Economy Marathon 2023

Prelims PYQ - Marathon
Session
Economy
Basics Of Economy
1. In the context of Indian economy, consider the following
statements: (2011)
1. The growth rate of GDP has steadily increased in the last
five years.
2. The growth rate in per capita income has steadily
increased in the last five years.
Which of the statements given above is/are correct?
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
1. In the context of Indian economy, consider the following
statements:
1. The growth rate of GDP has steadily increased in the last
five years.
2. The growth rate in per capita income has steadily
increased in the last five years.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
• Per capita income is a measure of the amount of
money earned per person in a nation or geographic
region.
• Per capita income can be used to determine the
average per-person income for an area and to
evaluate the standard of living and quality of life of
the population.
PCI=NNP/Total Population
2. Economic growth is usually coupled with (2011)
a) Deflation
b) Inflation
c) Stagflation
d) Hyperinflation
2. Economic growth is usually coupled with
a) Deflation
b) Inflation
c) Stagflation
d) Hyperinflation
Inflation
• It describes the increase in costs for the majority of items and
services used on a daily or routine basis, such as food,
clothing, housing, etc.
• The economy needs a certain amount of inflation to encourage
spending and discourage holding onto money through
savings.
• Spending grows, which increases demand, which causes
inflation.
• Thus, economic growth and inflation are frequently
associated.
Deflation
• It occurs when asset and consumer prices fall over time.
• It is often used to express a declining economy.
3. In terms of economy, the visit by foreign nationals to
witness the XIX common Wealth Games in India amounted
to (2011)
a) Export
b) Import
c) Production
d) Consumption
3. In terms of economy, the visit by foreign nationals to
witness the XIX common Wealth Games in India amounted
to
a) Export
b) Import
c) Production
d) Consumption
• Exports are products and services made in one nation and
offered to customers in another.
• As international visitors would purchase Indian goods and

use Indian services, their visit to India is equivalent to an
export.
• India will also receive foreign dollars.
• An import is an item or service that is purchased outside of its

nation of origin.
• Consider a US citizen purchasing products and services in

India; this would constitute an import for the US due to the
fact that its citizens are purchasing goods and services from
other nations.
4. A “closed economy” is an economy in which (2011)
a) The money supply is fully controlled
b) Deficit financing takes place
c) Only exports take place
d) Neither exports nor imports take place
4. A “closed economy” is an economy in which
a) The money supply is fully controlled
b) Deficit financing takes place
c) Only exports take place
d) Neither exports nor imports take place
• A closed economy is where the import and export of goods
and services don’t happen, implying that the economy is self-
sufficient and has no trading activity from outside economics.
• The sole purpose of such an economy is to meet all the

domestic consumers’ needs within the country’s border.
5. Economic growth in country X will necessarily have to
occur it (2013)
a) there is technical progress in the world economy
b) there is population growth in X
c) there is capital formation in X
d) the volume of trade grows in the world economy
5. Economic growth in country X will necessarily have to
occur it
a) there is technical progress in the world economy
b) there is population growth in X
c) there is capital formation in X
d) the volume of trade grows in the world economy
• Any country's capital formation accelerates its
growth as investment activity rises, leading to high
output, an increase in per-capita income, the creation
of jobs, an improvement in living standards, the
eradication of poverty, etc.
• The economy will benefit and suffer from the rising
population.
• The population's skill level will increase the
economy's output. Yet, if the economy is not capable
of slowing down on its own, this will be a burden on
the nation.
• The development of new and better technologies for
the manufacture of goods and services is referred to
as technical advancement.
• Despite their benefits, these technologies require a

significant investment in worker training when they
are introduced to the market, and occasionally they
replace people, leading to unemployment.
6. The national income of a country for a given period is
equal to the (2013)
a) total value of goods and services produced by the
nationals
b) sum of total consumption and investment expenditure
c) sum of personal income of all individuals
d) money value of final goods and service produced
6. The national income of a country for a given period is
equal to the
a) total value of goods and services produced by the
nationals
b) sum of total consumption and investment expenditure
c) sum of personal income of all individuals
d) money value of final goods and service produced
• Per capita income is a measure of the amount of
money earned per person in a nation or geographic
region.
• Per capita income can be used to determine the
average per-person income for an area and to
evaluate the standard of living and quality of life of
the population.
PCI=NNP/Total Population
7. A decrease in tax to GDP ratio of a country indicates which
of the following? (2015)
1. Slowing economic growth rate
2. Less equitable distribution of national income
Select the correct answer using the codes given below.
a) 1 only
b) 2 only
c) Both 1and 2
d) Neither 1 nor 2
7. A decrease in tax to GDP ratio of a country indicates which
of the following?
1. Slowing economic growth rate
2. Less equitable distribution of national income
a) 1 only
b) 2 only
c) Both 1and 2
d) Neither 1 nor 2
• The tax-to-GDP ratio is a measure of a nation's tax revenue
relative to the size of its economy.
• This ratio is used with other metrics to determine how well a
nation's government directs its economic resources via
taxation.
• Developed nations typically have higher tax-to-GDP ratios
than developing nations.
• Higher tax revenues mean a country is able to spend more on
improving infrastructure, health, and education—keys to the
long-term prospects for a country’s economy and people.
• For the tax/GDP ratio to decrease either the tax collection

should decrease or GDP should increase.
8. With reference to Indian economy, consider the following
statements: (2015)
1. The rate of growth of Real Gross Domestic Product has
steadily increased in the last decade.
2. The Gross Domestic Product at market prices (in rupees) has
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
8. With reference to Indian economy, consider the following
statements:
1. The rate of growth of Real Gross Domestic Product has
2. The Gross Domestic Product at market prices (in rupees) has
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
9. Increase is absolute and per capital real GNP do not connote
a higher level of economic development, if (2018)
a) industrial output fails to keep pace with agricultural output.
b) agricultural output fails to keep pace with industrial output.
c) poverty and unemployment increase.
d) imports grow faster than exports.
9. Increase is absolute and per capital real GNP do not connote
a higher level of economic development, if
a) industrial output fails to keep pace with agricultural output.
b) agricultural output fails to keep pace with industrial output.
c) poverty and unemployment increase.
d) imports grow faster than exports.
• Economic Development is programs, policies or activities that
seek to improve the economic well-being and quality of life for
a community.
• Increase in per capita availability of goods and services does
raise the standard of living and consequently welfare. But it
may not necessarily always be so.
• For example, manufacturing etc. does raise output but at the
same time also leads to water and air pollution which reduces
welfare of the people.
• Such a reduction in welfare may outweigh the increase in
welfare and thus lead to overall reduction in welfare.
• Multi -dimensional non -monetary social indicators are better
reflectors of overall economic development in the society.
10. Despite being a high saving economy, capital formation
may not result in significant increase in output due to (2018)
a) weak administrative machinery
b) illiteracy
c) high population density
d) high capital-output ratio
10. Despite being a high saving economy, capital formation
may not result in significant increase in output due to
a) weak administrative machinery
b) illiteracy
c) high population density
d) high capital-output ratio
• A measure of the percentage increase in capital formation
necessary to achieve a percentage rise in GDP is called the
capital output ratio (COR).
• The relationship between an investment and the output that

results over time is known as the capital-output ratio.
• The capital needed to produce one unit of output is measured

by the COR.
• Capital formation might not lead to a considerable increase in

output if the capital to output ratio is high.
11. Consider the following statements: (2019)
1. Purchasing Power Parity (PPP) exchange rates are calculated
by comparing the prices of the same basket of goods and
services in different countries.
2. In terms of PPP dollars, India is the sixth largest economy in
the world.
Which of the statement given above is/are correct?
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
11. Consider the following statements:
1. Purchasing Power Parity (PPP) exchange rates are calculated
by comparing the prices of the same basket of goods and
services in different countries.
2. In terms of PPP dollars, India is the sixth largest economy in
the world.
Which of the statement given above is/are correct?
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
• Purchasing power parity (PPP) exchange rate—the rate at
which the currency of one country would have to be converted
into that of another country to buy the same amount of goods
and services in each country.
12. In a given year in India, official poverty lines are higher in
some States than in others because (2019)
a) poverty rates vary from State to State
b) price levels vary from State to State
c) Gross State Product varies from State to State
d) quality of public distribution varies from State to State
12. In a given year in India, official poverty lines are higher in
some States than in others because
a) poverty rates vary from State to State
b) price levels vary from State to State
c) Gross State Product varies from State to State
d) quality of public distribution varies from State to State
• Due to pricing differences between states, poverty levels
would range from one state to the next.
• The national poverty line for rural regions in 2011–12,

calculated using the Tendulkar technique, is predicted to be
Rs. 816 per person per month in villages and Rs. 1,000 per
person per month in cities.
• The population's income distribution and consumer spending

patterns determine the poverty line.
• The cost of the consumption basket, which varies from state to

state, determines the poverty line.
13. Which among the following steps is most likely to be
taken at the time of an economic recession? (2021)
a) Cut in tax rates accompanied by increase in interest rate
b) Increase in expenditure on public projects
c) Increase in tax rates accompanied by reduction of interest
rate.
d) Reduction of expenditure on public projects
13. Which among the following steps is most likely to be
taken at the time of an economic recession?
a) Cut in tax rates accompanied by increase in interest rate
b) Increase in expenditure on public projects
c) Increase in tax rates accompanied by reduction of interest
rate.
d) Reduction of expenditure on public projects
• A recession is a macroeconomic term that refers to a significant
decline in general economic activity in a designated region. It had
been typically recognized as two consecutive quarters of economic
decline, as reflected by GDP in conjunction with monthly indicators
such as a rise in unemployment.
• Effects of Recession
• Budget Deficit
• Company’s going out of business
• Declining Real Incomes
• Fall in Exchange Rate
• Falling Asset Prices
• Low-Interest Rates
• Lower Levels of Inflation
• Unemployment
Solutions to an Economic Recession
• Reduce Taxes
• Increase in Government Spending
• Quantitative Easing
• Reduce Interest Rates
14. Which of the following activities constitute real sector
in the economy? (2022)
1. Farmers harvesting their crops
2. Textile mills converting raw cotton into fabrics
3. A commercial bank lending money to a trading company
4. A corporate body issuing Rupee Denominated Bonds
overseas
Select the correct answer using the code given below:
a) 1 and 2 only
b) 2, 3 and 4 only
c) 1, 3 and 4 only
d) 1, 2, 3 and 4
14. Which of the following activities constitute real sector
in the economy?
1. Farmers harvesting their crops
2. Textile mills converting raw cotton into fabrics
3. A commercial bank lending money to a trading company
4. A corporate body issuing Rupee Denominated Bonds
overseas
a) 1 and 2 only
b) 2, 3 and 4 only
c) 1, 3 and 4 only
d) 1, 2, 3 and 4
• The real sector of an economy is the most important sector since
its activities influence economic output and are exemplified by
those economic sectors that are crucial to the expansion of GDP.
• To boost economic output and advance GDP, for instance,

farmers harvesting their crops or textile factories turning raw
cotton into garments.
• Due to its ability to produce enough goods and services to

satisfy global demand, the sector is essential to the long-term
viability of the economy.
• The financial sector, on the other hand, is a division of the
economy made up of businesses and institutions that offer
financial services to wholesale and retail clients.
• Loans and mortgages account for a sizable amount of the

banking sector's income.
• This industry group includes a wide range of businesses, such

as banks, investment organisations, insurance providers, and
real estate companies.
• Hence, financial sector activities, not real sector activities,

include commercial banks lending money to trading firms or
corporate entities issuing bonds in rupees abroad.
Inflation
15. India has experienced persistent and high food inflation in
the recent past. What could be the reasons? (2011)
1. Due to a gradual switchover to the cultivation of commercial
crops, the area under the cultivation of food grains has steadily
decreased in the last five years by about 30%.
2. As a consequence of increasing incomes, the consumption
patterns of the people have undergone a significant change.
3. The food supply chain has structural constraints.
Which of the statements given above are correct?
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
15. India has experienced persistent and high food inflation in
the recent past. What could be the reasons?
1. Due to a gradual switchover to the cultivation of commercial
crops, the area under the cultivation of food grains has steadily
decreased in the last five years by about 30%.
2. As a consequence of increasing incomes, the consumption
patterns of the people have undergone a significant change.
3. The food supply chain has structural constraints.
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
Area under Cultivation of Foodgrains
• On the supply side, rising fuel and agricultural labour costs
have had an impact on the costs of numerous commodities
and overall food inflation.
• Several components of food inflation are found to be driven by

a complex combination of causes.
• Cereal inflation is mostly driven by rising production costs

and MSP, but milk, vegetables, meat, and fish inflation is
primarily driven by rising input costs and a favourable
demand-supply imbalance.
• Edible oil and sugar prices grow due to global food inflation,
and the increase in MSP is another element contributing to
sugar price inflation.
16. A rapid increase in the rate of inflation is sometimes
attributed to the “base effect”. What is “base effect”? (2011)
a) It is the impact of drastic deficiency in supply due to
failure of crops
b) It is the impact of the surge in demand due to rapid
economic growth
c) It is the impact of the price levels of previous year on the
calculation of inflation rate
d) None of the statements (a), (b) and (c) given above is
correct in this context
16. A rapid increase in the rate of inflation is sometimes
attributed to the “base effect”. What is “base effect”?
a) It is the impact of drastic deficiency in supply due to
failure of crops
b) It is the impact of the surge in demand due to rapid
economic growth
c) It is the impact of the price levels of previous year on
the calculation of inflation rate
d) None of the statements (a), (b) and (c) given above is
correct in this context
• Growth is always calculated over a base. For instance, to
calculate earnings growth you divide the current figure over
the year ago figure.
• But an unusual element in the base can give a misleading

result. A sharp decline as seen in COVID times or a one-off
expense creates a low base effect while a spike in income
causes a high base effect.
• Investors should adjust for this distortion to avoid erroneous

conclusions.
17. A rise in general level of prices may be caused by (2013)
1. An increase in the money supply
2. A decrease in the aggregate level of output
3. An increase in the effective demand
Select the correct answer using the codes given below:
a) 1 only
b) 1 and 2 only
c) 2 and 3 only
d) 1, 2 and 3
17. A rise in general level of prices may be caused by
1. An increase in the money supply
2. A decrease in the aggregate level of output
3. An increase in the effective demand
a) 1 only
b) 1 and 2 only
c) 2 and 3 only
d) 1, 2 and 3
• Several factors, including a rise in the money supply, a decline in
overall output, an increase in effective demand, an increase in
income, the rapid growth of the population, etc., may contribute
to the general level of price inflation.
• When an economy's total demand for goods and services grows

faster than its capacity for production, Demand-pull inflation
results.
• A central bank that significantly raises the money supply could
be one factor that shocks overall demand.
• Inflation is also brought on by a decline in overall output and a

rise in effective demand.
• On the other hand, cost-push inflation happens when the cost of

the inputs used in production processes rises.
18. Which one of the following is likely to be the most
inflationary in its effect? (2013 and 2021)
a) Repayment of public debt
b) Borrowing from the public to finance a budget deficit
c) Borrowings from banks to finance a budget deficit
d) Creating new money to finance a budget deficit
18. Which one of the following is likely to be the most
inflationary in its effect?
a) Repayment of public debt
b) Borrowing from the public to finance a budget deficit
c) Borrowings from banks to finance a budget deficit
d) Creating new money to finance a budget deficit
• When total expenditures exceed total revenues, there is a budget
deficit.
• A tool for raising money to create a budget deficit is known as

deficit financing.
There are three ways to finance a budget:

• Creating new currency (Inflationary)
• Borrowing from internal sources like RBI, issuing bonds, etc. (Not
inflationary)
• Borrowing from External sources like WB, IMF, etc. (Not
inflationary)
1. Inflation benefits the debtors.
2. Inflation benefits the bond-holders.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
1. Inflation benefits the debtors.
2. Inflation benefits the bond-holders.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
• Inflation redistributes wealth from creditors to debtors i.e.
lenders suffer and borrowers benefit out of inflation.
• For Example:
20. With reference to inflation in India, which of the following
statements is correct? (2015)
a) Controlling the inflation in India is the responsibility of the
Government of India only
b) The Reserve Bank of India has no role in controlling the
inflation
c) Decreased money circulation helps in controlling the
inflation.
d) Increased money circulation helps in controlling the inflation
20. With reference to inflation in India, which of the following
statements is correct?
a) Controlling the inflation in India is the responsibility of the
Government of India only
b) The Reserve Bank of India has no role in controlling the
inflation
c) Decreased money circulation helps in controlling the
inflation.
d) Increased money circulation helps in controlling the inflation
• RBI and government both play a role in controlling the inflation,
often termed as "inflation targeting" by the RBI.
• Increased money circulation leads to increased inflation as
demand increases.
• RBI increases bank rates and SLR etc. to reduce money supply in
the market which tames demand and hence, inflation.
• The RBI can purchase or sell Government securities from or to
the public. To control inflation, the RBI sells the securities in the
money market which sucks out excess liquidity from the market.
• As the amount of liquid cash decreases, demand goes down. This
part of monetary policy is called the open market operation.
1. The weightage of food in Consumer Price Index (CPI) is
higher than that in Wholesale Price Index (WPI).
2. The WPI does not capture changes in the prices of services,
which CPI does.
3. Reserve Bank of India has now adopted WPI as its key
measure of inflation and to decide on changing the key
policy rates.
a) 1 and 2 only
b) 2 only
c) 3 only
d) 1, 2 and 3
1. The weightage of food in Consumer Price Index (CPI) is
higher than that in Wholesale Price Index (WPI).
2. The WPI does not capture changes in the prices of services,
which CPI does.
3. Reserve Bank of India has now adopted WPI as its key
measure of inflation and to decide on changing the key
policy rates.
a) 1 and 2 only
b) 2 only
c) 3 only
d) 1, 2 and 3
• Any inflation rate essentially tells us the rate at which prices
have been rising in an economy. As such, an inflation rate is
expressed as a percentage.
• The government comes out with two indices — one for

mapping inflation in the wholesale market and one for
mapping inflation in the retail market. Inflation rates are also
calculated for rural and urban markets for better policy
analysis.
• The two most-often used inflation rates in the country are the
year-on-year
• the wholesale price index (WPI) based inflation rate and
• the consumer price index (CPI) based inflation rate
• The former is called the wholesale inflation rate and the latter
is called the retail inflation rate. Both WPI and CPI are price
indices.
• In other words, these are two different baskets of goods and
services.
• The government assigns different weights to different goods
and services based on what is relevant for those two types of
consumers.
Composition of Wholesale Price Index

