UPSC Indian Economy Test 2 (Old Year Questions)
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UPSC Indian Economy Test 2
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20 questions based on Indian Economy.
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Question 1 of 20
1. Question
1 pointsSupply of money remaining the same when there is an increase in demand for money, there will be
Correct
Ans b
Direct application based question. If the demand increase when the supply is same, it will lead to an increase in prices or in this case rate of interest to be charged.Incorrect
Ans b
Direct application based question. If the demand increase when the supply is same, it will lead to an increase in prices or in this case rate of interest to be charged. -
Question 2 of 20
2. Question
1 pointsEconomic growth in country X will necessarily have to occur if
Correct
Ans c
a and d statement does not say anything about the country X, only the general world economy. In b, if there is population growth without any avenues for the economy to absorb them, it will have a deteoriarating effect. c is the most appropriate option, as whenever there is capital formation in country it will lead to growthIncorrect
Ans c
a and d statement does not say anything about the country X, only the general world economy. In b, if there is population growth without any avenues for the economy to absorb them, it will have a deteoriarating effect. c is the most appropriate option, as whenever there is capital formation in country it will lead to growth -
Question 3 of 20
3. Question
1 pointsThe national income of a country for a given period is equal to the
Correct
Ans d
NNP at factor cost ≡ National Income (NI )so A is the best option.No other option mentions Nationals.Incorrect
Ans d
NNP at factor cost ≡ National Income (NI )so A is the best option.No other option mentions Nationals. -
Question 4 of 20
4. Question
1 pointsWhich of the following grants/grant direct credit assistance to rural households?
1. Regional Rural Banks
2. National Bank for Agriculture and Rural Development
3. Land Development Banks
Select the correct answer using the codes given below.Correct
Ans c
NABARD do not provide direct assistance. It “refinance” the assistance by other institutionsIncorrect
Ans c
NABARD do not provide direct assistance. It “refinance” the assistance by other institutions -
Question 5 of 20
5. Question
1 pointsThe balance of payments of a country is a systematic record of
Correct
Ans a
The balance of payments (BoP) record the transactions in goods, services and assets between residents of a country with the rest of the world for a specified time period typically a year. so best option is A.Incorrect
Ans a
The balance of payments (BoP) record the transactions in goods, services and assets between residents of a country with the rest of the world for a specified time period typically a year. so best option is A. -
Question 6 of 20
6. Question
1 pointsThe Reserve Bank of India regulates the commercial banks in matters of
- liquidity of assets
- branch expansion
- merger of banks
- winding-up of banks
Select the correct answer using the codes given below.
Correct
Ans d
All statemets are implied from the fact that RBI is regulator of Banks. One could think that merger might come under CCI only but its comes both under CCI and RBI. 1. CRR, SLR etc.2. Press Information Bureau English Releases As per Reserve Bank of India’s (RBI) Branch Authorisation Policy, general permission has been granted to domestic Scheduled Commercial Banks (other than RRBs) to open branches / mobile branches / Administrative Offices / CPCs (Service Branches), (i) in Tier 3 to Tier 6 centres (with population up to 49,999) and (ii) in rural, semi-urban and urban centres of the North-Eastern States and Sikkim subject to reporting. Opening of branches by these banks in Tier 1 and Tier 2 centres (centres with population of 50,000 and above) requires prior approval of RBI except in North Eastern States and Sikkim. Banks apply for authorisations for opening of branches in Tier 1 and Tier 2 centres in their Annual Branch Expansion Plan. 3. Mergers and acquisitions (M&As) in the banking space may require clearance from fair market watchdog, Competition Commission of India (CCI), as well as the sector regulator, Reserve Bank of India (RBI). Earlier, the indications were that only involuntary mergers and acquisitions, the ones directed by the RBI, would go to the central bank along with the CCI. However, all mergers and acquisitions may now come under both. While the CCI will look at the competition part of such deals, the RBI will see prudential aspects. 4. RBI issued order to windup few banks in recent past. ( Sahara India Financial Corp (SIFCL), the parabanking arm of Sahara India Pariwar, Siddharth Cooperative Bank, some Banks from Gujarat). Implied from deposit insurance and credit guarantee corporation (DICGC) scheme.Incorrect
Ans d
