penalty for holding cash at a time of high inflation.

Ø The degree of decrease in the value of cash is termed the inflation tax for the way it punishes people who hold assets in cash, which tend to be lower class and middle-class wage earners.

14. Answer: b

Ø Marginal Standing Facility (MSF) is the rate at which the banks are able to borrow overnight funds from RBI against the approved government securities.

This window was created for commercial banks to borrow from RBI in certain emergency conditions when inter-bank liquidity dries up completely and there is volatility in the overnight interest rates.

15. Answer a

The responsibility to promote digital transactions in India has been shifted from NITI Aayog to the Ministry of IT and Electronics (MEITY). By shifting the responsibility to promote digital transaction to MEITY, the government is trying to utilize the core competence of specific ministries.

NITI Aayog would have a role to monitor and recommend ways to improve government schemes and growth of IT-enabled services.

16. Answer :a

17. Answer a

· Regional Rural Banks (RRBs) are financial institutions which ensure adequate credit for agriculture and other rural sectors. They were conceived as low cost institutions having a rural ethos and pro poor focus, but with expertise of commercial banks.

· It was set up on the basis of the recommendations of the Narasimham Working Group (1975), and after the legislations of the Regional Rural Banks Act, 1976.

· The equity of a regional rural bank is held by the Central Government, concerned State Government and the Sponsor Bank in the proportion of 50:15:35.

18. Answer: b

19. Answer: a

Ø A socialist society answers the three questions in a totally different manner. In a socialist society the government decides what goods are to be produced in accordance with the needs of society. It is assumed that the government knows what is good for the people of the country and so the desires of individual consumers are not given much importance.

Ø The government decides how goods are to be produced and how they should be distributed. In principle, distribution under socialism is supposed to be based on what people need and not on what they can afford to purchase. Unlike under capitalism, for example, a socialist nation provides free health care to the citizens who need it. Strictly, a socialist society has no private property since everything is owned by the state. With the collapse of the Soviet system in the last decades of the twentieth century, socialist economies in the former Soviet Union and the socialist states in Eastern Europe ceased to exist.

Ø Most economies are mixed economies, i.e., the government and the market together answer the three questions of what to produce, how to produce and how to distribute what is produced. In a mixed economy, the market will provide whatever goods and services it can produce well, and the government will provide essential goods and services which the market fails to do.

20.a

21. Answer: d

22. Answer: b

When different consumers pay different prices for the same product, this situation is known as price discrimination

23. Answer b

24. Answer c

Pollution trends show inverse relationship with economic development. In early stage, pollution increases due to urbanization and industrialization. At last, pollution declines due to structural changes towards service sector.

25. Answer a

Ø AIF refers to any privately pooled investment fund, (whether from Indian or foreign sources), in the form of a trust or a company or a body corporate or a Limited Liability Partnership (LLP). Hence, in India, AIFs are private funds which are otherwise not coming under the jurisdiction of any regulatory agency in India.

Ø The definition of AIFs includes venture Capital Fund, hedge funds, private equity funds, commodity funds, Debt Funds, infrastructure funds, etc., while, it excludes Mutual funds or collective investment Schemes, family trusts, Employee Stock Option.

26. Answer a

The capital receipts are loans raised by Government from public, called market loans, borrowings by Government from Reserve Bank and other parties through sale of Treasury Bills, loans received from foreign Governments and bodies, disinvestment receipts and recoveries of loans from State and Union Territory Governments and other parties.

27. Answer D

Ø REITs are similar to mutual funds. While mutual funds provide for an opportunity to invest in equity stocks, REITs allow one to invest in income-generating real estate assets.

Ø They are collective investment vehicles that operate and manage property portfolios and give returns to investors. Securities and Exchange Board of India (Sebi) mandated that all REITS be listed on exchanges and make an initial public offer to raise money.

Ø REITs can reduce the risk related to your property investments as 80 per cent of the value of the REIT should be in completed and rent-generating assets. They are required to be run by professional managements with specified years of experience notified by SEBI.