Composition of
Consumer Price
Index
• The CPI-based inflation data is compiled by the Ministry of

Statistics and Programme Implementation (or MoSPI) and the
WPI-based inflation data is put together by the Department
for Promotion of Industry and Internal Trade (or DPIIT).
• A key difference that must not be missed is that the WPI does
not take into account the change in prices of services, but CPI
does.
• The Urjit Patel committee's recommendations call for India's
monetary policy (MP) to be developed with reference to CPI-
based inflation rather than WPI-based inflation. (The
suggestion was approved back in 2014.)
The following is why:
• WPI displays the wholesale price, whereas CPI reveals the
retail price, or the price at which people make purchases from
the retail market.
• CPI illustrates the impact on the populace. The effects of
inflation on people are not shown by the WPI.
• Any policy should take the effects on people into account.
• WPI does not take into account the cost of services.
• The majority of nations have switched to CPI; it is considered
to be best practise globally.
Other things remaining unchanged, market demand for a good
might increase if
1. price of its substitute increases
2. price of its complement increases
3. the good is an inferior good and income of the consumers
increases
4. its price falls
Which of the above statements are correct?
a) 1 and 4 only
b) 2, 3 and 4
c) 1, 3 and 4
d) 1, 2 and 3
Other things remaining unchanged, market demand for a good
might increase if
1. price of its substitute increases
2. price of its complement increases
3. the good is an inferior good and income of the consumers
increases
4. its price falls
a) 1 and 4 only
b) 2, 3 and 4
c) 1, 3 and 4
d) 1, 2 and 3
• One of the most fundamental ideas in economics is the law of
demand. It explains how market economies distribute resources
and set the prices of goods and services that we see in daily
transactions by combining the law of supply.
• The law of diminishing marginal utility, which states that

consumers use economic commodities to initially meet their
most pressing wants, is what drives demand.
• The total quantity demanded across all market consumers at

each price is expressed by a market demand curve.
• Although price changes do not by themselves cause demand to

rise or fall, they can be seen as movement along a demand curve.
• Now if the price of the substitute increases, less people are
likely to purchase that substitute and hence demand for the
good will increase.
• Complementary goods will have a negative cross elasticity of

demand.
• If the price of one good increases, demand for both

complementary goods will fall. Example, tea and sugar, fuel
and vehicle.
• For most goods, the quantity that a consumer chooses,
increases as the consumer’s income increases and decreases as
the consumer’s income decreases. Such goods are called
Normal Goods.
• Thus, a consumer’s demand for a normal good moves in the

same direction as the income of the consumer.
• However, there are some goods the demands for which move
in the opposite direction of the income of the consumer.
• Such goods are called Inferior Goods. As the income of the

consumer increases, the demand for an inferior good falls, and
as the income decreases, the demand for an inferior good rises.
23. With reference to Indian economy, demand-pull inflation
can be caused/increased by which of the following? (2021)
1. Expansionary policies
2. Fiscal stimulus
3. Inflation-indexing wages
4. Higher purchasing power
5. Rising interest rates
Select the correct answer using the code given below.
a) 1, 2 and 4 only
b) 3, 4 and 5 only
c) 1, 2, 3 and 5 only
d) 1, 2, 3, 4 and 5
23. With reference to Indian economy, demand-pull inflation
can be caused/increased by which of the following?
1. Expansionary policies
2. Fiscal stimulus
3. Inflation-indexing wages
4. Higher purchasing power
5. Rising interest rates
a) 1, 2 and 4 only
b) 3, 4 and 5 only
c) 1, 2, 3 and 5 only
d) 1, 2, 3, 4 and 5
• Demand-pull inflation refers to inflation in the economy brought
by strong consumer demand wherein aggregate demand
outweighs aggregate supply. Hence, the prices tend to go up. It
is a phenomenon that is often described as too much money
chasing too few goods.
The demand-pull inflation is caused by:

• Consumption: An increase in consumption level pushes up the
price of the certain product/commodity
• Exchange Rate: Depreciation of home currency will boost
exports. Hence, aggregate demand increases.
• Government Spending: An increase in government spending
will also enable the aggregate demand in an economy.
• Expectations: The very anticipation of inflation will lead to a rise
in inflation.
• Monetary Growth: If too much money is chasing too few goods,
inflation will rise.
24. With reference to the Indian economy, what are the
advantages of "Inflation-Indexed Bonds (IIBs)"? (2022)
1. Government can reduce the coupon rates on its
borrowing by way of IIBs.
2. IIBs provide protection to the investors from uncertainty
regarding inflation.
3. The interest received as well as capital gains on IIBs are
not taxable.
Which of the statements given above are correct ?
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
24. With reference to the Indian economy, what are the
advantages of "Inflation-Indexed Bonds (IIBs)"?
1. Government can reduce the coupon rates on its
borrowing by way of IIBs.
2. IIBs provide protection to the investors from uncertainty
regarding inflation.
3. The interest received as well as capital gains on IIBs are
not taxable.
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
• Inflation Indexed Bond (IIB) is a bond issued by the Sovereign,
which provides the investor a constant return irrespective of the
level of inflation in the economy.
• The main objective of Inflation Indexed Bonds is to provide a

hedge and to safeguard the investor against macroeconomic
risks in an economy.
• IIB are compared with the instrument of fixed deposits with the
bank.
• While fixed deposit offers a fixed rate of interest for the

investment for a given number of years, it does not protect the
investor from the erosion of real value of the deposit due to
inflation.
• IIB on the other hand, gives a constant minimum real return
irrespective of inflation level in the economy.
• Capital increases with the inflation, so actual interest is better

than originally promised.
In case of deflation
• Interest payments decrease with the negative inflation.
• However, capital does not decline below the face value, ie.
Initial investment, in case of deflation.
• 1997 - Inflation-linked bonds in the name of Capital Indexed Bonds
(CIBs) were first issued
• These provided protection only to principal and not to interest
payment
• 2013 - New bonds by the name of inflation-indexed bonds (IIBs) were

issued
• They provided protection to both principal and interest payments.
• These IIBs were linked to the WPI.
• Now, IIBs are linked to CPI

25. In India, which one of the following is responsible for
maintaining price stability by controlling inflation? (2022)
a) Department of Consumer Affairs
b) Expenditure Management Commission
c) Financial Stability and Development Council
d) Reserve Bank of India
25. In India, which one of the following is responsible for
maintaining price stability by controlling inflation?
a) Department of Consumer Affairs
b) Expenditure Management Commission
c) Financial Stability and Development Council
d) Reserve Bank of India
• The Reserve Bank of India (RBI) is tasked with the responsibility
of conducting monetary policy. The Reserve Bank of India Act,
1934 expressly mandates this obligation.
• Maintaining price stability is the major goal of monetary policy,
while growth is also a consideration. A key prerequisite for
sustainable growth is price stability.
• The necessary policy interest rate to reach the inflation objective
is chosen by the MPC (Monetary Policy Committee).
• The Monetary Policy Department (MPD) of the Reserve Bank
works with the MPC to develop monetary policy.
• The opinions of important economic players and the Reserve
Bank's analytical work are taken into consideration when
deciding on the policy repo rate.
• The Financial Markets Operations Department (FMOD) of
RBI operationalises the monetary policy, mainly through day-
to-day liquidity management operations.
• The Financial Markets Committee (FMC) meets daily to

review the liquidity conditions so as to ensure that the
operating target of the weighted average call money rate
(WACR) is aligned with the repo rate.
Inclusive Growth
26. Which of the following can aid in furthering the
Government’s objective of inclusive growth? (2011)
1. Promoting Self-Help Groups
2. Promoting Micro, Small and Medium Enterprises.
3. Implementing the Right to Education Act
a) 1 only
b) 1 and 2 only
c) 2 and 3 only
d) 1, 2 and 3
26. Which of the following can aid in furthering the
Government’s objective of inclusive growth?
1. Promoting Self-Help Groups
2. Promoting Micro, Small and Medium Enterprises.
3. Implementing the Right to Education Act
a) 1 only
b) 1 and 2 only
c) 2 and 3 only
d) 1, 2 and 3
• Self Help Groups (SHGs) are currently active at the grassroots
level in India, particularly in rural areas, and they operate under
the tenets of solidarity, mutual aid, and shared
responsibility. The more the Self Help Groups, the better the
financial inclusion.
• MSMEs play a significant role in the Indian economy and have
made significant contributions to the socioeconomic growth of
the nation.
• Along with creating job possibilities, it also contributes to the
advancement of the nation's rural and underdeveloped regions.
Financial inclusion may be aided by it.
• All kids between the ages of 6 and 14 are expected to receive a
basic education under the RTE Act. The act requires a 25%
reservation for the socially and economically disadvantaged,
which includes SCs and STs. Education has the power to
improve a civilization that is backward and oppressed.
27. India is regarded as a country with “Demographic
Dividend”. This is due to
a) Its high population in the age group below 15 years
b) Its high population in the group of 15-64 years
c) Its high population in the age group above 65 years
d) Its high total population
27. India is regarded as a country with “Demographic
Dividend”. This is due to
a) Its high population in the age group below 15 years
b) Its high population in the group of 15-64 years
c) Its high population in the age group above 65 years
d) Its high total population
• The demographic dividend is the economic growth potential that can
result from shifts in a population’s age structure, mainly when the
share of the working-age population (15 to 64) is larger than the non-
working-age share of the population (14 and younger, and 65 and
older).
28. Which of the following can be said to be essentially the
parts of ‘Inclusive Governance’? (2012)
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.
a) 1 and 2 only
b) 3 and 4 only
c) 2, 3 and 4 only
d) 1, 2, 3 and 4
28. Which 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.
a) 1 and 2 only
b) 3 and 4 only
c) 2, 3 and 4 only
d) 1, 2, 3 and 4
29. With reference to National Rural Health Mission, which of
the following are the jobs of ‘ASHA’, a trained community
health worker? (2012)
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.
a) 1, 2 and 3 only
b) 2 and 4 only
c) 1 and 3 only
d) 1, 2, 3 and 4
29. With 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.
a) 1, 2 and 3 only
b) 2 and 4 only
c) 1 and 3 only
d) 1, 2, 3 and 4
• India’s Accredited Social Health Activist (ASHA) program was
established by the National Rural Health Mission in 2010 with an
aim to improve health outcomes—particularly among women and
children—and to reduce geographic and socioeconomic
disparities.
• ASHAs are recruited and trained to work in their own
communities as health activists, educators and providers of basic
essential services.
Responsibilities of ASHA workers

• Identifying and registering new pregnancies, births, and deaths.
• Mobilizing, counselling and supporting the community to demand
and seek health services.
• Identifying, managing, or referring cases of illness.
• Supporting health service delivery through home visits, first-aid
and immunizations sessions.
• Maintaining data and participating in community-level health
planning.
• Arrange escort/accompany pregnant women & children requiring
treatment/ admission to the nearest pre-identified health facility
i.e. Primary Health Centre/ Community Health Centre/ First
Referral Unit (PHC/CHC /FRU)
30. How do District Rural Development Agencies (DRDAs) help in the
reduction of rural poverty in India? (2012)
1. DRDAs act as Panchayati Raj Institutions in certain specified backward
regions of the country.
2. DRDAs undertake area-specific scientific study of the causes of poverty
and malnutrition and prepare detailed remedial measures.
3. DRDAs secure inter-sectoral and inter-departmental coordination and
cooperation for effective implementation of anti-poverty programmes.
4. DRDAs watch over and ensure effective utilization of the funds
intended for anti-poverty programmes.
a) 1, 2 and 3 only
b) 3 and 4 only
c) 4 only
d) 1, 2, 3 and 4
30. How do District Rural Development Agencies (DRDAs) help in the
reduction of rural poverty in India?
1. DRDAs act as Panchayati Raj Institutions in certain specified backward
regions of the country.
2. DRDAs undertake area-specific scientific study of the causes of poverty
and malnutrition and prepare detailed remedial measures.
3. DRDAs secure inter-sectoral and inter-departmental coordination and
cooperation for effective implementation of anti-poverty programmes.
4. DRDAs watch over and ensure effective utilization of the funds intended
for anti-poverty programmes.
a) 1, 2 and 3 only
b) 3 and 4 only
c) 4 only
d) 1, 2, 3 and 4
• DRDA has traditionally been the principal organ at the district level
to oversee the implementation of anti-poverty programmes of the
Ministry of Rural Development.
• From April 1999 a separate DRDA Administration has been
introduced to take care of the administrative costs.
• Expenses of DRDAs are funded on a 75:25 basis between Centre
and State Governments.
• However, from 2008-09 the funding pattern for N.E. States has been
changed from 75: 25 to 90: 10. In the case of UTs, the Centre
provides entire (100%) funds under the Scheme.
• The DRDAs are expected to coordinate effectively with the

Panchayati Raj institutions. Under no circumstances will they
perform the functions of PRIs.
• DRDA has traditionally been the principal organ at the district level
to oversee the implementation of anti-poverty programmes of the
Ministry of Rural Development.
• From April 1999 a separate DRDA Administration has been
introduced to take care of the administrative costs.
• Expenses of DRDAs are funded on a 75:25 basis between Centre
and State Governments.
• However, from 2008-09 the funding pattern for N.E. States has been
changed from 75: 25 to 90: 10. In the case of UTs, the Centre
provides entire (100%) funds under the Scheme.
• The DRDAs are expected to coordinate effectively with the

Panchayati Raj institutions. Under no circumstances will they
perform the functions of PRIs.
• No such provisions are there for DRDAs to undertake an area-
specific scientific study of the causes of poverty and malnutrition
and prepare detailed remedial measures.
31. Disguised unemployment generally means (2013)
a) Large number of people remain unemployed
b) Alternative employment is not available
c) Marginal productivity of labour is zero
d) Productivity of workers is low
31. Disguised unemployment generally means
a) Large number of people remain unemployed
b) Alternative employment is not available
c) Marginal productivity of labour is zero
d) Productivity of workers is low
• Disguised unemployment is unemployment that does not
affect aggregate economic output.
• It occurs when productivity is low and too many workers
are filling too few jobs.
• It can refer to any part of the population that is not
employed at full capacity.
32. To obtain full benefits of demographic dividend, what
should India do? (2013)
a) Promoting skill development
b) Introducing more social security schemes
c) Reducing infant mortality rate
d) Privatization of higher education
32. To obtain full benefits of demographic dividend, what
should India do?
a) Promoting skill development
b) Introducing more social security schemes
c) Reducing infant mortality rate
d) Privatization of higher education
• To reap gains from India’s demographic dividend phase, apart
from flexible labour market policies, appropriate macroeconomic
and financial reforms are needed to encourage savings and for
efficient allocation of capital.
• The government has already rolled out policies and schemes for
boosting skills among the youth, entrepreneurship, etc.
• While these aim to make India ‘Atmanirbhar’, effective
implementation is necessary to help the domestic manufacturing
and services sectors aborb the excess labour force. Also,
substantial investment in higher education and research and
development would be required to enhance the skills of the large
cohort entering the labour market in the next three decades.
• Aggressive forward-looking policies, along with technology
push, are imperative to take advantage of the demographic
dividend.
33. 'Pradhan Mantri Jan-Dhan Yojana' has been launched for
(2015)
a) providing housing loan to poor people at cheaper interest
rates.
b) promoting women's Self-help Groups in backward areas
c) promoting financial inclusion in the country
d) providing financial help to the marginalized communities.
33. 'Pradhan Mantri Jan-Dhan Yojana' has been launched for
(a) providing housing loan to poor people at cheaper interest
rates.
(b) promoting women's Self-help Groups in backward areas
(c) promoting financial inclusion in the country
(d) providing financial help to the marginalized communities.
• Pradhan Mantri Jan-Dhan Yojana (PMJDY) is National Mission
for Financial Inclusion to ensure access to financial services,
namely, a basic savings & deposit accounts, remittance, credit,
insurance, pension in an affordable manner.
• Under the scheme, a basic savings bank deposit (BSBD) account
can be opened in any bank branch or Business Correspondent
(Bank Mitra) outlet, by persons not having any other account.
Benefits under PMJDY

