UPSC Indian Economy Test 1 (Old Year Questions)

Ans b

Ans d

Ans b
Current account includes balance of trade (exports-imports), net remittances, Trade in services. SDRs count as foreign assets

Ans c
BCs are being used under the Swabhimaan scheme for both the purposes

Ans a
MSF came into effect from 9th May 2011. MSF scheme is provided by RBI by which the banks can borrow overnight upto 1 per cent of their net demand and time liabilities (NDTL) i.e. 1 per cent of the aggregate deposits and other liabilities of the banks.

Ans a
A statutory reserve is an amount of cash a financial institution, such as a bank, credit union, or insurance company, must keep on hand to meet the obligations incurred by virtue of accepting deposits and premium payments. The statutory reserves required of banks and credit unions are generally set by the nation’s central bank, and those required of insurance companies are set by statute or regulation by the national, state or provincial government or regulatory authority. Calculated in various ways, statutory reserves are required to ensure that financial institutions are capable of paying claims even in a calamitous situation.

Ans a
The International Monetary Fund

Ans c
All of them form the part of Non-plan expenditure.

Ans c
Decreased interest rates would ensure availabilty of capital for investment expenditure

Ans b
Private Remittances forms a part of current account and not capital account

Ans a
For debtors, “real” interest rate goes down with inflation. Thus it benefits them on the other hand, with inflation the yield of bonds goes down, thus a negative effect for bond-holders.

Ans c
Disguised unemployment, means that more people are engaged in a job which can be done with less people, normally seen in agriculture where whole family is involved. It means extra people can be removed without affecting the productivity, i.e. their marginal productivity is zero.

Ans d
Liquidity of currency is highest. Next will come demand liabilities, as they have to be cleared when demanded. Next savings and least liquidity will be of time deposits

Ans c
The repo and reverse repo rates are used when RBI purchase or sale the government securities. This route is known as Open Market Operations

Ans d
Banks have to lend minimum of 40% to priority sector which includes all of the given sectors

Ans a
b option will not provide any benefit of demographic dividend. Social security schemes can be used for providing security to non-working population like old-age pension etc.c option is one of the Millenium Development Goal, but it does not provide any benefit of demographic dividendd option can infact have negative effect as it will make education costlier thus making it out of reach of a large section of eligible population

Ans d
It a direct application based question. 1st statement is correct as increase in money supply will cause inflation. 2nd and 3rd statement are obviously correct as they represent supply and demand side of products

Ans b
India’s foreign exchange reserves compriseforeign currency assets (FCA), gold, special drawing rights (SDRs) and reserve tranche position (RTP) in the International Monetary Fund (IMF).

Ans c
World bank’s Ease of doing business report, India’s position has improved from 142 to 130. This is on account of ease of starting a business, dealing with construction permit and getting electricity permits. Now, companies can get connected to the grid and get on with their business, 14 days sooner than before. The number of days it takes to start a new business has gone up marginally from last year, from 28.4 to 29
Credit is one area where India performs poorly and needs to improve. Access to credit and ease of paying taxes has worsened, according to the World Bank’s Doing Business Report 2016.

Ans d
b and c option will lead to a decrease in the money supply in market. Between a and d, d will have more inflationary effect than a, as it will lead to an increase in total money supply in the market.