Ø A REIT can be launched as an initial public offer (IPO). An investor can apply for investment in the REIT through his demat account, either online or by filling up the IPO form and indicating demat account details. After the issue is closed, the REIT will allot units to eligible investors.

28. Answer: (c) The entry of Private investment in Indian agriculture would be responsible for rising wages and tightening labour market due to labour saving mechanism.

29. Answer a

Ø RBI’s Prompt Corrective Action (PCA) Framework is a set of guidelines for banks that are weak in terms of identified indicators including – poor asset quality, insufficient capital and insufficient profit or losses.

Ø The PCA is an early intervention package or resolution guideline by the RBI when a bank turns weak in terms of the identified indicators.

Ø The PCA framework is applicable only to commercial banks and not extended to co-operative banks, non-banking financial companies (NBFCs) and FMIs.

30. Answer: b

31. Answer a

An advance pricing agreement (APA) is an ahead-of-time agreement between a taxpayer and a tax authority on an appropriate transfer pricing methodology. An APA provides certainty with respect to the tax outcome of the tax payer’s international transactions.

An APA can be one of the three types – unilateral, bilateral and multilateral.

1. A Unilateral APA is an APA that involves only the taxpayer and the tax authority of the country where the taxpayer is located.

2. Bilateral APA (BAPA) is an APA that involves the tax payer, associated enterprise (AE) of the taxpayer in the foreign country, tax authority of the country where the taxpayer is located and the foreign tax authority.

3. Multilateral APA (MAPA) is an APA that involves the taxpayer, two or more AEs of the tax payer in different foreign countries, tax authority of the country where the taxpayer is located and the tax authorities of AEs.

32. Answer c

Ø Unified Payments Interface (UPI) is a payment system launched by National Payments Corporation of India (NPCI). It facilitates the fund transfer between two bank accounts through a smartphone. It converts multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing & merchant payments into one hood.

Ø The unique feature of UPI is that it is immediate money transfer through mobile devices round the clock 24*7 and 365 days. Also, a single mobile application may be used for accessing different bank accounts. It may also be used for Utility Bill Payments, Over the Counter Payments and Barcode (Scan and Pay) based payments.

33. Answer a

Ø An expansionary is a macroeconomic policy that seeks to encourage economic growth or combat inflationary price increases by expanding the money supply, lowering interest rates, increasing government spending or cutting taxes.

34. Answer: a

35. Answer: a

(a) The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world's trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters and importers conduct their business. The Uruguay Round led to the creation of the World Trade Organization, with GATT remaining as an integral part of the WTO agreements. The agreements tall into a simple structure with six main parts, intellectual property (Agreement On Trade-Related Aspects of Intellectual Property Rights (TRIPS)) were one of them.

36. Answer c

Peer to peer (P2P) lending is a form of crowdfunding used to raise unsecured loans which are re-paid with interest. Crowdfunding refers to financing of projects with small amounts of money raised from a large number of people, with a portal serving as an intermediary. It utilises an online platform which serves as a link between borrowers and lenders.Minimum networth requirement for these platforms is kept at Rs. 5 Cr.

37. Answer: (b) The WBG came into formal existence on 27 December 1945 following international ratification of the Bretton Woods agreements. The Group's headquarters are in Washington, D.C.It was created in 1944 to help Europe rebuild after World War II. Its mission is defined by two goals - to end extreme poverty by 2030 and to boost prosperity among the poorest 40 percent in low- and middle-income countries. The World Bank comprises of five institutions. They are :

(1) International Bank for Reconstruction and Development (IBRD),

(2) The International Development Association (IDA),

(3) The International Finance Corporation (WC),

(4) The Multilateral Investment Guarantee Agency (MIGA)

(5) International Centre for Settlement of Investment Disputes (ICSID).

38. Answer: b

39. Answer d

(d) The variation in the value .of money is always accompanied by opposite variation in the price of commodities and services. In brief, the e value of money varies inversely with the price level. It is reciprocal of price level. Vm =1/p (where Vm denotes value of money and p stands for price level).