• One basic savings bank account is opened for unbanked
person.
• There is no requirement to maintain any minimum balance in
PMJDY accounts.
• Interest is earned on the deposit in PMJDY accounts.
• Rupay Debit card is provided to PMJDY account holder.
• Accident Insurance Cover of Rs.1 lakh (enhanced to Rs. 2 lakh
to new PMJDY accounts opened after 28.8.2018) is available
with RuPay card issued to the PMJDY account holders.
• An overdraft (OD) facility up to Rs. 10,000 to eligible account
holders is available.
• PMJDY accounts are eligible for Direct Benefit Transfer (DBT),
Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan
Mantri Suraksha Bima Yojana (PMSBY), Atal Pension Yojana
(APY), Micro Units Development & Refinance Agency Bank
(MUDRA) scheme.
Human capital formation as a concept is better explained in
terms of a process which enables
1. individuals of a country to accumulate more capital.
2. increasing the knowledge, skill levels and capacities of the
people of the country.
3. accumulation of tangible wealth.
4. accumulation of intangible wealth.
a) 1 and 2
b) 2 only
c) 2 and 4
d) 1, 3 and 4
Human capital formation as a concept is better explained in
terms of a process which enables
1. individuals of a country to accumulate more capital.
2. increasing the knowledge, skill levels and capacities of the
people of the country.
3. accumulation of tangible wealth.
4. accumulation of intangible wealth.
a) 1 and 2
b) 2 only
c) 2 and 4
d) 1, 3 and 4
• Human capital consists of the knowledge, skills, and health
that people invest in and accumulate throughout their lives,
enabling them to realize their potential as productive
members of society.
• Investing in people through nutrition, health care, quality
education, jobs and skills helps develop human capital, and
this is key to ending extreme poverty and creating more
inclusive societies.
• Intangible wealth consists of factors such as the trust among
people in a society, an efficient judicial system, clear property
rights, effective government, and good education system etc.
Human capital formation enables accumulation of intangible
wealth.
Banking
35. Why is the offering of “teaser loans” by commercial
banks a cause of economic concern? (2011)
1. The teaser loans are considered to be an aspect of sub-
prime lending and banks may be exposed to the risk of
defaulters in future.
2. In India, the teaser loans are mostly given to
inexperienced entrepreneurs to set up manufacturing or
export units.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
35. Why is the offering of “teaser loans” by commercial
banks a cause of economic concern?
1. The teaser loans are considered to be an aspect of sub-
prime lending and banks may be exposed to the risk of
defaulters in future.
2. In India, the teaser loans are mostly given to
inexperienced entrepreneurs to set up manufacturing or
export units.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
• A teaser loan is any loan that offers a lower interest rate for a fixed
amount of time as a purchase incentive.
• Common teaser loans include credit cards with low introductory

offers and adjustable-rate mortgages. Borrowers must be aware of
the rates that will apply after a teaser rate expires.
• Subprime lending is the practice of lending to borrowers with low

credit ratings. Because these borrowers carry relatively high default
risks, subprime loans carry above-average interest rates.
• It has nothing to do with the experience of the entrepreneurs as the

teaser loans are given to entrepreneurs as well as home loans.
36. In India, which of the following have the highest share
in the disbursement of credit to agriculture and allied
activities? (2011)
a) Commercial Banks
b) Cooperative Banks
c) Regional Rural Banks
d) Microfinance Institutions
36. In India, which of the following have the highest share
in the disbursement of credit to agriculture and allied
activities?
a) Commercial Banks
b) Cooperative Banks
c) Regional Rural Banks
d) Microfinance Institutions
• The related industries in the agriculture sector, such as horticulture,
animal husbandry, dairy, and fisheries, have a significant impact on
total economic growth.
• The Reserve Bank of India (RBI) has mandated public sector lending
(PSL), which requires domestic and international banks to provide
loans to particular sectors and sub-sectors of the country's economy.
Priority Sector includes the following categories:
• Agriculture
• Micro, Small and Medium Enterprises
• Export Credit
• Education
• Housing
• Social Infrastructure
• Renewable Energy
• Others
• Scheduled commercial banks contributed the major share (78
– 80 per cent) in agricultural and allied credit.
• Co-operative institutions also play a significant role in
extending agricultural credit and the share of all co-
operative banks/institutions (i.e. StCBs, DCCBs and PACS
put together) constituted 15-16 per cent. The RRBs
contributed the remaining 5 per cent of the agricultural
credit.
37. The lowering of Bank Rate by the Reserve Bank of
India leads to (2011)
a) More liquidity in the market
b) Less liquidity in the market
c) No change in the liquidity in the market
d) Mobilization of more deposits by commercial banks
37. The lowering of Bank Rate by the Reserve Bank of
India leads to
a) More liquidity in the market
b) Less liquidity in the market
c) No change in the liquidity in the market
d) Mobilization of more deposits by commercial banks
• The minimum rate of interest, which a central bank charges
(in India's case - Reserve Bank of India), while lending
loans to domestic banks is called "Bank Rate". When a bank
suffers fund deficiency, it can borrow money from RBI to
continue services.
• When Bank Rate is increased by the central bank, a

commercial bank’s borrowing costs hikes, which reduce
the supply of money in the market.
• As RBI controls the money supply in the economy as well

as in the banking sector, deciding the bank rate is usually
done quarterly to control inflation and India's exchange
rates as part of Monetary Policy action.
38. Microfinance is the provision of financial services to
people of low-income groups. This includes both the
consumers and the self-employed. The service/services
rendered under micro-finance is/are: (2011)
1. Credit facilities
2. Savings facilities
3. Insurance facilities
4. Fund Transfer facilities
Select the correct answer using the codes given below the
lists:
a) 1 only
b) 1 and 4 only
c) 2 and 3 only
d) 1, 2 ,3 and 4
38. Microfinance is the provision of financial services to
people of low-income groups. This includes both the
consumers and the self-employed. The service/services
rendered under micro-finance is/are:
1. Credit facilities
2. Savings facilities
3. Insurance facilities
4. Fund Transfer facilities
Select the correct answer using the codes given below the
lists:
a) 1 only
b) 1 and 4 only
c) 2 and 3 only
d) 1, 2 ,3 and 4
• Microfinance is a way in which loans, credit, insurance, access
to savings accounts, and money transfers are provided to small
business owners and entrepreneurs in the underdeveloped
parts of India.
• Financial services like insurance, savings, and remittance are

additionally offered in addition to microcredit.
• Additionally, non-financial services like training, counselling,

and support for borrowers are provided in the most practical
way possible.
39. The Reserve Bank of India (RBI) acts as a bankers’
bank. This would imply which of the following? (2012)
1. Other banks retain their deposits with the RBI.
2. The RBI lends funds to the commercial banks in times of
need.
3. The RBI advises the commercial banks on monetary
matters.
a) 2 and 3 only
b) 1 and 2 only
c) 1 and 3 only
d) 1, 2 and 3
39. The Reserve Bank of India (RBI) acts as a bankers’
bank. This would imply which of the following?
1. Other banks retain their deposits with the RBI.
2. The RBI lends funds to the commercial banks in times of
need.
3. The RBI advises the commercial banks on monetary
matters.
a) 2 and 3 only
b) 1 and 2 only
c) 1 and 3 only
d) 1, 2 and 3
• The entire financial system of a nation is under the
jurisdiction of the central bank, which is a top bank. It
regulates the amount of money available to the economy
and is the only agency authorised to issue notes.
According to the Reserve Bank of India Act of 1934, it carries
out the following duties:
• The Reserve Bank serves the Indian government and the
states as their banker, agent, and advisor. It carries out all
of the State and Central Government's banking duties and
offers the government helpful guidance on issues
pertaining to economic and monetary policy. It also
oversees the government's public debt.
• It serves the same purposes for the other commercial banks
as those institutions typically do for their clients. RBI lends
money to all the commercial banks of the country.
• Its oversight responsibilities include guiding other banks
and governments through various economic
circumstances, such as inflation or deflation.
• Promotional duties: The central bank also carries out

promotional duties, such as interacting with international
economies and keeping foreign exchange reserves. They
serve as the nation's economic ambassadors abroad.
40. Which of the following measures would result in an
increase in the money supply in the economy? (2012)
1. Purchase of government securities from the public by the
Central Bank.
2. Deposit of currency in commercial banks by the public.
3. Borrowing by the government from the Central Bank.
4. Sale of government securities to the public by the Central
Bank.
a) 1 only
b) 2 and 4 only
c) 1 and 3
d) 2, 3 and 4
40. Which of the following measures would result in an
increase in the money supply in the economy?
1. Purchase of government securities from the public by the
Central Bank.
2. Deposit of currency in commercial banks by the public.
3. Borrowing by the government from the Central Bank.
4. Sale of government securities to the public by the Central
Bank.
a) 1 only
b) 2 and 4 only
c) 1 and 3
d) 2, 3 and 4
Lets look at the options one by one.
• Purchase of government securities from the public by the
Central Bank: Flow of more money in the market.
• Deposit of currency in commercial banks by the public:
decreases the supply of money in the market.
• Borrowing by the government from the Central Bank:
increase the money supply in the economy, it will be spent
by the government on public.
• Sale of government securities to the public by the Central
Bank: will lead to reduction in money supply in market.
41. The basic aim of Lead Bank Scheme is that (2012)
a) Big banks should try to open offices in each district.
b) There should be stiff competition among the various
nationalized banks.
c) Individual banks should adopt particular district for
intensive development.
d) All the banks should make intensive efforts to mobilize
deposits.
42. The basic aim of Lead Bank Scheme is that
a) Big banks should try to open offices in each district.
b) There should be stiff competition among the various
nationalized banks.
c) Individual banks should adopt particular district for
intensive development.
d) All the banks should make intensive efforts to mobilize
deposits.
• The Lead Bank Scheme is a programme that uses a "service
area approach" with one bank designated for each area to
provide adequate banking and credit in rural areas.
• In order to achieve this goal, it was introduced in 1969.
• The Gadgil Study Group and Banker's Committee's

recommendations led to RBI introducing the Scheme.
• In view of the several changes that had taken place in the

financial sector, the Lead Bank Scheme was last reviewed
by the High Level Committee headed by Smt. Usha Thorat,
former Deputy Governor of the Reserve Bank of India in
2009.
43. Consider the following liquid assets: (2013)
1. Demand deposits with the banks
2. Time deposits with the banks
3. Savings deposits with the banks
4. Currency
The correct sequence of these assets in the decreasing order
of liquidity is
a) 1–4–3–2
b) 4–3–2–1
c) 2–3–1–4
d) 4–1–3–2
43. Consider the following liquid assets:
1. Demand deposits with the banks
2. Time deposits with the banks
3. Savings deposits with the banks
4. Currency
The correct sequence of these assets in the decreasing order
of liquidity is
a) 1–4–3–2
b) 4–3–2–1
c) 2–3–1–4
d) 4–1–3–2
• Liquidity refers to the efficiency or ease with which an
asset or security can be converted into ready cash without
affecting its market price. The most liquid asset of all is
cash itself.
44. In the context of Indian economy, ‘Open Market
Operations’ refers to (2013)
a) Borrowing by scheduled banks from then RBI
b) Lending by commercial banks to industry and trade
c) Purchase and sale of government securities by the RBI
d) None of the above
44. In the context of Indian economy, ‘Open Market
Operations’ refers to
a) Borrowing by scheduled banks from then RBI
b) Lending by commercial banks to industry and trade
c) Purchase and sale of government securities by the RBI
• Open market operations or OMOs are conducted by the
Reserve Bank of India (RBI) by way of sale and purchase of
G-Secs (government securities) to and from the market
with an objective to adjust the rupee liquidity conditions in
the market on a durable basis.
• When the Reserve Bank feels that there is excess liquidity

in the market, it resorts to sale of securities thereby sucking
out the rupee liquidity.
• Similarly, when the liquidity conditions are tight, RBI may

buy securities from the market, thereby releasing liquidity
into the market.
45. Priority Sector Lending by banks in Indian constitutes
the lending to (2013)
a) Agriculture
b) Micro and small enterprises
c) Weaker sections
d) All of the above
the lending to
a) Agriculture
c) Weaker sections
d) All of the above
the lending to
a) Agriculture
c) Weaker sections
d) All of the above
The categories under priority sector are as follows:
• Agriculture
• Micro, Small and Medium Enterprises
• Export Credit
• Education
• Housing
• Social Infrastructure
• Renewable Energy
• Others
46. Which of the following grants/grant direct credit
assistance to rural households? (2013)
1. Regional Rural Banks
2. National Bank for Agriculture and Rural Development
3. Land Development Banks
a) 1 and 2 only
b) 2 only
c) 1 and 3 only
d) 1, 2 and 3
46. Which 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
a) 1 and 2 only
b) 2 only
c) 1 and 3 only
d) 1, 2 and 3
NABARD do not provide direct assistance. It "refinance" the

assistance by other institutions.
47. The Reserve Bank of India regulates the commercial
banks in matters of (2013)
1. liquidity of assets
2. branch expansion
3. merger of banks
4. winding-up of banks
a) 1 and 4 only
b) 2, 3 and 4 only
c) 1, 2 and 3 only
d) 1, 2, 3 and 4
47. The Reserve Bank of India regulates the commercial
banks in matters of
1. liquidity of assets
2. branch expansion
3. merger of banks
4. winding-up of banks
a) 1 and 4 only
b) 2, 3 and 4 only
c) 1, 2 and 3 only
d) 1, 2, 3 and 4
• RBI is called the banker's bank and regulates the banking
sector in India.
• By using mechanisms like CRR, SLR, etc, it keeps a check on
the liquidity of assets of the banks.Moreover, RBI also sets
rules and regulations concerning the merger of banks, their
winding-up operations, and branch expansion.
• In the case of “Peerless General Finance and Investments Co.

Limited vs. Reserve Bank of India” the Apex Court held that
RBI plays an integral part in the economy and in its financial
affairs, and the main role of RBI is to regulate the banking
sector of India.
• Two functions of RBI that are supervisory in nature have
helped the sector in a great way as it has enhanced the
banking standards of India by developing a sound line and
improved the methods of operating the activities.
• 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.
48. An increase in the Bank Rate generally indicates that
the (2013)
a) market rate of interest is likely to fall
b) Central Bank is no longer making loans to commercial
banks
c) Central Bank is following an easy money policy
d) Central Bank is following a tight money policy
Remember 2011 question wrt Bank rate

48. An increase in the Bank Rate generally indicates that
the
a) market rate of interest is likely to fall
b) Central Bank is no longer making loans to commercial
banks
c) Central Bank is following an easy money policy
d) Central Bank is following a tight money policy
• Tight monetary policy aims to slow down an overheated
economy by increasing interest rates.
• These policies focus on decreasing the spending capacity,

or controlling inflation that is accelerating at an abnormal
rate.
• Conversely, loose monetary policy aims to stimulate an

economy by lowering interest rates.
• When the Central Bank wants to increase money supply in

the country, it lowers the overnight interest rate (the rate
charged to banks to borrow money). As such, borrowing
for banks becomes less costly. This, in turn, makes money
more accessible and less costly for borrowers from the
lender banks.
49. Supply of money remaining the same when there is an
increase in demand for money, there will be (2013)
a) a fall in the level of prices
b) an increase in the rate of interest
c) a decrease in the rate of interest
d) an increase in the level of income and employment
49. Supply of money remaining the same when there is an
increase in demand for money, there will be
a) a fall in the level of prices
b) an increase in the rate of interest
c) a decrease in the rate of interest
d) an increase in the level of income and employment
• The supply of money remaining the same when there is an
increase in demand for money, there will be an increase in
the rate of interest.
• This occurs in order to attract customers and initiate

deposits among them by the banks.
50. The terms 'Marginal Standing Facility Rate' and 'Net
Demand and Time Liabilities', sometimes appearing in news,
are used in relation to (2014)
a) banking operations
b) communications networking
c) military strategies
d) supply and demand of agricultural products
50. The terms 'Marginal Standing Facility Rate' and 'Net
Demand and Time Liabilities', sometimes appearing in news,
are used in relation to
a) banking operations
b) communications networking
c) military strategies
d) supply and demand of agricultural products
Marginal Standing Facility
• Marginal Standing Facility (MSF) is the rate at which RBI
lends funds overnight to the banks, which are included in the
Second Schedule of Reserve Bank of India Act, 1934, against
government securities.
• The Reserve Bank of India has come up with this borrowing
scheme to regulate the mismatch in short-term asset liability
more effectively.
• MSF = Repo Rate + X
%
RBI Banks
• 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.
• Net Demand and Time Liability (NDTL) is basically the sum of

demand and time liabilities including ODTL of scheduled
commercial banks.
• NDTL is used by banks for computation of Cash Reserve Ratio
(CRR), Statutory Liquidity Ratio (SLR), and Liquidity
Adjustment Facility (LAF). i.e. Net Demand and Time Liabilities
(NDTL) = (Demand Liabilities +Time Liabilities + Other Demand
and Time Liabilities + Liability to Others) – Assets with the
Banking System.
5.1 In the context of Indian economy which of the following
is/are the purpose/purposes of 'Statutory Reserve
Requirements’? (2014)
1. To enable the Central Bank to control the amount of
advances the banks can create.
2. To make the people's deposits with banks safe and liquid.
3. To prevent the commercial banks from making excessive
profits.
4. To force the banks to have sufficient vault cash to meet their
day-to-day requirements.
a) 1 only
b) 1 and 2 only
c) 2 and 3 only
d) 1, 2, 3 and 4
51. In the context of Indian economy which of the following
is/are the purpose/purposes of 'Statutory Reserve
Requirements’?
1. To enable the Central Bank to control the amount of
advances the banks can create.
2. To make the people's deposits with banks safe and liquid.
3. To prevent the commercial banks from making excessive
profits.
4. To force the banks to have sufficient vault cash to meet their
day-to-day requirements.
a) 1 only
b) 1 and 2 only
c) 2 and 3 only
d) 1, 2, 3 and 4
• 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.
• Statement 2: To make people’s deposit safe, capital adequacy

ratio is the norm.
52.) If the interest rate is decreased in an economy, it will
(2014)
a) decrease the consumption expenditure in the economy
b) increase the tax collection of the Government.
c) Increase the investment expenditure in the economy
d) increase the total savings in the economy
52. If the interest rate is decreased in an economy, it will
a) decrease the consumption expenditure in the economy
b) increase the tax collection of the Government.
c) Increase the investment expenditure in the economy
d) increase the total savings in the economy
• Lower interest rates make it cheaper to borrow.
• This tends to encourage spending and investment.
• This leads to higher aggregate demand (AD) and economic

growth.
• This increase in AD may also cause inflationary pressures.