All statemets are implied from the fact that RBI is regulator of Banks. One could think that merger might come under CCI only but its comes both under CCI and RBI. 1. CRR, SLR etc.2. Press Information Bureau English Releases As per Reserve Bank of India’s (RBI) Branch Authorisation Policy, general permission has been granted to domestic Scheduled Commercial Banks (other than RRBs) to open branches / mobile branches / Administrative Offices / CPCs (Service Branches), (i) in Tier 3 to Tier 6 centres (with population up to 49,999) and (ii) in rural, semi-urban and urban centres of the North-Eastern States and Sikkim subject to reporting. Opening of branches by these banks in Tier 1 and Tier 2 centres (centres with population of 50,000 and above) requires prior approval of RBI except in North Eastern States and Sikkim. Banks apply for authorisations for opening of branches in Tier 1 and Tier 2 centres in their Annual Branch Expansion Plan. 3. Mergers and acquisitions (M&As) in the banking space may require clearance from fair market watchdog, Competition Commission of India (CCI), as well as the sector regulator, Reserve Bank of India (RBI). Earlier, the indications were that only involuntary mergers and acquisitions, the ones directed by the RBI, would go to the central bank along with the CCI. However, all mergers and acquisitions may now come under both. While the CCI will look at the competition part of such deals, the RBI will see prudential aspects. 4. RBI issued order to windup few banks in recent past. ( Sahara India Financial Corp (SIFCL), the parabanking arm of Sahara India Pariwar, Siddharth Cooperative Bank, some Banks from Gujarat). Implied from deposit insurance and credit guarantee corporation (DICGC) scheme. -
Question 7 of 20
7. Question
1 pointsAn increase in the Bank Rate generally indicates that the
Correct
Ans d
a is wrong, as increase in bank rate generally implies an increase in RoI. c is wrong as in easy money policy, central bank provides money at a cheaper rate so that market supply can increaseIncorrect
Ans d
a is wrong, as increase in bank rate generally implies an increase in RoI. c is wrong as in easy money policy, central bank provides money at a cheaper rate so that market supply can increase -
Question 8 of 20
8. Question
1 pointsIn India, deficit financing is used for raising resources for
Correct
Ans a
Incorrect
Ans a
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Question 9 of 20
9. Question
1 pointsIf National Water Mission is properly and completely implement, how will it impact the country?
1. Part of the water needs of urban areas will be met through recycling of waste-water.
2. The water requirements of coastal cities with inadequate alternative sources of water will be met by adopting appropriate technologies that allow for the use of ocean water.
3. All the rivers of Himalayan origin will be linked to the rivers of peninsular India.
4. The expenses incurred by farmers for digging bore-wells and for installing motors and pump-sets to draw ground-water will be completely reimbursed by the Government.
Select the correct answer using the codes given below:Correct
Ans b
[from objective statement] It will seek to ensure that a considerable share of the water needs of urban areas are met through recycling of waste water, and ensuring that the water requirements of coastal cities with inadequate alternative sources of water are met through adoption of new and appropriate technologies such as low temperature desalination technologies that allow for the use of ocean water. http://india.gov.in/allimpfrms/alldocs/15658.pdf Climate council’s water mission for India Pasted from The objective of National Water Mission is “conservation of water, minimizing wastage and ensuring its equitable distribution both across and within States through integrated water resources development and management”. Pasted fromIncorrect
Ans b
[from objective statement] It will seek to ensure that a considerable share of the water needs of urban areas are met through recycling of waste water, and ensuring that the water requirements of coastal cities with inadequate alternative sources of water are met through adoption of new and appropriate technologies such as low temperature desalination technologies that allow for the use of ocean water. http://india.gov.in/allimpfrms/alldocs/15658.pdf Climate council’s water mission for India Pasted from The objective of National Water Mission is “conservation of water, minimizing wastage and ensuring its equitable distribution both across and within States through integrated water resources development and management”. Pasted from -
Question 10 of 20
10. Question
1 pointsWith reference to ‘Financial Stability and Development Council’, consider the following statements:
1. It is an organ of NITI Aayog.
2. It is headed by the Union Finance Minister.
3. It monitors macroprudential supervision of the economy.
Which of the statements given above is/are correct?Correct
Ans c
The Financial Stability and Development Council (FSDC) under the chairmanship of union Finance Minister was set up by the government as the apex-level forum in December 2010.