40. Answer: (a) The main functioning of the banking system is to accept deposits and provide credit. The bank collects deposits from public. These are savings, fixed, current and recurring deposits. The bank advances loan to the business community and other members of the public. The types of bank loans and advances are overdraft, cash credits, loans and discounting of bill of exchange.

41. Answer b

Fiscal deficit (FD) is the difference between revenue receipts plus non-debt capital receipts on the one side and total expenditure including loans, net of repayments, on the other. It measures the gap between the government consumption expenditure including loan repayments and the anticipated income from tax and non-tax revenues.

42. Answer d

Cost of production (CoP) is one of the important factors in the determination of MSP of mandated crops. Besides cost, the Commission for ‘Agricultural Costs and Prices’ (CACP), considers other important factors such as demand and supply, price trend in the domestic and international markets, inter-crop price parity, terms of trade between agricultural and non-agricultural sectors and the likely impact of MSPs on consumers, in addition to ensuring rational utilization of natural resources like land and water.

Thus, pricing policy is rooted not in ‘cost plus’ approach, though cost is an important determinant of MSP.

43. Answer: (b) Effective Revenue Deficit is basically revenue deficit excluding expenditure on capital generation form grants from the Centre to the states. It signifies the amount of capital receipts that are being used for actual consumption expenditure of the Government. It is a new term introduced in the Union Budget 2011-12. It has now become a new fiscal parameter.

44. Answer: a(a) Corporation Tax, Wealth Tax and Income Tax are in the category of direct tax.

45. Answer d

T-bills are short term securities issued on behalf of the government by the RBI and are used in managing short term liquidity needs of the government.

· T-Bills are issued on discount to face value, while the holder gets the face value on maturity. The return on T-Bills is the difference between the issue price and face value.

· Thus, return on T-Bills depends upon auctions. When the liquidity position in the economy is tight, returns are higher and vice versa.

· Individuals, Firms, Trusts, Institutions and banks can purchase T-Bills. The commercial and cooperative banks use T-Bills for fulfilling their SLR requirements.

· Treasury Bills are issued only by the central government in India. The State governments do not issue any treasury bills.

46. Answer a

Ø A cess is levied on the tax payable and not on the taxable income. In a sense, for the taxpayer, it is equivalent to a surcharge on tax.

Ø A cess can be levied on both direct and indirect taxes.

Ø Unlike a tax, a cess is levied to meet a specific purpose; its proceeds cannot be spent on any kind of government expenditure.

47. Answer c

Fiat money is currency that a government has declared to be legal tender, but it is not backed by a physical commodity. The value of fiat money is derived from the relationship between supply and demand rather than the value of the material from which the money is made. Because fiat money is not linked to physical reserves, it risks becoming worthless due to hyperinflation.

48. Answer: c

Ø Government deficits are inflationary. This is because when government increases spending or cuts taxes, aggregate demand increases. Firms may not be able to produce higher quantities that are being demanded at the ongoing prices. Prices will, therefore, have to rise. However, if there are unutilised resources, output is held back by lack of demand.

Ø A high fiscal deficit is accompanied by higher demand and greater output and, therefore, need not be inflationary. It has been argued that there is a decrease in investment due to a reduction in the amount of savings available to the private sector. This is because if the government decides to borrow from private citizens by issuing bonds to finance its deficits, these bonds will compete with corporate bonds and other financial instruments for the available supply of funds. If some private savers decide to buy bonds, the funds remaining to be invested in private hands will be smaller. Thus, some private borrowers will get „crowded out‟ of the financial markets as the government claims an increasing share of the economy‟s total savings. However, one must note that the economy‘s flow of savings is not really fixed unless we assume that income cannot be augmented.