53. When the Reserve Bank of India reduces the Statutory
Liquidity Ratio by 50 basis points, which of the following is
likely to happen ? (2015)
a) India's GDP growth rate increases drastically
b) Foreign Institutional Investors may bring more capital into
our country
c) Scheduled Commercial Banks may cut their lending rates.
d) It may drastically reduce the liquidity to the banking system
53. When the Reserve Bank of India reduces the Statutory
Liquidity Ratio by 50 basis points, which of the following is
likely to happen ?
a) India's GDP growth rate increases drastically
b) Foreign Institutional Investors may bring more capital into
our country
c) Scheduled Commercial Banks may cut their lending rates.
d) It may drastically reduce the liquidity to the banking system
• Statutory liquidity ratio (SLR), in terms of Indian banking, is
the minimal reserve stipulation that the country's commercial
banks must uphold.
• The Indian government uses this phrase.
• The word 'statutory' suggests that it is mandatorily and legally
necessary.
• The RBI controls the SLR. The conventional tools used by the
central bank's monetary policy to regulate inflation, credit
expansion, and liquidity flow have been the cash reserve ratio
(CRR) and the standard lending rate (SLR).
• While decreasing the SLR will lead to economic growth,
raising it will prevent inflation in the economy.
54. 'Basel III Accord' or simply 'Basel III' often seen in the
news, seeks to (2015)
a) develop national strategies for the conservation and
sustainable use of biological diversity
b) improve banking sector's ability economic stress and
improve risk management
c) reduce the greenhouse gas emissions but places a heavier
burden on developed countries
d) transfer technology from developed countries to poor
countries to enable them to replace the use of
chlorofluorocarbons in refrigeration with harmless chemicals
54. 'Basel III Accord' or simply 'Basel III' often seen in the
new, seeks to
a) develop national strategies for the conservation and
sustainable use of biological diversity
b) improve banking sector's ability economic stress and
improve risk management
c) reduce the greenhouse gas emissions but places a heavier
burden on developed countries
d) transfer technology from developed countries to poor
countries to enable them to replace the use of
chlorofluorocarbons in refrigeration with harmless chemicals
• Basel III is an international regulatory accord that introduced a
set of reforms designed to mitigate risk within the
international banking sector by requiring banks to maintain
certain leverage ratios and keep certain levels of reserve
capital on hand. Begun in 2009, it is still being implemented as
of 2022.
• Basel III is an iterative step in the ongoing effort to enhance

the banking regulatory framework.
• A consortium of central banks from 28 countries devised Basel

III in 2009, largely in response to the financial crisis of 2007–
2008 and ensuing economic recession.
55. The establishment of ‘Payment Banks’ is being allowed in
India to promote financial inclusion. Which of the following
statements is/are correct in this context? (2016)
1. Mobile telephone companies and supermarket chains that
are owned and controlled by residents are eligible to be
promoters of Payment Banks.
2. Payment Banks can issue both credit cards and debit cards.
3. Payment Banks cannot undertake lending activities.
a) 1 and 2 only
b) 1 and 3 only
c) 2 only
d) 1, 2 and 3
55. The establishment of ‘Payment Banks’ is being allowed in
India to promote financial inclusion. Which of the following
statements is/are correct in this context?
1. Mobile telephone companies and supermarket chains that
are owned and controlled by residents are eligible to be
promoters of Payment Banks.
2. Payment Banks can issue both credit cards and debit cards.
3. Payment Banks cannot undertake lending activities.
a) 1 and 2 only
b) 1 and 3 only
c) 2 only
d) 1, 2 and 3
• A payments bank is like any other bank, but operating on a
smaller scale without involving any credit risk.
• In simple words, it can carry out most banking operations but
can’t advance loans or issue credit cards.
• It can accept demand deposits (up to Rs 2 lakh), offer remittance
services, mobile payments/transfers/purchases and other
banking services like ATM/debit cards, net banking and third
party fund transfers.
• Based on the recommendations of the Nachiket Mor Committee,
Payments Bank was set up to operate on a smaller scale with
minimal credit risk.
• The main objective is to advance financial inclusion by offering
banking and financial services to the unbanked and underbanked
areas, helping the migrant labour force, low-income households,
small entrepreneurs etc.
56. The term ‘Core Banking Solution’ is sometimes seen in the
news. Which of the following statements best
describes/describe this term? (2016)
1. It is a networking of a bank’s branches which enables
customers to operate their accounts from any branch of the
bank on its network regardless of where they open their
accounts.
2. It is an effort to increase RBI’s control over commercial banks
through computerization.
3. It is a detailed procedure by which a bank with huge non-
performing assets is taken over by another bank.
a) 1 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
56. The term ‘Core Banking Solution’ is sometimes seen in the
news. Which of the following statements best
describes/describe this term?
1. It is a networking of a bank’s branches which enables
customers to operate their accounts from any branch of the
bank on its network regardless of where they open their
accounts.
2. It is an effort to increase RBI’s control over commercial banks
through computerization.
3. It is a detailed procedure by which a bank with huge non-
performing assets is taken over by another bank.
a) 1 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
• As per pure definition Core banking refers to a centralized
system established by a bank which allows its customers to
conduct their business irrespective of the bank's branch. Thus,
it removes the impediments of geo-specific transactions.
• E-kuber is the core banking solution of the Reserve Bank of

India (RBI).
• Scheduled Urban Cooperative banks (UCBs), insurance

companies, commercial banks who maintain securities
accounts and current accounts with the RBI use the E-kuber
platform.
57. What is/are the purpose/purposes of the ‘Marginal Cost of
Funds based Lending Rate (MCLR)’ announced by RBI?
(2016)
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.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
57. What 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.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
• It refers to the minimum interest rate of a bank below which it
cannot lend, except in some cases allowed by the RBI.
• It is an internal benchmark or reference rate for the bank.
• MCLR describes the method by which the minimum interest
rate for loans is determined by a bank.
• Which is based on marginal cost or the additional or
incremental cost of arranging one more rupee to the
prospective borrower.
• The MCLR methodology was introduced by the RBI from
April 1, 2016.
• This new methodology replaces the base rate system
introduced in July 2010
• Prior to MCLR system, different banks were following
different methodology for calculation of base rate /minimum
rate – i.e., either on the basis of average cost of funds or
marginal cost of funds or blended cost of funds.
• Thus, MCLR aims -
• To improve the transmission of policy rates into the
lending rates of banks.
• To bring transparency in the methodology followed by
banks for determining interest rates on advances.
• To ensure availability of bank credit at interest rates which
are fair to borrowers as well as banks.
• To enable banks to become more competitive and enhance
their long run value and contribution to economic growth.
58. With reference to ‘Financial Stability and Development
Council’, consider the following statements: (2016)
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.
a) 1 and 2 only
b) 3 only
c) 2 and 3 only
d) 1, 2 and 3
58. With 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.
a) 1 and 2 only
b) 3 only
c) 2 and 3 only
d) 1, 2 and 3
Financial Stability and Development Council (FSDC):
• With a view to strengthening and institutionalizing the
mechanism for maintaining financial stability, enhancing
inter-regulatory coordination and promoting financial sector
development, the Financial Stability and Development
Council (FSDC) was set up by the Government as the apex
level forum in December 2010.
• The Chairman of the Council is the Finance Minister and its
members include the heads of financial sector Regulators (RBI,
SEBI, PFRDA, IRDA & FMC) Finance Secretary and/or
Secretary, Department of Economic Affairs, Secretary,
Department of Financial Services, and Chief Economic
Adviser.
• The Council can invite experts to its meeting if required.
• Without prejudice to the autonomy of regulators, the Council
monitors macro-prudential supervision of the economy,
including functioning of large financial conglomerates, and
addresses inter-regulatory coordination and financial sector
development issues.
• It also focuses on financial literacy and financial inclusion.
• The FSDC Sub-committee has also been set up under the

chairmanship of Governor, RBI.
• It meets more often than the full Council. All the members of
the FSDC are also the members of the Sub-committee.
• Additionally, all four Deputy Governors of the RBI and
Additional Secretary, DEA, in charge of FSDC, are also
members of the Sub Committee.
59.) With reference to ‘Bitcoins’, sometimes seen in the news,
which of the following statements is/are correct? (2016)
1. Bitcoins are tracked by the Central Banks of the countries.
2. Anyone with a Bitcoin address can send and receive Bitcoins
from anyone else with a Bitcoin address.
3. Online payments can be sent without either side knowing
the identity of the other.
a) 1 and 2 only
b) 2 and 3 only
c) 3 only
d) 1, 2 and 3
59.) With reference to ‘Bitcoins’, sometimes seen in the news,
which of the following statements is/are correct?
1. Bitcoins are tracked by the Central Banks of the countries.
2. Anyone with a Bitcoin address can send and receive Bitcoins
from anyone else with a Bitcoin address.
3. Online payments can be sent without either side knowing
the identity of the other.
a) 1 and 2 only
b) 2 and 3 only
c) 3 only
d) 1, 2 and 3
• Bitcoin is a digital currency that is not tied to a bank or
government and allows users to spend money anonymously.
• The coins are created by users who ''mine'' them by lending
computing power to verifying other users' transactions. They
receive bitcoins in exchange.
• The coins also can be bought and sold on exchanges with U.S.
dollars and other currencies.
• Bitcoins have become popular because transactions can be
made anonymously, making the currency popular with
libertarians as well as tech enthusiasts, speculators - and
criminals.
60. Which of the following statements is/are correct regarding
the ‘Monetary Policy Committee (MPC)? (2017)
1. It decides the RBI’s benchmark interest rates.
2. It is a 12-member body including the Governor of RBI and is
reconstituted every year.
3. It functions under the chairmanship of the Union Finance
Minister.
a) 1 only
b) 1 and 2 only
c) 3 only
d) 2 and 3 only
60. Which of the following statements is/are correct regarding
the ‘Monetary Policy Committee (MPC)?
1. It decides the RBI’s benchmark interest rates.
2. It is a 12-member body including the Governor of RBI and is
reconstituted every year.
3. It functions under the chairmanship of the Union Finance
Minister.
a) 1 only
b) 1 and 2 only
c) 3 only
d) 2 and 3 only
• The MPC fixes the benchmark interest rate — or the base or
reference rate that is used to set other interest rates — in India.
• An accommodative stance indicates a willingness on the part
of the central bank to expand money supply and cut interest
rates.
• The primary objective of the RBI’s monetary policy is to
maintain price stability while keeping in mind the objective of
growth. Price stability is a necessary precondition to
sustainable growth.
• Under Section 45ZB of the amended RBI Act, 1934, the central
government is empowered to constitute a six-member
Monetary Policy Committee (MPC) to determine the policy
interest rate required to achieve the inflation target. The first
such MPC was constituted on September 29, 2016.
• Section 45ZB lays down that “the Monetary Policy Committee
shall determine the Policy Rate required to achieve the
inflation target”, and that “the decision of the Monetary Policy
Committee shall be binding on the Bank”.
• MPC shall consist of the RBI Governor as its ex officio
chairperson, the Deputy Governor in charge of monetary policy,
an officer of the Bank to be nominated by the Central Board, and
three persons to be appointed by the central government.
• The last category of appointments must be from “persons of
ability, integrity and standing, having knowledge and
experience in the field of economics or banking or finance or
monetary policy”.
1. Capital Adequacy Ratio (CAR) is the amount that banks
have to maintain in the form of their own funds to offset any
loss that banks incur if the account-holders fail to repay
dues.
2. CAR is decided by each individual bank.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
1. Capital Adequacy Ratio (CAR) is the amount that banks
have to maintain in the form of their own funds to offset any
loss that banks incur if the account-holders fail to repay
dues.
2. CAR is decided by each individual bank.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
• Capital Adequacy Ratio (CAR) is the ratio of a bank’s capital
in relation to its risk weighted assets and current liabilities.
• It is decided by central bank and bank regulators to prevent
commercial banks from taking excess leverage and becoming
insolvent in the process.
• Two types of capital are measured with CAR. Tier-1 capital
can absorb a reasonable amount of loss without forcing the
bank to stop its trading, while tier-2 capital can sustain a loss if
there's a liquidation.
• The Basel III norms stipulated a capital to risk weighted assets
of 8%. However, as per RBI norms, Indian scheduled
commercial banks are required to maintain a CAR of 9% while
Indian public sector banks are emphasized to maintain a CAR
of 12%.
1. The Reserve Bank of India manages and services
Government of India Securities but not any State
Government Securities.
2. Treasury bills are issued by the Government of India and
there are no treasury bills issued by the state Governments.
3. Treasury bills offer are issued at a discount from the par
value.
a) 1 and 2 only
b) 3 only
c) 2 and 3 only
d) 1, 2 and 3
1. The Reserve Bank of India manages and services
Government of India Securities but not any State
Government Securities.
2. Treasury bills are issued by the Government of India and
there are no treasury bills issued by the state Governments.
3. Treasury bills offer are issued at a discount from the par
value.
a) 1 and 2 only
b) 3 only
c) 2 and 3 only
d) 1, 2 and 3
• The Reserve Bank of India manages public debt and issues
Indian currency denominated loans on behalf of the central
and the state governments under the powers derived from the
Reserve Bank of India Act.
• The RBI is the debt manager for both the Central Government
and the State Governments. RBI manages the debt of state
governments on the basis of separate agreements.
• Treasury bills or T-bills, which are money market instruments,

are short term debt instruments issued by the Government of
India and are presently issued in three tenors, namely, 91 day,
182 day and 364 day.
• Treasury bills are zero coupon securities and pay no interest.
Instead, they are issued at a discount and redeemed at the face
value at maturity.
• For example, a 91 day Treasury bill of ₹100/- (face value) may
be issued at say ₹ 98.20, that is, at a discount of say, ₹1.80 and
would be redeemed at the face value of ₹100/-.
• The return to the investors is the difference between the
maturity value or the face value (that is ₹100) and the issue
price
63. With reference to the governance of public sector banking
in India, consider the following statements:
1. Capital infusion into public sector banks by the Government
of India has steadily increased in the last decade.
2. To put the public sector banks in order, the merger of
associate banks with the parent State Bank of India has been
affected.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
63. With reference to the governance of public sector banking
in India, consider the following statements:
1. Capital infusion into public sector banks by the Government
of India has steadily increased in the last decade.
2. To put the public sector banks in order, the merger of
associate banks with the parent State Bank of India has been
affected.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
• The idea of infusion is to strengthen the lending capacity and
improve credit growth among PSBs that are saddled with a
heavy, non-performing assets (NPAs) as well as are struggling
to meet capital adequacy ratio.
• The merger of SBI-associated banks under Section 35 of the
State Bank of India Act, 1955 will result in the creation of a
stronger merged entity.
• This will minimize vulnerability to any geographic
concentration risks faced by subsidiary banks.
• It will create improved operational efficiency and economies
of scale.
• It will also result in improved risk management and unified
treasury operations.
• The merger will bring about increased capital base and increased
ability to give loans.
64. The Service Area Approach was implemented under the
purview of (2019)
a) Integrated Rural Development Programme
b) Lead Bank Scheme
c) Mahatma Gandhi National Rural Employment Guarantee
Scheme
d) National Skill Development Mission
64. The Service Area Approach was implemented under the
purview of
a) Integrated Rural Development Programme
b) Lead Bank Scheme
c) Mahatma Gandhi National Rural Employment Guarantee
Scheme
d) National Skill Development Mission
Hope You Remember 2012 Question on Lead bank