Incorrect
Ans c
The Financial Stability and Development Council (FSDC) under the chairmanship of union Finance Minister was set up by the government as the apex-level forum in December 2010.
-
Question 11 of 20
11. Question
1 pointsWhich of the following can be said to be essentially the parts of ‘Inclusive Governance’?
1. Permitting the Non-Banking Financial Companies to do banking.
2. Establishing effective District Planning Committees in all the districts.
3. Increasing the government spending on public health.
4. Strengthening the Mid-day Meal Scheme.
Select the correct answer using the codes given below:Correct
Ans c
Incorrect
Ans c
-
Question 12 of 20
12. Question
1 pointsIn the context of which of the following do you sometimes find the terms ‘amber box, blue box and green box’ in the news?
Correct
Ans a
In WTO terminology, subsidies in general are identified by “Boxes” which are given the colours of traffic lights: green (permitted), amber (slow down — i.e. be reduced), red (forbidden). In agriculture, things are, as usual, more complicated. The Agriculture Agreement has no Red Box, although domestic support exceeding the reduction commitment levels in the Amber Box is prohibited; and there is a Blue Box for subsidies that are tied to programmes that limit production.The ‘amber box’: For agriculture, all domestic support measures considered to distort production and trade (with some exceptions) fall into the amber box.
The ‘green box’: In order to qualify for the “green box”, a subsidy must not distort trade, or at most cause minimal distortion. These subsidies have to be government-funded (not by charging consumers higher prices) and must not involve price support.
The ‘blue box’: The blue box is an exemption from the general rule that all subsidies linked to production must be reduced or kept within defined minimal (“de minimis”) levels. It covers payments directly linked to acreage or animal numbers, but under schemes which also limit production by imposing production quotas or requiring farmers to set aside part of their land.
Countries using these subsidies – and there are only a handful – say they distort trade less than alternative amber box subsidies. Currently, the only members notifying the WTO that they are using or have used the blue box are: the EU, Iceland, Norway, Japan, the Slovak Republic, Slovenia, and the US (now no longer using the box).
Incorrect
Ans a
In WTO terminology, subsidies in general are identified by “Boxes” which are given the colours of traffic lights: green (permitted), amber (slow down — i.e. be reduced), red (forbidden). In agriculture, things are, as usual, more complicated. The Agriculture Agreement has no Red Box, although domestic support exceeding the reduction commitment levels in the Amber Box is prohibited; and there is a Blue Box for subsidies that are tied to programmes that limit production.The ‘amber box’: For agriculture, all domestic support measures considered to distort production and trade (with some exceptions) fall into the amber box.
The ‘green box’: In order to qualify for the “green box”, a subsidy must not distort trade, or at most cause minimal distortion. These subsidies have to be government-funded (not by charging consumers higher prices) and must not involve price support.
The ‘blue box’: The blue box is an exemption from the general rule that all subsidies linked to production must be reduced or kept within defined minimal (“de minimis”) levels. It covers payments directly linked to acreage or animal numbers, but under schemes which also limit production by imposing production quotas or requiring farmers to set aside part of their land.
Countries using these subsidies – and there are only a handful – say they distort trade less than alternative amber box subsidies. Currently, the only members notifying the WTO that they are using or have used the blue box are: the EU, Iceland, Norway, Japan, the Slovak Republic, Slovenia, and the US (now no longer using the box).
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Question 13 of 20
13. Question
1 pointsWith reference to National Rural Health Mission, which of the following are the jobs of ‘ASHA’, a trained community health worker?
1. Accompanying women to the health facility for antenatal care checkup.
2. Using pregnancy test kits for early detection of pregnancy.
3. Providing information on nutrition and immunization.
4. Conducting the delivery of baby.
Select eh correct answer using the codes given below:Correct
Ans a
Incorrect
Ans a
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Question 14 of 20
14. Question
1 pointsHow does the National Rural Livelihood Mission seek to improve livelihood options of rural poor?