Ø If government deficits succeed in their goal of raising production, there will be more income and, therefore, more saving. In this case, both government and industry can borrow more. Also, if the government invests in infrastructure, future generations may be better off, provided the return on such investments is greater than the rate of interest. The actual debt could be paid off by the growth in output. The debt should not then be considered burdensome. The growth in debt will have to be judged by the growth of the economy as a whole.

49. Answer: c

(c) Deflation is defined as a fall in the general price level of goods and services. It is a negative rate of inflation. It means the value of money increases rather than decreases

50. Answer d

Ø Gross Domestic Product (GDP) is the total monetary or market value of all the finished goods and services produced within a country's borders in a specific time period.

Ø There are, of course, drawbacks to using GDP as an indicator. In addition to the lack of timeliness, some criticisms of GDP as a measure are:

Ø If there is a high degree of income inequality, the majority of people do not really benefit from an increased economic output because they cannot afford to buy most of the goods and services. It does not account for income distribution.

Ø It does not account for several unofficial income sources – GDP relies on official data, so it does not take into account the extent of informal economic activity. GDP fails to quantify the value of under-the-table employment, black market activity, volunteer work, and household production, which can be significant in some nations.

Ø It is geographically limited in a globally open economy – GDP does not take into account profits earned in a nation by overseas companies that are remitted back to foreign investors. This can overstate a country's actual economic output. For example, Ireland had GDP of $210.3 billion and GNP of $164.6 billion in 2012, the difference of $45.7 billion (or 21.7% of GDP) largely being due to profit repatriation by foreign companies based in Ireland.

Ø It emphasizes material output without considering overall well-being – GDP growth alone cannot measure a nation's development or its citizens' well-being. An externality, in economics, is the cost or benefit that affects a party who did not choose to incur that cost or benefit. For example, a nation may be experiencing rapid GDP growth, but this may impose a significant cost to society in terms of environmental impact and an increase in income disparity.

Ø It ignores business-to-business activity – GDP considers only final goods production and new capital investment and deliberately nets out intermediate spending and transactions between businesses. By doing so, GDP overstates the importance of consumption relative to production in the economy and is less sensitive as an indicator of economic fluctuations compared to metrics that include business-to-business activity.

51. Answer: a

(a) The term bear denotes an investor who believes that a particular security or market is headed downward. Bears 42. Attempt to protit from a decline in prices. Bears are generally pessimistic about the state of a given market. Bearish sentiment can be applied to all types ofmarkets including commodity markets, stock markets and the bond market.

52. Answer c

Fiscal Responsibility and Budget Management (FRBM) became an Act in 2003. The objective of the Act is to ensure inter-generational equity in fiscal management, long run macroeconomic stability, better coordination between fiscal and monetary policy, and transparency in fiscal operation of the Government. · It requires for the presentation of the following documents before the Parliament - the Medium Term Expenditure Framework Statement (MTEF), Medium-Term Fiscal Policy Statement, Fiscal Policy Strategy Statement and Macroeconomic Framework Statement. · The introduction of Outcome Budget is an executive action by the government. From the year 2017-18 onwards, it has been decided that the output and outcomes of the schemes of 68 Ministries and Departments will be available along with the financial outlays as a part of the Budget documents, so that clearly defined objectives and goals for each scheme can be seen by all.

53. Answer d

Cash Reserve Ratio‘ (CRR).

Ø It is the percentage of deposits which a bank must keep as cash reserves (not in any other liquid form such as gold, securities, etc) with RBI.

Ø CRR is also called as ‗Required Reserve Ratio‘ or the ‗Reserve Ratio‘.

Ø Higher is the CRR, lower will be the liquidity available with the bank for lending out. Hence lower is the credit or money creation in the economy and vice versa.

· Apart from the CRR, banks are also required to keep some reserves in liquid form in the short term. This ratio is called the Statutory Liquidity Ratio or SLR. It can be kept in the form of cash, gold and securities specified by the government.

54. Answer: (b) Rapid rate of increase of population and practice of dividing land equally among the heirs are responsible for the decrease of per capita holding of cultivated land in India.