• The Service Area Approach (SAA) introduced in April 1989, in
order to bring about an orderly and planned development of
rural and semi- urban areas of the country, was extended to all
Indian scheduled commercial banks including Regional Rural
Banks (RRBs).
• Service area approach (SAA) is a developed version of the ‘area
approach’ structure of the Lead Bank Scheme. Under SAA plan
each commercial bank / RRB branch in a rural and semi-urban
area is designated to serve 15 to 25 villages for the planned and
orderly development of the areas.
• The primary objective of SAA was to increase productive lending
and forge effective linkages between bank credit, production,
productivity and increase in income levels.
• The Lead Bank Scheme, introduced towards the end of 1969,

envisages assignment of lead roles to individual banks (both in
public sector and private sector) for the districts allotted to them.
65. Which of the following is not included in the assets of a
commercial bank in India? (2019)
a) Advances
b) Deposits
c) Investments
d) Money at call and short notice
65. Which of the following is not included in the assets of a
commercial bank in India?
a) Advances
b) Deposits
c) Investments
d) Money at call and short notice
Assets of Scheduled Commercial Banks
• Cash-in-Hand
• Cash at the Central Bank
• Money at Call and Short Notice
• Bills Discounted
• Certificates of Deposit
• Investments
• Loans and Advances
• Short notice money" is also considered to be a liquid asset that
trails cash and money-at-calls in terms of the degree of
liquidity. Aside from generating interest, money-at-call's true
value is in providing banks the opportunity to profit from
surplus funds and maintain proper liquidity levels.
66. The money multiplier in an economy increases with which
one of the following? (2019)
a) Increase in the cash reserve ratio
b) Increase in the banking habit of the population
c) Increase in the statutory liquidity ratio
d) Increase in the population of the country
66. The money multiplier in an economy increases with which
one of the following?
a) Increase in the cash reserve ratio
b) Increase in the banking habit of the population
c) Increase in the statutory liquidity ratio
d) Increase in the population of the country
• In the financial system, banks can enhance money supply by
expanding loans out of the deposits they receive.
• The deposit received by commercial banks are part of base
money.
• But after receiving the deposits, banks create money by
expanding loans and cheque facilities.
• Here, the banking system as a whole can create additional
money impact through deposit acceptance and loan disbursal.
• The multiple in which the banking system can expand
deposits received in the form of base money into broad money
is called money multiplier.
• From a practical sense, money multiplier shows what is the
proportion of broad money compared to base money.
• The money multiplier, m, is the inverse of the reserve
requirement, RR
M4= M3 + total post
office deposits
M1 (Narrow Money)
M4
+ Savings deposits with Post
Includes:
office savings banks = M2
Currency with the Public,
Demand Deposits with the
M3 Banking System, and + Time deposits with the
‘Other’ Deposits with RBI. banking system = M3
M2
M1 M0 (Monetary Base or
Reserve Money)
Includes:
Currency in Circulation,
M0 Bankers’ Deposits with
RBI, Bank Reserve and
‘Other’ Deposits with
RBI
67. If you withdraw Rs. 1,00,000 in cash from your Demand
Deposit Account at your bank, the immediate effect on
aggregate money supply in the economy will be (2020)
a) to reduce it by Rs. 1,00,000
b) to increase it by Rs. 1,00,000
c) to increase it by more than Rs. 1,00,000
d) to leave it unchanged
67. If you withdraw Rs. 1,00,000 in cash from your Demand
Deposit Account at your bank, the immediate effect on
aggregate money supply in the economy will be
a) to reduce it by Rs. 1,00,000
b) to increase it by Rs. 1,00,000
c) to increase it by more than Rs. 1,00,000
d) to leave it unchanged
Explanation same as in previous question

68. In the context of the Indian economy, non-financial debt
includes which of the following? (2020)
1. Housing loans owed by households
2. Amounts outstanding on credit cards
3. Treasury bills
a) 1 only
b) 1 and 2 only
c) 3 only
d) 1, 2 and 3
68. In the context of the Indian economy, non-financial debt
includes which of the following?
1. Housing loans owed by households
2. Amounts outstanding on credit cards
3. Treasury bills
a) 1 only
b) 1 and 2 only
c) 3 only
d) 1, 2 and 3
• The term "non-financial debt" does not include debt held by
financial institutions, i.e., those organisations that borrow
money only to re-lend it.
• In other words, financial debt would exist if NABARD, ILFS,

etc. had borrowed money to re-lend it. And any other debt
will be referred to as "non-financial debt.“
• Non- financial debt includes industrial or commercial loans,

Treasury bills and credit card balances.
69. If the RBI decides to adopt an expansionist monetary
policy, which of the following would it not do? (2020)
1. Cut and optimise the Statutory Liquidity Ratio
2. Increase the Marginal Standing Facility Rate
3. Cut the Bank Rate and Repo Rate
a) 1 and 2 only
b) 2 only
c) 1 and 3 only
d) 1, 2 and 3
69. If the RBI decides to adopt an expansionist monetary
policy, which of the following would it not do?
1. Cut and optimise the Statutory Liquidity Ratio
2. Increase the Marginal Standing Facility Rate
3. Cut the Bank Rate and Repo Rate
a) 1 and 2 only
b) 2 only
c) 1 and 3 only
d) 1, 2 and 3
• Expansionary Monetary Policy: Lower interest rates decrease the
cost of borrowing money, which encourages consumers to
increase spending on goods and services and businesses to
invest in new equipment.
Tool Contractionary Expansionary

CRR Increase Decrease
Repo Rate Increase Decrease
SLR Increase Decrease
MSFR Increase Decrease
1. In terms of short -term credit delivery to the agriculture
sector, District Central Cooperative Banks (DCCBs) deliver
more credit in comparison to Scheduled Commercial Banks
and Regional Rural Banks.
2. One of the most important functions of DCCBs is to provide
funds to the Primary Agriculture Credit Societies.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
1. In terms of short -term credit delivery to the agriculture
sector, District Central Cooperative Banks (DCCBs) deliver
more credit in comparison to Scheduled Commercial Banks
and Regional Rural Banks.
2. One of the most important functions of DCCBs is to provide
funds to the Primary Agriculture Credit Societies.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
• Scheduled commercial banks contributed the major share (78
– 80 per cent) in agricultural and allied credit.
• Co-operative institutions also play a significant role in
extending agricultural credit and the share of all co-
operative banks/institutions (i.e. StCBs, DCCBs and PACS
put together) constituted 15-16 per cent. The RRBs
contributed the remaining 5 per cent of the agricultural
credit.
71. With reference to 'Urban Cooperative banks' in India
consider the following statements: (2021)
1. They are supervised and regulated by local boards set up by
the State Governments.
2. They can issue equity shares and preference shares.
3. They were brought under the purview of the Banking
Regulation Act, 1949 through an Amendment in 1966.
a) 1 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
71. With reference to 'Urban Cooperative banks' in India
consider the following statements:
1. They are supervised and regulated by local boards set up by
the State Governments.
2. They can issue equity shares and preference shares.
3. They were brought under the purview of the Banking
Regulation Act, 1949 through an Amendment in 1966.
a) 1 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
• After The Banking Regulation (Amendment) Bill, 2020 was
passed, RBI has been in charge of monitoring and regulating
Urban Cooperative Banks (UCB).
• All Indian banking institutions are governed by the Banking

Regulation Act, 1949. The Banking Companies Act of 1949,
which was passed, went into effect on March 16, 1949, and
was renamed the Banking Regulation Act of 1949 on March 1,
1966.
• The law initially exclusively applied to banking institutions.

However, the 1966 amendment added further amendments
and made it applicable to cooperative banks.
• The recent Banking Regulation (Amendment) Act 2020 enables
the RBI to get all the powers, including those hitherto
exclusively with the registrar of cooperative societies.
However, powers of registrar continue to be with him but the
powers of RBI override those of registrar.
• The 2020 notification specifies that UCBs can raise capital
through three broad methods, viz:- issuance of equity shares,
preference shares, and debt instruments.
• First, UCBs can raise funds by issue of equity to enrolled
members within the area of operation or through additional
equity shares to existing members.
• Second, UCBs can augment Tier – I & Tier – II capital by
issuing Perpetual Cumulative & Non-Cumulative Preference
Shares, and, Redeemable Cumulative & Non-Cumulative
Preference Shares.
• Third, UCBs can issue Perpetual Debt Instruments (PDIs) for
Tier – I Capital and Long Term Subordinated Bonds as Tier –
II Capital. It can be issued to institutional investors also, with
the consent of the depositors.
• RBI may supersede the board of directors of a multi-state co-

operative bank for up to five years under certain conditions.
These conditions include cases where it is in the public interest
for RBI to supersede the Board, and to protect depositors.
• The Banking Regulation Amendment Bill, 2020 will not be
applicable to a) Primary agricultural credit societies, b)
Cooperative societies whose principal business is long term
financing for agricultural development.
72. In India, the central bank's function as the 'lender of last
resort' usually refers to which of the following? (2021)
1. Lending to trade and industry bodies when they fail to
borrow from other sources
2. Providing liquidity to the banks having a temporary crisis
3. Lending to governments to finance budgetary deficits
a) 1 and 2
b) 2only
c) 2 and 3
d) 3 only
72. In India, the central bank's function as the 'lender of last
resort' usually refers to which of the following?
1. Lending to trade and industry bodies when they fail to
borrow from other sources
2. Providing liquidity to the banks having a temporary crisis
3. Lending to governments to finance budgetary deficits
a) 1 and 2
b) 2 only
c) 2 and 3
d) 3 only
• A lender of last resort (LoR) is an institution, usually a
country's central bank, that offers loans to banks or other
eligible institutions that are experiencing financial difficulty or
are considered highly risky or near collapse.
• Functions of RBI
• Monetary Management
• Issuer of Currency
• Banker and Debt Manager to Government
• Banker to Banks
• Financial Regulation and Supervision
• Foreign Exchange Reserves Management
• Market Operations
• Payment and Settlement Systems
• Developmental Role
• Research and Data Dissemination
73. With reference to the Indian economy, consider the
following statements: (2022)
1. If the inflation is too high, Reserve Bank of India (RBI) is
likely to buy government securities.
2. If the rupee is rapidly depreciating, RBI is likely to sell
dollars in the market.
3. If interest rates in the USA or European Union were to
fall, that is likely to induce RBI to buy dollars.
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
following statements:
1. If the inflation is too high, Reserve Bank of India (RBI) is
likely to buy government securities.
2. If the rupee is rapidly depreciating, RBI is likely to sell
dollars in the market.
3. If interest rates in the USA or European Union were to
fall, that is likely to induce RBI to buy dollars.
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
• Government Securities are debt products that the
government issues in order to borrow money. Treasury bills,
which are short-term instruments with maturities of 91 days,
182 days, or 364 days, and dated securities, which are long-
term instruments with maturities ranging from 5 years to 40
years, are the two main kinds.
• The Reserve Bank of India (RBI) periodically intervenes in

the debt market to affect inflation and interest rates.
• If the RBI decides that the rate of inflation is too high, it will
sell government securities and drain the economy of its
funds. The economy's interest rates will rise as a result of
this action, and businesses will reduce loan-financed capital
expenditures, decreasing the demand for money.
• Depreciation occurs in a free-floating exchange rate system
when there is a surplus of demand for dollars relative to
supply. In order to increase the quantity of dollars in the
economy, RBI is therefore likely to sell dollars.
• FIIs would increase their investments in India if interest

rates in the US or the EU declined. The rupee will
strengthen as a result of the increased demand for them. In
retaliation, the RBI will purchase dollars and add rupees to
the system.
74. With reference to the 'Banks Board Bureau (BBB)',
which of the following statements are correct? (2022)
1. The Governor of RBI is the Chairman of BBB.
2. BBB recommends for the selection of heads of Public
Sector Banks.
3. BBB helps the Public Sector Banks in developing
strategies and capital raising plans.
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
74. With reference to the 'Banks Board Bureau (BBB)',
which of the following statements are correct?
1. The Governor of RBI is the Chairman of BBB.
2. BBB recommends for the selection of heads of Public
Sector Banks.
3. BBB helps the Public Sector Banks in developing
strategies and capital raising plans.
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
• The Government of India's Banking Board Bureau is an
autonomous body. On March 23, 2016, the Central Government
notified the Nationalized Banks (Management and
Miscellaneous Provisions) Scheme, 1980, revision, giving the
legal basis for the makeup and responsibilities of the Banks
Board Bureau. As a result, the Bureau began operating on April
1, 2016, as an independent recommendatory agency.
• It was not mandated that the Governor of RBI will be the

chairman of the Bank Board Bureau (BBB).
• It was empowered to select the heads of Public sector Banks.

• The BBB was declared an incompetent authority by the
Delhi High Court, when a general manager at state-owned
National Insurance Company challenged the appointment
of a person junior to him for Director’s position by the BBB.
Consequent to the order, 10–11 directors appointed by the
BBB had to vacate office.
• To end this logjam, the BBB had to be struck down and a

new body, namely, FSIB had to be put in place vide
approval from the Appointments Committee of the
Cabinet, headed by the prime minister.
External Sector
75. Consider the following actions which the government
can take: (2011)
1. Devaluing the domestic currency.
2. Reduction in the export subsidy.
3. Adopting suitable policies which attract greater FDI and
more funds from FIIs.
Which of the above action/actions can help in reducing the
current account deficit?
a) 1 and 2
b) 2 and 3
c) 3 only
d) 1 and 3
75. Consider the following actions which the government
can take:
1. Devaluing the domestic currency.
2. Reduction in the export subsidy.
3. Adopting suitable policies which attract greater FDI and
more funds from FIIs.
Which of the above action/actions can help in reducing the
current account deficit?
a) 1 and 2
b) 2 and 3
c) 3 only
d) 1 and 3
• The current account deficit is a measurement of a country’s
trade where the value of the goods and services it imports
exceeds the value of the products it exports.
• Many variables, including the current exchange rate,
consumer spending volume, capital inflow, inflation rate, and
interest rate, all contribute to the existence of CAD.
• With the help of import restrictions, quotas, or levies as well as
export subsidies, the government can significantly lower its
current account deficit by either raising exports or by reducing
imports.
• By weakening the native currency, exchange rate
manipulation for cheaper exports typically results in a rise in
the balance of payments.
• Among other things, the government and RBI may look into
reviewing the FPI debt investment limits.
76. Both Foreign Direct Investment (FDI) and Foreign
Institutional Investor (FII) are related to investment in a
country. Which one of the following statements best
represents an important difference between the two? (2011)
a) FII helps bring better management skills and technology,
while FDI only brings in capital
b) FII helps in increasing capital availability in general,
while FDI only targets specific sectors
c) FDI flows only into the secondary market, while FII
targets primary market
d) FII is considered to be more stable than FDI
76. Both Foreign Direct Investment (FDI) and Foreign
Institutional Investor (FII) are related to investment in a
country. Which one of the following statements best
represents an important difference between the two?
a) FII helps bring better management skills and technology,
while FDI only brings in capital
b) FII helps in increasing capital availability in general,
while FDI only targets specific sectors
c) FDI flows only into the secondary market, while FII
targets primary market
d) FII is considered to be more stable than FDI
77. Which of the following would include Foreign Direct
Investment in India? (2012)
1. Subsidiaries of foreign companies in India.
2. Majority foreign equity holding in Indian companies.
3. Companies exclusively financed by foreign companies.
4. Portfolio investment.
a) 1, 2, 3 and 4
b) 2 and 4 only
c) 1 and 3 only
d) 1, 2 and 3 only
77. Which of the following would include Foreign Direct
Investment in India?
1. Subsidiaries of foreign companies in India.
2. Majority foreign equity holding in Indian companies.
3. Companies exclusively financed by foreign companies.
4. Portfolio investment.
a) 1, 2, 3 and 4
b) 2 and 4 only
c) 1 and 3 only
d) 1, 2 and 3 only
• FDI stands for Foreign Direct Investment, which refers to the
investment made by a foreign company or individual in a
company or enterprise in another country.
• In other words, FDI is a form of cross-border investment,
where a foreign entity acquires or establishes a business
enterprise in another country with the aim of gaining
ownership, control, and management rights over the
enterprise.
• FDI can take various forms, including the establishment of
new subsidiaries, the acquisition of existing companies, or the
establishment of joint ventures with local companies.
• FDI is considered an important driver of economic growth and
development, as it can bring in capital, technology, and
expertise, create jobs, and stimulate trade and economic
activity.
The price of any currency in international market is
decided by the (2012)
1. World Bank
2. Demand for good/services provided by the country
concerned
3. Stability of the government of the concerned country
4. Economic potential of the country in question.
a) 1, 2 3, and 4
b) 2 and 3 only
c) 3 and 4 only
d) 1 and 4 only
The price of any currency in international market is
decided by the
1. World Bank
2. Demand for good/services provided by the country
concerned
3. Stability of the government of the concerned country
4. Economic potential of the country in question.
a) 1, 2 3, and 4
b) 2 and 3 only
c) 3 and 4 only
d) 1 and 4 only
There are several factors that can influence the price of a
currency in the foreign exchange market. Some of the most
important factors include:
• Interest rates: Higher interest rates tend to attract foreign

investment, which can increase demand for the currency and
cause its price to appreciate.
• Political stability: Political instability, including factors such as

government instability, civil unrest, and war, can cause a
currency to depreciate as investors become more cautious and
uncertain about the country's future prospects.
• Trade balance: Countries with a trade surplus, where exports
exceed imports, are often seen as having a stronger currency
due to increased demand for their goods and services.
• Market sentiment: Finally, market sentiment, or the overall