1. By setting up a large number of new manufacturing industries and agribusiness centres in rural areas.
2. By strengthening ‘self-help groups’ and providing skill development.
3. By supplying seeds, fertilizers, diesel pump-sets and micro-irrigation equipment free of cost to farmers.
Select the correct answer using the codes given below:Correct
Ans b
Incorrect
Ans b
-
Question 15 of 20
15. Question
1 pointsPradhan Mantri MUDRA Yojana is aimed at
Correct
Ans a
Pradhan Mantri MUDRA Yojana is aimed at bringing sole-proprietors or entrepreneurs of Small & Medium Enterprises into formal financial system.Incorrect
Ans a
Pradhan Mantri MUDRA Yojana is aimed at bringing sole-proprietors or entrepreneurs of Small & Medium Enterprises into formal financial system. -
Question 16 of 20
16. Question
1 pointsThe Multi-dimensional Poverty Index developed by Oxford Poverty and Human Development initiative with UNDP support covers which of the following?
- Deprivation of education, health, assets and services at household level.
- Purchasing power parity at national level.
- Extent of budget deficit and GDP growth rate at national level.
Select the correct answer using the codes given below.
Correct
Ans a
Incorrect
Ans a
-
Question 17 of 20
17. Question
1 pointsWhat is/are the recent policy initiative(s) of Government of India to promote the growth manufacturing sector?
1. Setting up of National Investment and Manufacturing Zones.
2. Providing the benefit of ‘single window clearance’.
3. Establishing the Technology Acquisition and Development Fund.
Select the correct answer using codes given below:Correct
Ans d
Incorrect
Ans d
-
Question 18 of 20
18. Question
1 pointsWhat is/are the purpose/purposes of the ‘Marginal Cost of Funds based Lending Rate (MCLR)’ announced by RBI?
1. These guidelines help improve the transparency in the methodology followed by banks for determining the interest rates on advances.
2. These guidelines help ensure availability of bank credit at interest rates which are fair to the borrowers as well as the banks.
Select the correct answer using the code given below.Correct
Ans c
To ensure better transmission and transparency of rates, the RBI introduced the MCLR framework, under which banks have to calculate their cost of funds based on the latest rates offered on deposits or borrowings. This was to ensure that changes in deposit rates were immediately reflected on banks’ cost of funds.Apart from helping improve the transmission of policy rates into the lending rates of banks, these measures are expected to improve transparency in the methodology followed by banks for determining interest rates on advances. The guidelines are also expected to ensure availability of bank credit at interest rates which are fair to the borrowers as well as the banks.
Further, marginal cost pricing of loans will help the banks become more competitive and enhance their long run value and contribution to economic growth.
Incorrect
Ans c
To ensure better transmission and transparency of rates, the RBI introduced the MCLR framework, under which banks have to calculate their cost of funds based on the latest rates offered on deposits or borrowings. This was to ensure that changes in deposit rates were immediately reflected on banks’ cost of funds.Apart from helping improve the transmission of policy rates into the lending rates of banks, these measures are expected to improve transparency in the methodology followed by banks for determining interest rates on advances. The guidelines are also expected to ensure availability of bank credit at interest rates which are fair to the borrowers as well as the banks.
Further, marginal cost pricing of loans will help the banks become more competitive and enhance their long run value and contribution to economic growth.
-
Question 19 of 20
19. Question
1 pointsIn India, in the overall index of Industrial Production, the Indices of Eight Core Industries have a combined weight of 37.90%. Which of the following are among those Eight Core Industries?
1. Cement
2. Fertilizers
3. Natural Gas
4. Refinery products
5. Textiles
Select the correct answer using the codes given below:Correct
Ans c
The term ” Eight core industries” is used in many articles and Analysis.Incorrect
Ans c
The term ” Eight core industries” is used in many articles and Analysis. -
Question 20 of 20
20. Question
1 pointsThe endeavour of ‘Janani Suraksha Yojana’ Programme is
1. To promote institutional deliveries.
2. To provide monetary assistance to the mother to meet the cost of delivery.
3. To provide for wage loss due to pregnancy and confinement.
Which of the statements given above is/are correct?Correct
Ans a
Incorrect
Ans a