55. Answer: a

56. Answer a

About Pradhan Mantri Kaushal VikasYojana (PMKVY)Scheme

Pradhan Mantri Kaushal VikasYojana (PMKVY) is the flagship scheme of the Ministry of Skill Development & Entrepreneurship (MSDE).

· Skill training would be done based on the National Skill Qualification Framework (NSQF) and industry led standards.

· Under the scheme, a monetary reward is given to trainees on assessment and certification by third party assessment bodies.

· The average monetary reward would be around Rs.8000 per trainee.

· Eligible Beneficiaries · In line with the scheme objectives, the scheme is applicable to any candidate of Indian nationality who:

· Undergoes a skill development training in an eligible sector by an eligible training provider.

·is certified during the span of one year from the date of launch of the scheme by approved assessment agencies.

·is availing of this monetary award for the first and only time during the operation of this Scheme.

57. Answer: d

58 Answer: b

59. Answer b

Recently, World Economic Forum (WEF) released the Human Capital Report. · The Human Capital Index is among the set of knowledge tools provided by the World Economic Forum as part of its System Initiative on Education, Gender and Work.

60. Answer: d

61. Answer d

Organic farming is a method of farming system which primarily aimed at cultivating the land and raising crops in such a way, as to keep the soil alive and in good health by use of organic wastes (crop, animal and farm wastes, aquatic wastes) and other biological materials along with beneficial microbes (biofertilizers) to release nutrients to crops for increased sustainable production in an eco friendly pollution-free environment.

Ø Organic agriculture offers a means to substitute costlier agricultural inputs (such as HYV seeds, chemical fertilizers, pesticides, etc.) with locally produced organic inputs that are cheaper and thereby generate good returns on investment

Ø Since organic farming requires more labor input than conventional farming, India will find organic farming an attractive proposition. Organic farming systems are often more labour-intensive because of increased time spent managing weeds and monitoring pests and unlike conventional farming which is capital-intensive, organic farming needs manpower at every stage

Ø Organic agriculture also generates income through exports as the demand for organically grown crops is on a rise. Studies across countries have shown that organically grown food has more nutritional value than chemical farming thus providing us with healthy foods.

Ø Finally, the produce is pesticide-free and produced in an environmentally sustainable way. · But organic produce may also have more blemishes and shorter shelf life than sprayed produce

62. Answer: c

2. Second Five Year Plan (1956-61)- Heavy Industry

3. Fifth Five Year Plan (197479)- Removal of Poverty

4. Ninth Five Year Plan (1997-2002)- Food Security and woman empowerment

63. Answer b

Micro-insurance policies are a special category of insurance policies created to promote insurance coverage among economically vulnerable sections of society. ·

These policies are regulated by the Insurance Regulatory Development Authority of India (IRDA). ·Microinsurance can be either a general insurance policy (which can insure health, belongings, house, tools, personal accident contract, livestock etc) or life insurance policy with a sum assured of Rs 50,000 or less.

They can be on an individual or group basis. · Insurers can offer composite covers or package products that include life and general insurance covers together. ·Microinsurance business is done through the following intermediaries in India: o Non-Government Organisations o Self-Help Groups o Micro-Finance Institutions

64. Answer: a

65. Answer: c

66. Answer: a

67.c

68.a

69 Answer c

Inflation-Indexed Bond (IIB) is a bond issued by the Sovereign, which provides the investor with a constant return irrespective of the level of inflation in the economy. The main objective of InflationIndexed Bonds is to provide a hedge and to safeguard the investor against macroeconomic risks in an economy.

The Reserve Bank of India auctioned its first tranche, linking to Wholesale Price Index (WPI) inflation, as WPI headline inflation was then used as the key measure of inflation by RBI. Since April 2014, RBI adopted a consumer price index (CPI -combined) as the key measure of inflation for its monetary policy stance. In case RBI issues new IIB bonds in the near future, it would be based on CPI, as CPI (combined) has been accepted by RBI as the key measure of inflation for its monetary policy stance, since 2014.