mood of investors and traders, can also have an impact on a
currency's value. Positive news or sentiment can increase
demand for a currency, while negative news or sentiment can
cause it to depreciate.
79. Which of the following constitute Capital Account?
(2013)
1. Foreign Loans
2. Foreign Direct Investment
3. Private Remittances
4. Portfolio Investment
a) 1, 2 and 3
b) 1, 2 and 4
c) 2, 3 and 4
d) 1, 3 and 4
79. Which of the following constitute Capital Account?
1. Foreign Loans
2. Foreign Direct Investment
3. Private Remittances
4. Portfolio Investment
a) 1, 2 and 3
b) 1, 2 and 4
c) 2, 3 and 4
d) 1, 3 and 4
80. Which one of the following groups of items is included
in India’s foreign-exchange reserves? (2013)
a) Foreign-currency assets, Special Drawing Rights (SDRs)
and loans from foreign countries
b) Foreign-currency assets, gold holdings of the RBI and
SDRs
c) Foreign-currency assets, loans from the World Bank and
SDRs
d) Foreign-currency assets, gold holdings of the RBI, and
loans from the World Bank
80. Which one of the following groups of items is included
in India’s foreign-exchange reserves?
a) Foreign-currency assets, Special Drawing Rights (SDRs)
and loans from foreign countries
b) Foreign-currency assets, gold holdings of the RBI and
SDRs
c) Foreign-currency assets, loans from the World Bank and
SDRs
d) Foreign-currency assets, gold holdings of the RBI, and
loans from the World Bank
81. The balance of payments of a country is a systematic
record of (2013)
a) all import and export transactions of a country during a
given period of time, normally a year
b) goods exported from a country during a year
c) economic transaction between the government of one
country to another
d) capital movements from one country to another
81. The balance of payments of a country is a systematic
record of
a) all import and export transactions of a country during a
given period of time, normally a year
b) goods exported from a country during a year
c) economic transaction between the government of one
country to another
d) capital movements from one country to another
• The balance of payments (BoP) is a record of all economic
transactions made between residents of a country and the
rest of the world over a given period of time, usually a
year.
• It is a statistical statement that summarises all transactions
that take place between the residents of a country and the
rest of the world, and it provides a snapshot of a country's
international financial position.
82. With reference to Balance of Payments, which of the
following constitutes/ constitute the Current Account ? (2014)
1. Balance of trade
2. Foreign assets
3. Balance of invisibles
4. Special Drawing Rights
a) 1 only
b) 2 and 3
c) 1 and 3
d) 1, 2 and 4
82. With reference to Balance of Payments, which of the
following constitutes/ constitute the Current Account ?
1. Balance of trade
2. Foreign assets
3. Balance of invisibles
4. Special Drawing Rights
a) 1 only
b) 2 and 3
c) 1 and 3
d) 1, 2 and 4
83. Convertibility of rupee implies (2015)
a) being able to convert rupee notes into gold
b) allowing the value of rupee to be fixed by market forces
c) freely permitting the conversion of rupee to other currencies
and vice versa.
d) developing an international market for currencies in India.
83. Convertibility of rupee implies
a) being able to convert rupee notes into gold
b) allowing the value of rupee to be fixed by market forces
c) freely permitting the conversion of rupee to other
currencies and vice versa.
d) developing an international market for currencies in India.
• Convertibility is the ease with which a country's currency can
be converted into gold or another currency through global
exchanges.
• India's rupee is a partially convertible currency—rupees can
be exchanged at market rates in certain cases, but approval is
required for larger amounts.
• Making the rupee a fully convertible currency would mean
increased liquidity in financial markets, improved
employment and business opportunities, and easy access to
capital.
• Some of the disadvantages include higher volatility, an
increased burden of foreign debt, and an effect on the balance
of trade and exports.
84. The problem of international liquidity is related to the
nonavailability of (2015)
a) goods and services
b) gold and silver
c) dollars and other hard currencies
d) exportable surplus
84. The problem of international liquidity is related to the
nonavailability of
a) goods and services
b) gold and silver
c) dollars and other hard currencies
d) exportable surplus
• The term ‘International Liquidity’ means all the financial
resources and facilities that are available to the monetary
authorities of individual countries for financing the deficits in
their international balance of payments when all other sources
of supply of foreign funds prove insufficient to ensure a
balance in international payments.
• The primary medium of international liquidity are gold and

those foreign currencies which are universally acceptable in
the settlement of international transactions.
• Since Dollar being the commander of international currency

dominating across the world in forex, the problems related
with international liquidity concerns with non-availability of
dollar and other related currencies
85. Which of the following best describes the term ‘import
cover’, sometimes seen in the news? (2016)
a) It is the ratio of value of imports to the Gross Domestic
Product of a country
b) It is the total value of imports of a country in a year
c) It is the ratio between the value of exports and that of
imports between two countries
d) It is the number of months of imports that could be paid for
by a country’s international reserves
85. Which of the following best describes the term ‘import
cover’, sometimes seen in the news?
a) It is the ratio of value of imports to the Gross Domestic
Product of a country
b) It is the total value of imports of a country in a year
c) It is the ratio between the value of exports and that of
imports between two countries
d) It is the number of months of imports that could be paid
for by a country’s international reserves
• Import cover is an important indicator of the stability of the
currency. It measures the number of months of money
available in the national bank to cover the cost of imports or
the stock of foreign exchange reserves in terms of months of
retained imports of goods as at end of year.
1. Most of India’s external debt is owed by governmental
entities.
2. All of India’s external debt is denominated in US dollars.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
1. Most of India’s external debt is owed by governmental
entities.
2. All of India’s external debt is denominated in US dollars.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
• While a major part of India’s external debt is denominated in the US
dollar (55.5 per cent as at-September 2002),
• The Indian rupee-denominated component (30.2 per cent) occupies
the second largest position, insulating the external debt from foreign
currency risk, thereby augmenting stability friendly characteristics
of the external debt.
• As of end-September 2022, Sovereign External Debt (SED)
amounted to US$ 124.5 billion, decreasing by 5.7 per cent over the
level a year ago.
• Non-SED, estimated at US$ 486.0 billion as of end-September 2022
87.) In the context of India, which of the following factors
is/are contributor/ contributors to reducing the risk of a
currency crisis? (2019)
1. The foreign currency earnings of India’s IT sector
2. Increasing the government expenditure.
3. Remittances from Indians abroad
a) 1 only
b) 1 and 3 only
c) 2 only
d) 1, 2 and 3
87.) In the context of India, which of the following factors
is/are contributor/ contributors to reducing the risk of a
currency crisis?
1. The foreign currency earnings of India’s IT sector
2. Increasing the government expenditure.
3. Remittances from Indians abroad
a) 1 only
b) 1 and 3 only
c) 2 only
d) 1, 2 and 3
• A currency crisis is defined as a speculative attack on the
foreign exchange value of a currency, resulting in a sharp
depreciation or forcing the authorities to sell foreign exchange
reserves and raise domestic interest rates to defend the
currency.
• A substantial amount of foreign exchange reserves can help to

cushion against any risks of currency crisis.
• The foreign current earnings of India's IT sector and

remittances from abroad would lead more inflow of foreign
currencies in the economy and boost the foreign exchange
reserves.
88.) Which one of the following is not the most likely measure
the Government/ RBI takes to stop the slide of Indian rupee?
(2019)
a) Curbing imports of non- essential goods and promoting
exports
b) Encouraging Indian borrowers to issue rupee denominated
Masala Bonds
c) Easing conditions relating to external commercial borrowing
d) Following an expansionary monetary policy
88.) Which one of the following is not the most likely measure
the Government/ RBI takes to stop the slide of Indian rupee?
a) Curbing imports of non- essential goods-and promoting
exports
b) Encouraging Indian borrowers to issue rupee denominated
Masala Bonds
c) Easing conditions relating to external commercial borrowing
d) Following an expansionary monetary policy
• Expansionary monetary policy works by expanding the
money supply faster than usual or lowering short-term
interest rates.
• It is enacted by central banks and comes about through open

market operations, reserve requirements, and setting interest
rates.
• Higher interest rates tend to attract foreign investment,

increasing the demand for and value of the home country's
currency.
• Conversely, lower interest rates tend to be unattractive for

foreign investment and decrease the currency's relative value.
89. If another global financial crisis happens in the near
future, which of the following action/policies are most likely
to give some immunity to India? (2020)
1. Not depending on short - term foreign borrowings
2. Opening up to more foreign banks
3. Maintaining full capital account convertibility
a) 1 only
b) 1 and 2 only
c) 3 only
d) 1, 2 and 3
89. If another global financial crisis happens in the near
future, which of the following action/policies are most likely
to give some immunity to India?
1. Not depending on short - term foreign borrowings
2. Opening up to more foreign banks
3. Maintaining full capital account convertibility
a) 1 only
b) 1 and 2 only
c) 3 only
d) 1, 2 and 3
• Less exposure to foreign financial markets will likely give
India some insulation if a future global financial crisis occurs.
• Debt commitments that must be paid off either within the next
12 months or the current fiscal year of a corporation are
referred to as short-term debt.
• Current liabilities are another name for short-term debt. So, it

would be challenging to pay back the debt amid a worldwide
financial crisis.
• Opening up to additional international banks would increase

the risk due to the greater exposure to the global economy.
• Capital account convertibility is a feature of a nation's
financial regime that centers on the ability to conduct
transactions of local financial assets into foreign financial
assets freely or at market determined exchange rates. It is
sometimes referred to as capital asset liberation or CAC.
Disadvantages of CAC
• High Volatility
• Foreign Debt Burden
• Effects on Balance of Trade and Exports
• Capital flight
90. With reference to the international trade of India at present,
1. India's merchandise exports are less than its merchandise
imports.
2. India's imports of iron and steel, chemicals, fertilisers and
machinery have decreased in recent years.
3. India's exports of services are more than its imports of
services.
4. India suffers from an overall trade/current account deficit.
a) 1 and 2 only
b) 2 and 4 only
c) 3 only
d) 1, 3 and 4 only
90. With reference to the international trade of India at
present, which of the following statements is/are correct?
1. India's merchandise exports are less than its merchandise
imports.
2. India's imports of iron and steel, chemicals, fertilisers and
machinery have decreased in recent years.
3. India's exports of services are more than its imports of
services.
4. India suffers from an overall trade/current account deficit.
a) 1 and 2 only
b) 2 and 4 only
c) 3 only
d) 1, 3 and 4 only
91.) Consider the following: (2021)
1. Foreign currency convertible bonds
2. Foreign institutional investment with certain conditions
3. Global depository receipts
4. Non-resident external deposits
Which of the above can be included in Foreign Direct
Investments?
a) 1, 2 and 3
b) 3 only
c) 2 and 4
d) 1 and 4
91.) Consider the following:
1. Foreign currency convertible bonds
2. Foreign institutional investment with certain conditions
3. Global depository receipts
4. Non-resident external deposits
Which of the above can be included in Foreign Direct
Investments?
a) 1, 2 and 3
b) 3 only
c) 2 and 4
d) 1 and 4
• FDI refers to the purchase of assets in the rest of the world which
allows control over the assets, e g, purchase of firms by Reliance in
the United States.
• On the recommendation of the Mayaram panel, the following
definition for FDI was adopted:
• Any foreign investment equal to or beyond (≥) 10 percent stake
in post issue paid-up equity capital on a fully diluted basis in a
listed company is construed as EDI.
• Further, any investment in an unlisted entity (even if it is only 1
or 2 percent of paid-up capital) is treated as FDI.
• A foreign currency convertible bond (FCCB) is a type of convertible
bond issued in a currency different than the issuer's domestic
currency. In other words, the money being raised by the issuing
company is in the form of foreign currency. A convertible bond is a
mix between a debt and equity instrument.
• Since these bonds are convertible in to equity shares over a period of
time as provided in the instrument, therefore they are covered
under FDI policy.
• A Depositary receipt is a negotiable a financial instrument
issued by a bank which represents, foreign company's publicly
traded securities.
• American Depository Receipts (ADR) - In the case of ADR, it is
issued by the US bank that represents securities of a foreign
company trading in the US stock market.
• ADR is denominated US$, and through this the US investors
can invest in non-US companies.
• ADRs can be transferred without any stamp duty.
• RBI publishes ADRs/GDRs as Portfolio Investment.
• However, FEMA as well as the Department for Promotion of
Industry and Internal Trade (DPIIT) under the Ministry of
Commerce and Industry, treats ADR/GDR as FDI.
The effect of devaluation of a currency is that it necessarily
1. improves the competitiveness of the domestic exports in the
foreign markets.
2. increases the foreign value of domestic currency
3. improves the trade balance
Which of the above statements is/are correct?
a) 1 only
b) 1 and 2
c) 3 only
d) 2 and 3
The effect of devaluation of a currency is that it necessarily
1. improves the competitiveness of the domestic exports in the
foreign markets.
2. increases the foreign value of domestic currency
3. improves the trade balance
a) 1 only
b) 1 and 2
c) 3 only
d) 2 and 3
• Devaluation is the intentional reduction in a country's
currency's value in comparison to another currency, group of
currencies, or currency standard.
• To address a trade imbalance is one reason a nation can
weaken its currency.
• Devaluation makes a nation's exports less expensive and more
competitive on the world market, which raises the price of
imports.
• Domestic consumers are less likely to buy imports if they are
more expensive, which helps domestic businesses grow.
• There is often a better balance of payments since the trade
deficit decreases as exports rise and imports fall.
• In other words, a nation that devalues its currency might
reduce its deficit since there is a greater demand for less
expensive exports.
following statements : (2022)
1. An increase in Nominal Effective Exchange Rate (NEER)
indicates the appreciation of rupee.
2. An increase in the Real Effective Exchange Rate (REER)
indicates an improvement in trade competitiveness.
3. An increasing trend in domestic inflation relative to
inflation in other countries is likely to cause an increasing
divergence between NEER and REER.
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
following statements :
1. An increase in Nominal Effective Exchange Rate (NEER)
indicates the appreciation of rupee.
2. An increase in the Real Effective Exchange Rate (REER)
indicates an improvement in trade competitiveness.
3. An increasing trend in domestic inflation relative to
inflation in other countries is likely to cause an increasing
divergence between NEER and REER.
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
• A weighted average of numerous foreign currencies is
used to calculate the nominal effective exchange rate, or
NEER.
• The amount of local currency required to buy foreign
currency is known as the nominal exchange rate.
• In a system with variable exchange rates, NEER is said to
appreciate if a domestic currency gains value relative to a
basket of other currencies.
• The NEER depreciates if the local currency declines in
value relative to the basket.
• Increases in NEER signify that the local currency has
gained value relative to the weighted basket of currencies
used by its trading partners.
• Real Effective Exchange Rate (REER) is the real effective
exchange rate (a measure of a currency's value versus a
weighted average of multiple foreign currencies) divided
by an index of costs or a price deflator.
• To put it simply, a country's real effective exchange rate

(REER) equals its nominal effective exchange rate (NEER),
adjusted for inflation in the home country (REER).
• An increase in REER suggests a loss in trade

competitiveness since it means that exports become more
expensive and imports get less expensive.
• Using any metric of relative costs or prices, REER is the
NEER after accounting for relative inflation (consumer
price-based index); changes in the REER thus take into
account both changes in the nominal exchange rate and the
inflation differential with respect to trading partners.
• Rising inflation will have an effect on REER, which would

certainly drive up the cost of goods and reduce the
competitiveness of Indian exports.
• As a result, there is likely to be a growing disparity

between NEER and REER if domestic inflation is increasing
relative to inflation in other nations.
The rising gap between NEER and REER trends is a result of
India's internal inflation rate being higher than the six major
currencies taken into account.
94. Which one of the following situations best reflects
"Indirect Transfers" often talked about in media recently
with reference to India ? (2022)
a) An Indian company investing in a foreign enterprise and
paying taxes to the foreign country on the profits arising
out of its investment
b) A foreign company investing in India and paying taxes to
the country of its base on the profits arising out of its
investment
c) An Indian company purchases tangible assets in a foreign
country and sells such assets after their value increases
and transfers the proceeds to India
d) A foreign company transfers shares and such shares
derive their substantial value from assets located in India
94. Which one of the following situations best reflects
"Indirect Transfers" often talked about in media recently
with reference to India ?
a) An Indian company investing in a foreign enterprise and
paying taxes to the foreign country on the profits arising
out of its investment
b) A foreign company investing in India and paying taxes to
the country of its base on the profits arising out of its
investment
c) An Indian company purchases tangible assets in a foreign
country and sells such assets after their value increases
and transfers the proceeds to India
d) A foreign company transfers shares and such shares
derive their substantial value from assets located in
India
• When foreign entities own shares or assets in India, the shares
of those foreign entities are transferred rather than the
underlying assets directly. This is known as an indirect
transfer. As a result, choice (d) is the right response.
• Retrospective taxation dates back to 2012, when Vodafone Ltd.

was assessed tax on a 2007 transaction by the Indian tax
authorities.
• The 2012 act revised the IT act in order to retroactively impose

tax responsibility on revenue derived from the sale of shares of
a foreign corporation (i.e., also applicable to the transactions
done before May 28, 2012).
• The 2012 Act's revisions make it clear that even if a
company is registered or formed outside of India, its shares
will be considered to be or to have always been situated
there if they draw a significant portion of their value from
Indian assets.
• As a result, anyone who sold these shares of foreign

corporations before to the Act's passage (i.e., May 28, 2012)
were also required to pay tax on the proceeds of those
sales.
• The "retrospective taxation" that was implemented with the