70. Answer d

About Payment Banks

· Payments Banks are a new set of banks licensed by the Reserve Bank of India to further financial inclusion.

· Functions: o Provide small savings/ current accounts below Rs. 1 lakh o Distribution of mutual funds, insurance products on a non-risk sharing basis o Payments/remittance services · The Payments Bank cannot undertake lending business nor can provide fixed deposit services.

· Compliance Norms: o They are bound by the reserve requirement rules of RBI (CRR, SLR etc.).

· They are required to invest a minimum 75 percent of its "demand deposit balances" in Statutory Liquidity Ratio (SLR) eligible Government securities/treasury bills. · Who is eligible to setup payment banks: o Non-Banking Finance Companies (NBFCs) o Corporate Banking Correspondents (BCs) o Mobile telephone companies & Supermarket chains. Hence statement 1 is correct. o Public sector entities o Even banks can take an equity stake in a Payments Bank to the extent permitted under the Banking Regulation Act, 1949.

71. Answer c

Consistently running a deficit could imply that a government is unable to meet its current and future recurring obligations. It also implies that the government or business will have to disinvest or cover the shortage by borrowing.

Running a revenue deficit places many planned government expenditures in jeopardy as there are not enough funds to cover the costs. Often, a government with a revenue deficit is using savings allocated to other divisions of the economy for its expenditures.

The growth of revenue deficit as a percentage of fiscal deficit points to a deterioration in the quality of government expenditure involving lower capital formation.

72. Answer : a

73. C

Explanation

Ø Gender inequality remains a major barrier to human development. Girls and women have made major strides since 1990, but they have not yet gained gender equity. The disadvantages facing women and girls are a major source of inequality. All too often, women and girls are discriminated against in health, education, political representation, labour market, etc.—with negative consequences for development of their capabilities and their freedom of choice.

Ø The GII is an inequality index. It measures gender inequalities in three important aspects of human development—reproductive health, measured by maternal mortality ratio and adolescent birth rates; empowerment, measured by proportion of parliamentary seats occupied by females and proportion of adult females and males aged 25 years and older with at least some secondary education; and economic status, expressed as labour market participation and measured by labour force participation rate of female and male populations aged 15 years and older. The GII is built on the same framework as the IHDI—to better expose differences in the distribution of achievements between women and men. It measures the human development costs of gender inequality. Thus the higher the GII value the more disparities between females and males and the more loss to human development.

Ø The GII sheds new light on the position of women in 160 countries; it yields insights in gender gaps in major areas of human development. The component indicators highlight areas in need of critical policy intervention and it stimulates proactive thinking and public policy to overcome systematic disadvantages of women.

Ø The GII is an inequality index. It measures gender inequalities in three important aspects of human development—reproductive health, measured by maternal mortality ratio and adolescent birth rates; empowerment, measured by proportion of parliamentary seats occupied by females and proportion of adult females and males aged 25 years and older with at least some secondary education; and economic status, expressed as labour market participation and measured by labour force participation rate of female and male populations aged 15 years and older. The GII is built on the same framework as the IHDI—to better expose differences in the distribution of achievements between women and men. It measures the human development costs of gender inequality. Thus, the higher the GII value the more disparities between females and males and the more loss to human development.

74. (b)

The Index of Industrial Production (IIP) is an index which shows the growth rates in different industry groups of the economy in a stipulated period of time. The IIP index is computed and published by the Central Statistical Organisation (CSO) on a monthly basis. Currently IIP figures are calculated considering 2004-05 as base year.

75Answer: (a)

Ø Technically, the SDR is neither a currency nor a claim on the IMF itself. Instead, it is a potential claim against the currencies of IMF members. An SDR allocation is a low-cost method of adding to member nations' international reserves, allowing members to reduce their reliance on more expensive domestic or external debt. Developing nations can use SDRs as a cost-free alternative to accumulating foreign currency reserves through more expensive means, such as borrowing or running current account surpluses.