Finance Act of 2012 is repealed by the Taxation Laws
(Amendment) Act, 2021.
1. Tight monetary policy of US Federal Reserve could lead
to capital flight.
2. Capital flight may increase the interest cost of firms with
existing External Commercial Borrowings (ECBs).
3. Devaluation of domestic currency decreases the currency
risk associated with ECBs.
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
1. Tight monetary policy of US Federal Reserve could lead
to capital flight.
2. Capital flight may increase the interest cost of firms with
existing External Commercial Borrowings (ECBs).
3. Devaluation of domestic currency decreases the currency
risk associated with ECBs.
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
• In the field of economics, capital flight is a phenomena
characterised by significant withdrawals of capital and/or
assets from a nation as a result of certain circumstances, with
detrimental economic repercussions for that nation.
• In this setting, Capital Flight will be induced due to the tight

monetary policy of the US federal reserve.
• Capital flight occurs when foreign investors flee emerging

nations like India in search of safer, more stable returns in the
US as a result of higher interest rates there.
• Since capital flight would result in a decline in the value of the

currency and supply-side constraints for borrowers, it is
possible that enterprises with current external commercial
borrowing (ECB) will see an increase in their interest costs.
• Devaluation of domestic currency will inadvertently
increase the currency risk associated with ECBs and will
result in higher interest costs for borrowers.
Markets
96. What does venture capital mean ? (2014)
a) A short-term capital provided to industries
b) A long-term start-up capital provided to new entrepreneurs
c) Funds provided to industries at times of incurring losses.
d) Funds provided for replacement and renovation of
industries.
96. What does venture capital mean ?
a) A short-term capital provided to industries
b) A long-term start-up capital provided to new entrepreneurs
c) Funds provided to industries at times of incurring losses.
d) Funds provided for replacement and renovation of
industries.
• A venture capitalist is an individual or group that invests
money into high-risk startups.
• Typically, the potential for the startup to grow rapidly offsets
the potential risk for failure, thus incentivizing venture
capitalists to invest.
• After a set period, the venture capitalist may fully buy the
company or, in the event of an initial public offering (IPO), a
large number of its shares.
• Angel investor refers to an affluent, accredited individual who

invests their own money in startups or companies in the
early stages of development; this is in exchange for equity in
that startup.
• Angel investors may contribute their business expertise to
help the company, but they are generally content with
receiving an equity stake for the funds they contribute.
97. Which of the following is issued by registered foreign
portfolio investors to overseas investors who want to be part
of Indian stock market without registering themselves
directly? (2019)
a) Certificate of Deposits
b) Commercial Paper
c) Promissory Note
d) Participatory Note
97. Which of the following is issued by registered foreign
portfolio investors to overseas investors who want to be part
of Indian stock market without registering themselves
directly?
a) Certificate of Deposits
b) Commercial Paper
c) Promissory Note
d) Participatory Note
Certificate of Deposit
• A certificate of Deposit (CD) is an electronic short-term
negotiable money market instrument to be held with a SEBI-
registered (Securities and Exchange Board of India)
depository.
• A negotiable instrument guarantees the repayment of the
principal amount along with interest at the pre-specified rate.
• CDs are governed by the RBI and issued by authorized banks
against the funds deposited by an investor.
Commercial paper
• Commercial paper, also called CP, is a short-term debt
instrument issued by companies to raise funds generally for a
time period up to one year.
• It is an unsecured money market instrument issued in the
form of a promissory note and was introduced in India for the
first time in 1990.
Promissory Note
• A promissory note is a debt instrument that contains a written
promise by one party (the note's issuer or maker) to pay
another party (the note's payee) a definite sum of money,
either on-demand or at a specified future date.
Participatory notes
• P-Notes are a type of derivative instrument that allow foreign
investors to invest in the Indian stock market through a proxy,
without having to comply with the regulatory requirements
for foreign investment in India.
• The underlying securities in a P-Note are typically Indian
stocks or derivatives, and the value of the P-Note is based on
the performance of those securities.
98.) What is the importance of the term "Interest Coverage
Ratio" of a firm in India? (2020)
1. It helps in understanding the present risk of a firm that a
bank is going to given loan to.
2. It helps in evaluating the emerging risk of a firm that a bank
is going to give loan to.
3. The higher a borrowing firm's level of Interest Coverage
Ratio, the worse is its ability to service its debt.
a) 1 and 2 only
b) 2 only
c) 1 and 3 only
d) 1, 2 and 3
98.) What is the importance of the term "Interest Coverage
Ratio" of a firm in India?
1. It helps in understanding the present risk of a firm that a
bank is going to given loan to.
2. It helps in evaluating the emerging risk of a firm that a bank
is going to give loan to.
3. The higher a borrowing firm's level of Interest Coverage
Ratio, the worse is its ability to service its debt.
a) 1 and 2 only
b) 2 only
c) 1 and 3 only
d) 1, 2 and 3
• The interest coverage ratio is a debt and profitability ratio
used to determine how easily a company can pay interest on
its outstanding debt.
• The interest coverage ratio is calculated by dividing a

company's earnings before interest and taxes (EBIT) by its
interest expense during a given period.
• The interest coverage ratio is sometimes called the times

interest earned (TIE) ratio. Lenders, investors, and creditors
often use this formula to determine a company's riskiness
relative to its current debt or for future borrowing.
• Generally, a higher coverage ratio is better, although the ideal

ratio may vary by industry.
1. 'Commercial Paper' is a short-term unsecured promissory
note. Drawing the
2. 'Certificate of Deposit' is a long-term instrument issued by inspiration from
the Reserve Bank of India to a corporation. PYQ (2019)
3. 'Call Money' is a short term finance used for interbank
transactions.
4. 'Zero-Coupon Bonds are the interest bearing short term
bond issued by the Scheduled Commercial Banks to
corporations.
a) 1 and 2 only
b) 4 only
c) 1 and 3 only
d) 2, 3 and 4 only
1. 'Commercial Paper' is a short-term unsecured promissory
note.
2. 'Certificate of Deposit' is a long-term instrument issued by
the Reserve Bank of India to a corporation.
3. 'Call Money' is a short term finance used for interbank
transactions.
4. 'Zero-Coupon Bonds are the interest bearing short term
bond issued by the Scheduled Commercial Banks to
corporations.
a) 1 and 2 only
b) 4 only
c) 1 and 3 only
d) 2, 3 and 4 only
Certificate of Deposit
• A certificate of Deposit (CD) is an electronic short-term
negotiable money market instrument to be held with a SEBI-
registered (Securities and Exchange Board of India)
depository.
• A negotiable instrument guarantees the repayment of the
principal amount along with interest at the pre-specified rate.
• CDs are governed by the RBI and issued by authorized banks
against the funds deposited by an investor.
Commercial paper
• Commercial paper, also called CP, is a short-term debt
instrument issued by companies to raise funds generally for a
time period up to one year.
• It is an unsecured money market instrument issued in the
form of a promissory note and was introduced in India for the
first time in 1990.
• Call money rate is the rate at which short term funds are
borrowed and lent in the money market among banks on a
day-today basis. Banks resort to this type of loan to fill the
asset liability mismatch, comply with the statutory CRR and
SLR requirements and to meet the sudden demand of funds.
• A zero-coupon bond, also known as an accrual bond, is a debt

security that does not pay interest but instead trades at a deep
discount, rendering a profit at maturity, when the bond is
redeemed for its full face value.
100.) With reference to Foreign Direct Investment in India,
which one of the following is considered its major
characteristic? (2020)
a) It is the investment through capital instruments essentially
in a listed company.
b) It is a largely non-debt creating capital flow.
c) It is the investment which involves debt-servicing.
d) It is the investment made by foreign institutional investors in
the Government Securities.
100.) With reference to Foreign Direct Investment in India,
which one of the following is considered its major
characteristic?
a) It is the investment through capital instruments essentially
in a listed company.
b) It is a largely non-debt creating capital flow.
c) It is the investment which involves debt-servicing.
d) It is the investment made by foreign institutional investors in
the Government Securities.
• FDI refers to the purchase of assets in the rest of the world which
allows control over the assets, e g, purchase of firms by Reliance in
the United States.
• On the recommendation of the Mayaram panel, the following
definition for FDI was adopted:
• Any foreign investment equal to or beyond (≥) 10 percent stake
in post issue paid-up equity capital on a fully diluted basis in a
listed company is construed as EDI.
• Further, any investment in an unlisted entity (even if it is only 1
or 2 percent of paid-up capital) is treated as FDI.
101. Indian Government Bond Yields are influenced by which
of the following? (2021)
1. Actions of the United States Federal Reserve
2. Actions of the Reserve bank of India
3. Inflation and short-term interest rates
a) 1 and 2 only
b) 2 only
c) 3 only
d) 1, 2 and 3
101. Indian Government Bond Yields are influenced by which
of the following?
1. Actions of the United States Federal Reserve
2. Actions of the Reserve bank of India
3. Inflation and short-term interest rates
a) 1 and 2 only
b) 2 only
c) 3 only
d) 1, 2 and 3
• The return an investor receives on a particular bond or
government security is known as the bond yield.
• It is based on the bond's price, which is affected by its
demand.
• The Reserve Bank of India's monetary policy, particularly the
direction of interest rates, the government's borrowing plan,
the state of the global economy and markets, and inflation are
the main factors influencing the yield.
• The actions of the RBI have a direct impact on short-term
interest rates, inflation, and bond yields.
• The investments flowing into India may be impacted by the
Federal Reserve of the United States' actions.
• Investors shift their asset allocation from riskier emerging
market equities or debt to the US Treasury, which is the safest
investment option, due to a higher return on treasury bonds in
the US.
102. With reference to India, consider the following
statements: (2021)
1. Retail investors through demat account can invest in
'Treasury Bills' and 'Government of India Debt Bonds' in
primary market.
2. The 'Negotiated Dealing System-Order Matching' is a
government securities trading platform of the Reserve Bank
of India.
3. The 'Central Depository Services Ltd' is jointly promoted by
the Reserve Bank of India and the Bombay Stock Exchange.
a) 1 only
b) 1 and 2
c) 3 only
d) 2 and 3
102. With reference to India, consider the following
statements:
1. Retail investors through demat account can invest in
'Treasury Bills' and 'Government of India Debt Bonds' in
primary market.
2. The 'Negotiated Dealing System-Order Matching' is a
government securities trading platform of the Reserve Bank
of India.
3. The 'Central Depository Services Ltd' is jointly promoted by
the Reserve Bank of India and the Bombay Stock Exchange.
a) 1 only
b) 1 and 2
c) 3 only
d) 2 and 3
• Retail Direct scheme is a one-stop solution to facilitate
investment in Government Securities by Individual Investors.
Under this scheme Individual Retail investors can open Gilt
Securities Account – “Retail Direct Gilt (RDG)” Account with
the RBI.
• Retail investors (individuals) will have the facility to open and
maintain the ‘Retail Direct Gilt Account’ (RDG Account) with
RBI.
• The investor can place non competitive bids in Primary
issuance of all Central Government securities (including
Treasury Bills and Sovereign Gold bonds) as well as securities
issued by various State Governments.
• Under this scheme, the individual can also access Secondary
market through “NDS OM” - RBI’s trading system.
• The investor will automatically receive any interest
paid/maturity proceeds into his linked bank account on due
dates.
• Central Depository Services (India) Limited (CDSL) is one of
India's leading securities depositories.
• Central Depository Services Ltd (CDSL) was promoted by BSE

Ltd. jointly with leading banks such as State Bank of India,
Bank of India, Bank of Baroda, HDFC Bank, Standard
Chartered Bank and Union Bank of India.
• CDSL offers other online services such as e-voting e-Locker

National Academy Depository EASI (Electronic Access to
Security Information) EASIEST (Electronic Access to Securities
Information and Execution of Secured Transaction) and
mobile application (myeasi m-voting).
following statements : (2022)
1. A share of the household financial savings goes towards
government borrowings.
2. Dated securities issued at market related rates in auctions
form a large component of internal debt.
Which of the above statements is/are correct ?
a) 1 only
b) 2 only
c) Both l and 2
d) Neither 1 nor 2
following statements :
1. A share of the household financial savings goes towards
government borrowings.
2. Dated securities issued at market related rates in auctions
form a large component of internal debt.
Which of the above statements is/are correct ?
a) 1 only
b) 2 only
c) Both l and 2
d) Neither 1 nor 2
• Currency, bank deposits, debt securities, mutual funds, pension
funds, insurance, and investments by households in small
savings plans are all examples of household financial savings.
• This money saved goes towards government borrowing in part.
The government borrows money by issuing Treasury Bills and
G-secs, two types of government securities. It obtains short-term
borrowings from the market, small savings accounts, state
provident funds, outside funding, and short-term loans.
• Banks, insurance providers, and mutual and provident funds—
who, in turn, are significant investors in governmental
securities—will be significantly impacted by any negative
changes in household savings.
1. In India, credit rating agencies are regulated by Reserve
Bank of India.
2. The rating agency popularly known as ICRA is a public
limited company.
3. Brickwork Ratings is an Indian credit rating agency.
Which of the statements given above are correct.
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
1. In India, credit rating agencies are regulated by Reserve
Bank of India.
2. The rating agency popularly known as ICRA is a public
limited company.
3. Brickwork Ratings is an Indian credit rating agency.
Which of the statements given above are correct.
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
• SEBI oversees the regulation of credit rating agencies in India.
• The SEBI (Credit Rating Agencies) Regulations, 1999 governs
credit rating agencies and, among other things, specifies the
requirements for a proper rating process, the avoidance of
conflicts of interest, and the inspection of rating agencies by
SEBI.
• It also specifies the eligibility requirements for registration of

credit rating agencies.
• Leading financial/investment institutions, commercial banks,

and financial services firms founded ICRA Limited
(previously known as Investment Information and Credit
Rating Agency of India Limited) in 1991 to serve as an
independent and expert investment information and credit
rating agency.
• Brickwork Ratings is authorised to conduct credit ratings
in India by the Reserve Bank of India (RBI) as an external
credit assessment agency (ECAI).
• Canara Bank sponsors Brickwork Rating, which was

founded in 2007.
• It provides ratings for financial institutions, SMEs,

municipal corporations, capital market instruments, and
bank loans.
105. With reference to Convertible Bonds, consider the
1. As there is an option to exchange the bond for equity,
Convertible Bonds pay a lower rate of interest.
2. The option to convert to equity affords the bondholder a
degree of indexation to rising consumer prices.
a) 1only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
105. With reference to Convertible Bonds, consider the
1. As there is an option to exchange the bond for equity,
Convertible Bonds pay a lower rate of interest.
2. The option to convert to equity affords the bondholder a
degree of indexation to rising consumer prices.
a) 1only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
• An interest-bearing fixed-income corporate debt security
known as a convertible bond has the option of being converted
into a predetermined number of shares of common stock or
equity.
• During the bond's term, the conversion from bond to stock is
possible at specific times and is typically at the bondholder's
discretion.
• They provide a lower coupon rate because there is an option to
convert the bond into common stock.
• Indexation means adjusting a price, wage, or other value based
on the changes in another price or composite indicator of
prices. Indexation can be done to adjust for the effects of
inflation, cost of living, or input prices over time, or to adjust
for different prices and costs in different geographic areas.
• The bondholder is given some indexation to rising
consumer prices thanks to the option to convert to equity.
Indexation will make sure that prices are eventually
adjusted to reflect inflation.
• Bondholders will be able to reduce their long-term capital