It is not backed by any currency or precious metal, and is used only among governments and IMF for balance of payments settlements

76.

Answer: b

77. Answer: c

78. Answer a

Ø Tier-1 capital is the core capital.

Ø It can absorb losses without a bank being required to cease trading.

Ø Tier-2 capital is the supplementary capital of a bank. It can absorb losses in the event of a winding-up and so provides a lesser degree of protection to depositors.

79. Answer c

A Non-Banking Financial Company (NBFC) is a company registered under Companies Act that provides financial services without meeting the legal definition of a bank.

It can engage in the business of loans and advances, acquisition of shares/stocks/bonds/debentures/securities issued by Government or local authority or other marketable securities, leasing, hire-purchase, insurance business, chit business etc.

NBFCs are different from banks as:

· They can only accept time deposits and not demand deposits

· NBFCs do not form part of the payment & settlement system & cannot issue cheques to its customers

80. Answer a

About Shell Companies

· Shell companies typically refer to companies without active business operations or significant assets.

· Though incorporated with a standard memorandum or articles of associations, it has inactive shareholders and directors, and is functionally dormant.

· After the sale transaction, inactive shareholders usually transfer their shares to the buyer and the so-called directors resign or flee.

· In India, shell companies are not defined under Companies Act, 2013 or any other legislation. However, some laws can help curbing illegal activities such as money laundering and can indirectly be used to target shell companies — Benami Transaction (Prohibition) Amendment Act 2016; The Prevention of Money Laundering Act 2002 and The Companies Act, 2013 etc.

· Serious Fraud Investigation Office under Ministry of Corporate Affairs has prepared comprehensive digital database of shell companies

81. Answer c

Impact of falling rupee

· Imports will become expensive and will drive inflation upwards further hurting investors’ sentiment as well.

· High fuel prices have a direct bearing on the non-food parts of CPI (Consumer Price Index) and WPI (Wholesale Price Index) inflation, current account deficit as well as fiscal deficit.

· Increasing competitiveness of exports will boost Make in India.

· The value of remittances in bank accounts in India rises.

Boost tourism in India

82. Answer d

About GST council

· It is a constitutional body set up as per Article 279A to decide issues relating to GST.

· It consists of following members:

ü Union Finance Minister - Chairperson

ü Union Minister of State, in-charge of Revenue of finance.

ü Minister In-charge of finance or taxation or any other Minister nominated by each State Government

83. Answer c

Ø Project Insight: It will monitor high-value transactions with use big data analytics to find out any discrepancy between a taxpayer’s income and expenses.

Ø AaykarSetu: It is an app to help users, to understand the various nuances of direct taxes, file income tax, apply for PAN, check TDS statement etc.

Ø Income Declaration Scheme: It offers an opportunity to tax defaulters to disclose their income under the IT Act.

84. Answer d

The seventh Economic Census is being conducted by the Ministry of Statistics and Programme Implementation. The exercise started with the state of Tripura and has now been kick-started in Puducherry.

7^th Economic Census:

Ø The ministry has partnered with CSC e-Governance Services India Limited, a Special Purpose Vehicle under the Ministry of Electronics and Information.

Ø The census would also cover all establishments, including household enterprises, engaged in production or distribution of goods and services.

Ø Earlier too, collecting data for the survey has been a flagship task of MoSPI, that has overall conducted 6 Economic Censuses during, 1977, 1980, 1990, 1998, 2005 and 2013.

Ø The survey is conducted to find out the economic activity in a specific area.

Ø The seventh census would witness the use of Information Technology for data collection. The enumerators and supervisors engaged by the Common Service Centres have been trained to collect data on a mobile application developed for data gathering, validation, report generation and dissemination.

85. Answer: c

86. Answer: a

The World Customs Organization (WCO) Time Release Study is a strategic and internationally recognized tool to measure the actual time required for the release and/or clearance of goods, from the time of arrival until the physical release of cargo.

Aim: To find bottlenecks in the trade flow process and taking necessary measures to improve the effectiveness and efficiency of border procedures.

The WCO TRS is specifically referenced in Article 7.6 of the WTO Trade Facilitation Agreement (TFA) as a tool for Members to measure and publish the average release time of goods.

87. Answer: d

88. Answer’: c

89. Answer: a

The recently discovered Kajin Sara lake in Manang district of Nepal is likely to earn the distinction of the world’s highest lake, taking the title from Tili

90. Answer: d

91. Answer: d

92. Answer A

Ø CCB is a relatively new concept, introduced under the international Basel III norms.

Ø The concept says that during good times, banks must build up a capital buffer that can be drawn from when there is stress.

Ø In India, the minimum capital requirement is 9 per cent.

Ø The CCB would be 2.5 percentage points over and above the minimum capital requirement

93. Answer: d

The principal tributaries of Brahmaputra in India are the Subansiri, JiaBhareli, Dhansiri, Puthimari, Pagladiya and the Manas. The Brahmaputra in Bangladesh fed by Teesta, etc. finally falls into the Ganga. The Barak river, the head stream of Meghna, rises in the hills in Manipur. The important tributaries of the river are Makku, Trang, Tuivai, Jiri, Sonai, Rukni, Katakhal, Dhaleswari, Langachini, Maduva and Jatinga. Barak continues in Bangladesh till the combined Ganga-Brahmaputra join it near Bhairab Bazar

94. Answer : c

Ø LPG Connection is released in the name of adult woman of the BPL Family

Ø 2016 in Ballia, Uttar Pradesh

Ø Beneficiaries: Earlier, beneficiaries under the PMUY included all the BPL families who suffer with at least one deprivation under Socioeconomic caste census 2011. It has been expanded to cover all SC/ST households, beneficiaries of Antyoday Anna Yojana (AAY), PMAY (Gramin), forest dwellers, most backward classes (MBC), Tea and Ex-Tea Garden Tribes, people residing in Islands or rivers island. Now, the scheme will cover all the poor households of the country. Under this, new beneficiaries will be those among holders of both ration cards and Aadhaar, who will identify themselves as poor through self-declaration

95.

Answer: D

Ø In order to qualify, green box subsidies must not distort trade, or at most cause minimal distortion. They have to be government-funded (not by charging consumers higher prices) and must not involve price support.

Ø They tend to be programmes that are not targeted at particular products, and include direct income supports for farmers that are not related to (are “decoupled” from) current production levels or prices. They also include environmental protection and regional development programmes. “Green box” subsidies are therefore allowed without limits, provided they comply with the policy-specific criteria

96. Answer : C

97. Answer :c

Back-propagation technique

Ø In order to mimic a biological brain, the artificial neural networks are trained to perform calculation like the neural network in the brain.

Ø One method to build an AI system is back-propagation technique.

Ø In this method the AI system learns by taking in inputs and corresponding outputs.

Ø It compares the actual output with the desired output and learns accordingly.

Ø The learning happens in a number of iterations so that the AI system is learning continuously for every input and corresponding output.

This learning happens in a closed system called the internal state which is ‘hidden’

98. Answer : b

99 Answer : C

Employment elasticity is a measure of the percentage change in employment associated with a 1 percentage point change in economic growth. The employment elasticity indicates the ability of an economy to generate employment opportunities for its population as per cent of its growth (development) process.

100. Answer: b

Ø The word sandbox originally referred to the small box filled with sand where children play and experiment in a controlled environment. But little by little, the term has acquired new meanings. In the computer science world, a sandbox is a closed testing environment designed for experimenting safely with web or software projects.

Ø The concept is also being used in the digital economyarena, to refer to regulatory sandboxes: testing grounds for new business models that are not protected by current regulation, or supervised by regulatory institutions.

UPSC & BANKING General Awareness (GK QUIZ)

Tuesday 1 October 2019

UPSC PRELIMS TEST SERIES ECONOMY PAPER ENGLISH

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