gains with the aid of indexation even when converting
their bonds into equity, which lowers their taxable income,
because their investment will be adjusted with inflation.
Public Finance
106. Why is the Government of India disinvesting its
equity in the Central Public Sector Enterprises (CPSEs)?
(2011)
1. The Government intends to use the revenue earned from
the disinvestment mainly to pay back the external debt.
2. The Government no longer intends to retain the
management control of the CPSEs.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
106. Why is the Government of India disinvesting its
equity in the Central Public Sector Enterprises (CPSEs)?
1. The Government intends to use the revenue earned from
the disinvestment mainly to pay back the external debt.
2. The Government no longer intends to retain the
management control of the CPSEs.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
• Disinvestment refers to the sale or liquidation of assets by the
government, typically projects, enterprises, or other fixed
assets in the Central and State Public Sector.
• Disinvestment is an action taken by the government to lighten
the load on the exchequer or to raise funds for addressing
particular needs, such as making up for a shortfall in revenue
from other regular sources.
• The portion of a nation's debt that is borrowed from foreign
lenders, such as commercial banks, governments, or
international financial institutions, is referred to as its external
debt.
• The revenue from the disinvestment is not necessarily going to
be used by the government primarily for repaying the external
debt.
• The Government occasionally decides to withdraw its
investments from CPSEs, but it typically decides to retain
management control on a case-by-case basis.
107. Which one of the following statements appropriately
describes the “fiscal stimulus”? (2011)
a) It is a massive investment by the Government in
manufacturing sector to ensure the supply of goods to
meet the demand surge caused by rapid economic
growth
b) It is an intense affirmative action of the Government to
boost economic activity in the country
c) It is Government’s intensive action on financial
institutions to ensure disbursement of loans to
agriculture and allied sectors to promote greater food
production and contain food inflation
d) It is an extreme affirmative action by the Government to
pursue its policy of financial inclusion
107. Which one of the following statements appropriately
describes the “fiscal stimulus”?
a) It is a massive investment by the Government in
manufacturing sector to ensure the supply of goods to
meet the demand surge caused by rapid economic
growth
b) It is an intense affirmative action of the Government to
boost economic activity in the country
c) It is Government’s intensive action on financial
institutions to ensure disbursement of loans to
agriculture and allied sectors to promote greater food
production and contain food inflation
d) It is an extreme affirmative action by the Government to
pursue its policy of financial inclusion
• Fiscal stimulus refers to increasing government
consumption or transfers or lowering taxes.
• It refers to targeted fiscal and monetary policy intended
to elicit and economic response from the private sector.
• It is a conservative approach to expansionary fiscal and
monetary policy that relies on encouraging private sector
spending to make up for losses of aggregate demand.
• It measures are deficit spending and lowering taxes;
monetary stimulus measures are produced by central
banks and may include lowering interest rates.
• Economists still argue over the usefulness of coordinated
fiscal stimulus, with some claiming that in the long run it
can do more harm than short-term good.
108. Under which of the following circumstances may
‘capital gains’ arise? (2012)
1. When there is an increase in the sales of a product
2. When there is a natural increase in the value of the
property owned.
3. When you purchase a painting and there is a growth in
its value due to increase in its popularity.
a) 1 only
b) 2 and 3 only
c) 2 only
d) 1, 2 and 3
108. Under which of the following circumstances may
‘capital gains’ arise?
1. When there is an increase in the sales of a product
2. When there is a natural increase in the value of the
property owned.
3. When you purchase a painting and there is a growth in
its value due to increase in its popularity.
a) 1 only
b) 2 and 3 only
c) 2 only
d) 1, 2 and 3
• A capital asset experiences a gain in value, or a capital
gain. When you sell the asset, it is regarded as having been
realised.
• A capital gain must be reported on income taxes, whether

it is short-term (lasting less than a year) or long-term
(lasting more than a year).
• Only realised gains, which occur after the asset is sold, are
subject to capital gains tax.
• Only "capital assets" like stocks, bonds, artwork, jewellery,

coin collections, and real estate are subject to the capital
gains treatment.
109. In India, deficit financing is used for raising resources
for (2013)
a) economic development
b) redemption of public debt
c) adjusting the balance of payments
d) reducing the foreign debt
109. In India, deficit financing is used for raising resources
for
a) economic development
b) redemption of public debt
c) adjusting the balance of payments
d) reducing the foreign debt
110. With reference to Union Budget, which of the following
is/are covered under Non-Plan Expenditure ? (2014)
1. Defence expenditure
2. Interest payments
3. Salaries and pensions
4. Subsidies
a) 1 only
b) 2 and 3 only
c) 1, 2, 3 and 4
d) None
110. With reference to Union Budget, which of the following
is/are covered under Non-Plan Expenditure ?
1. Defence expenditure
2. Interest payments
3. Salaries and pensions
4. Subsidies
a) 1 only
b) 2 and 3 only
c) 1, 2, 3 and 4
d) None
• The government's total spending can be divided into two broad
sub-heads — plan and non-plan — with the latter constituting the
bulk of expenditure.
• Non-plan expenditure is what the government spends on the so-
called non-productive areas and is mostly obligatory in nature. It
includes salaries, subsidies, loans and interest.
• Plan expenditure, on the other hand, pertains to the money set
aside for productive purposes like various projects of ministries. It
is spent on productive asset creation through Centrally-sponsored
programmes and flagship schemes.
• A high-power panel headed by Dr. C. Rangarajan (Chairman,
Prime Minister’s Economic Advisory Council), in September 2011
suggested for redefining Plan and Non-Plan expenditures as
Capital and Revenue expenditures, as the former set of terms ‘blur
the classification’—this will facilitate linking expenditure to
‘outcomes’ and better public expenditure
111. With reference to the Fourteenth Finance Commission,
1. It has increased the share of States in the central divisible pool
from 32 percent to 42 percent.
2. It has made recommendations concerning sector-specific
grants.
a) 1 only
b) 2 only
c) Both 1and 2
d) Neither 1 nor 2
111. With reference to the Fourteenth Finance Commission,
which of the following statements is/are correct?
1. It has increased the share of States in the central divisible pool
from 32 percent to 42 percent.
2. It has made recommendations concerning sector-specific
grants.
a) 1 only
b) 2 only
c) Both 1and 2
d) Neither 1 nor 2
Fourteenth Finance Commission
• The FFC has radically enhanced the share of the states in the
central divisible pool from the then 32 percent to 42 per cent
which is the biggest ever increase in vertical tax devolution.
14th FC 15th FC 15th FC
Criteria
2015-20 2020-21 2021-26
Income Distance 50.0 45.0 45.0

Area 15.0 15.0 15.0
Population (1971) 17.5 - -
Population (2011)# 10.0 15.0 15.0
Demographic Performance - 12.5 12.5
Forest Cover 7.5 - -
Forest and Ecology - 10.0 10.0
Tax and fiscal efforts* - 2.5 2.5
Total 100 100 100
112. There has been a persistent deficit budget year after year.
Which of the following actions can be taken by the
government to reduce the deficit? (2015)
1. Reducing revenue expenditure
2. Introducing new welfare schemes
3. Rationalizing subsidies
4. Expanding industries
a) 1 and 3 only
b) 2 and 3 only
c) 1 only
d) 1, 2, 3 and 4
112. There has been a persistent deficit budget year after year.
Which of the following actions can be taken by the
government to reduce the deficit?
1. Reducing revenue expenditure
2. Introducing new welfare schemes
3. Rationalizing subsidies
4. Expanding industries
a) 1 and 3 only
b) 2 and 3 only
c) 1 only
d) 1, 2, 3 and 4
• Budget deficit is used to define a status of financial health in
which expenditures exceed revenue.
Question was
again asked in
• Reducing the revenue expenditure will certainly help in
2016
bridging the gap.
• Subsidies are a part of expenditure and rationalizing them

would reduce the deficit.
• Introducing new welfare schemes will most likely result in

increasing expenditure and so will expanding industries
which would require capital infusion.
113. Which of the following is/are included in the capital
budget of the Government of India?
1. Expenditure on acquisition of assets like roads, buildings,
machinery, etc.
2. Loans received from foreign governments
3. Loans and advances granted to the States and Union
Territories
a) 1 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
113. Which of the following is/are included in the capital
budget of the Government of India?
1. Expenditure on acquisition of assets like roads, buildings,
machinery, etc.
2. Loans received from foreign governments
3. Loans and advances granted to the States and Union
Territories
a) 1 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
• Capital Budget consists of capital receipts (like disinvestment,
borrowing, loans from public or foreign governments, Reserve
Bank of India, etc) and capital expenditure (like expenditure
on development of machinery, health facilities, etc).
• Capital budgeting comprises two words — 'capital' and
'budget'. It implies setting targets for projects/schemes to
ensure maximum profitability.
• Parts of Capital Budget: Capital budget is divided into two
parts — capital receipts and capital expenditure.
Capital receipts in Union Budget
• Capital receipts refer to incoming cash flows. They can be both
non-debt and debt receipts. Loan from the general public, foreign
governments and RBI form a major part of capital receipts.
• Example of capital receipts: Recovery of loans and advances
given to state governments and foreign governments,
disinvestment proceeds, money accrued to the government from
issue of bonus shares, etc, are all examples of non-debt capital
receipts.
• Debt receipts are those which the government needs to repay
along with interest. Most of the government's capital receipts
are debt receipts. They are shown as liabilities in the
government’s balance sheet.
Capital expenditure in Union Budget

• Capital expenditure is the expenditure on the development of
machinery, equipment, building, health facilities, acquisition
of assets like land, research & development, education, etc.
• Examples of capital expenditure: Loans given by the
government to states and public-sector undertakings (PSUs),
loans that were taken in the past but are now returned,
spending on infrastructure, machinery, land, road, etc.
114. What is/are the purpose/purposes of Government’s
‘Sovereign Gold Bond Scheme’ and ‘Gold Monetization
Scheme’? (2016)
1. To bring the idle gold lying with Indian households into the
economy.
2. To promote FDI in the gold and jewellery sector
3. To reduce India’s dependence on gold imports
a) 1 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
114. What is/are the purpose/purposes of Government’s
‘Sovereign Gold Bond Scheme’ and ‘Gold Monetization
Scheme’?
1. To bring the idle gold lying with Indian households into the
economy.
2. To promote FDI in the gold and jewellery sector
3. To reduce India’s dependence on gold imports
a) 1 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
• SGBs are government securities denominated in grams of
gold.
• They are substitutes for holding physical gold.
• Investors have to pay the issue price in cash and the bonds
will be redeemed in cash on maturity.
• The Bond is issued by Reserve Bank on behalf of Government
of India.
• The Government of India announced the Gold Monetisation
Scheme in September 15, 2015.
• The objective of the Scheme is to mobilise gold held by
households and institutions of the country and facilitate its use
for productive purposes, and in the long run, to reduce
country’s reliance on the import of gold.
115. What is/are the most likely advantages of implementing
‘Goods and Services Tax (GST)’? (2017)
1. It will replace multiple taxes collected by multiple
authorities and will thus create a single market in India.
2. It will drastically reduce the ‘Current Account Deficit’ of
India and will enable it to increase its foreign exchange
reserves.
3. It will enormously increase the growth and size of economy
of India and will enable it to overtake China in the near
future.
a) 1 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
115. What is/are the most likely advantages of implementing
‘Goods and Services Tax (GST)’?
1. It will replace multiple taxes collected by multiple
authorities and will thus create a single market in India.
2. It will drastically reduce the ‘Current Account Deficit’ of
India and will enable it to increase its foreign exchange
reserves.
3. It will enormously increase the growth and size of economy
of India and will enable it to overtake China in the near
future.
a) 1 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
Advantages of GST
• Uniformity in Taxation
• Helping Government Revenue Find Buoyancy
• Cascading of Taxes
• Simpler and Lesser Number of Compliances
• Common Procedures
• Common Portal
• Regulation of Unorganised Industries
1. Tax revenue as a percent of GDP of India has steadily
increased in the last decade.
2. Fiscal deficit as a percent of GDP of India has steadily
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
1. Tax revenue as a percent of GDP of India has steadily
2. Fiscal deficit as a percent of GDP of India has steadily
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
117. If a commodity is provided free to the public by the
Government, then (2018)
a) the opportunity cost is zero.
b) the opportunity cost is ignored.
c) the opportunity costs is transferred from the consumers of
the product to the tax-paying public.
d) the opportunity cost is transferred from the consumers of the
product to the Government.
117. If a commodity is provided free to the public by the
Government, then
a) the opportunity cost is zero.
b) the opportunity cost is ignored.
c) the opportunity costs is transferred from the consumers of
the product to the tax-paying public.
d) the opportunity cost is transferred from the consumers of the
product to the Government.
• Opportunity costs represent the potential benefits that an
individual, investor, or business misses out on when choosing
one alternative over another.
• Even though the consumer is getting it for free, the
opportunity cost (of that commodity) is transferred to the
Government.
• Few sources mention that opportunity cost is borne by the

Decision Maker (Government), while others state that
opportunity cost is borne by the person who eventually pays
for it (Tax payer).
• UPSC ANSWER KEY: C

118. Which one of the following effects of creation of black
money in India has been the main cause of worry to the
Government of India? (2021)
a) Diversion of resources to the purchase of real estate and
investment in luxury housing
b) Investment in unproductive activities and purchase of
previous stones, jewellery, gold, etc.
c) Large donations to political parties and growth of
regionalism
d) Loss of revenue to the State Exchequer due to tax evasion
118. Which one of the following effects of creation of black
money in India has been the main cause of worry to the
Government of India?
a) Diversion of resources to the purchase of real estate and
investment in luxury housing
b) Investment in unproductive activities and purchase of
previous stones, jewellery, gold, etc.
c) Large donations to political parties and growth of
regionalism
d) Loss of revenue to the State Exchequer due to tax evasion
• Black money includes all funds earned through illegal activity
and otherwise legal income that is not recorded for tax
purposes. Black money proceeds are usually received in cash
from underground economic activity and, as such, are not
taxed.
• In its simplest form, black money is money on which tax is not
paid to the government. Suppose a store accepts cash for its
merchandise and does not issue receipts to its customers. That
store is transacting in black money, as it would not pay tax on
the unrecorded sales.
• As another example, consider a property buyer who purchases
land valued at Rs.200,000. If the buyer only reports Rs50,000
on the books and pays Rs.150,000 under the table, then there is
a black money transaction worth Rs.150,000.
• The sellers in both examples have earned money from legal
sources but evaded taxes.
119. With reference to the expenditure made by an
organisation or a company, which of the following
statements is/are correct? (2022)
1. Acquiring new technology is capital expenditure.
2. Debt financing is considered capital expenditure, while
equity financing is considered revenue expenditure.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
119. With reference to the expenditure made by an
organisation or a company, which of the following
statements is/are correct?
1. Acquiring new technology is capital expenditure.
2. Debt financing is considered capital expenditure, while
equity financing is considered revenue expenditure.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
• Capital expenditures are expenses that either increase an
asset (such as a school building) or decrease a liability
(such as loan repayment).
• These expenses are made on long-term development

projects, physical capital assets, and financial assets.
• This kind of investment strengthens the economy's capital

base and increases its capacity to produce more in the
future.
• Because it lowers liability, loan repayment is also

considered a capital expenditure.
• Debt financing is the process by which a business obtains a
loan that will be repaid with interest at a later time.
• It might take the form of an unsecured loan or a secured

loan. A business will take out a loan to pay for working
capital or an acquisition.
• Equity financing is the process of raising money by selling

stock in a business. An ownership interest for shareholders
is a result of equity financing.
• Both fall under capital outlays.

Economically Relevant
International Institutions
120. Regarding the International Monetary Fund, which
one of the following statements is correct? (2011)
a) It can grant loans to any country
b) It can grant loans to only developed countries
c) It grants loans to only member countries
d) It can grant loans to the central bank of a country
120. Regarding the International Monetary Fund, which
one of the following statements is correct?
a) It can grant loans to any country
b) It can grant loans to only developed countries
c) It grants loans to only member countries
d) It can grant loans to the central bank of a country
• The International Monetary Fund (IMF) is an international
organization that was established in 1944 with the primary
mandate to promote international monetary cooperation, exchange
stability, and to facilitate the balanced growth of international
trade. Some of the key functions of the IMF include:
• Surveillance: The IMF monitors the economic and financial policies
of its member countries, providing regular reports and advice to
promote sound macroeconomic policies and prevent economic
crises.
• Financial assistance: The IMF provides financial assistance to its
member countries that are experiencing balance of payments
problems, helping them to overcome temporary economic
difficulties.
• Technical assistance and training: The IMF provides technical
assistance and training to its member countries to help them
develop their economic and financial institutions and policies.
• Economic research and analysis: The IMF conducts economic
research and analysis on global economic trends and issues,
providing insights and policy recommendations to its member
countries.
• Capacity building: The IMF helps its member countries to build
their capacity to manage economic and financial policies
effectively, including strengthening their institutions and
governance frameworks.
121. The Multi-dimensional Poverty Index developed by
‘Oxford Poverty and Human Development initiative with
UNDP support covers which of the following? (2012)
1. Deprivation of education, health, assets and services at
household level.
2. Purchasing power parity at national level.
3. Extent of budget deficit and GDP growth rate at national
level.
a) 1 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
121. The Multi-dimensional Poverty Index developed by
‘Oxford Poverty and Human Development initiative with
UNDP support covers which of the following?
1. Deprivation of education, health, assets and services at
household level.
2. Purchasing power parity at national level.
3. Extent of budget deficit and GDP growth rate at national
level.
a) 1 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
122. Which of the following organizations brings out the
publication known as 'World Economic Outlook’ ? (2014)
a) The International Monetary Fund
b) The United Nations Development Programme
c) The World Economic Forum
d) The World Bank
122. Which of the following organizations brings out the
publication known as 'World Economic Outlook’ ?
a) The International Monetary Fund
b) The United Nations Development Programme
c) The World Economic Forum
d) The World Bank
Important Publications by IMF:
• World Economic Outlook
• Global Financial Stability Report
• Fiscal Monitor
123. In the context of which of the following do you
sometimes find the terms ‘amber box, blue box and green box’
in the news? (2016)
a) WTO affairs
b) SAARC affairs
c) UNFCCC affairs
d) India-EU negotiations on FTA
123. In the context of which of the following do you
sometimes find the terms ‘amber box, blue box and green box’
in the news?
a) WTO affairs
b) SAARC affairs
c) UNFCCC affairs
d) India-EU negotiations on FTA
Agreement On Agriculture
• The Agreement on Agriculture (AoA) is a multilateral
agreement negotiated and adopted by member countries of
the World Trade Organization (WTO) in 1994.
• The agreement seeks to reform and liberalize agricultural
trade by reducing trade-distorting subsidies, improving
market access, and promoting fair competition.
The AoA sets out three main pillars:
• Market access: The AoA requires countries to reduce tariffs
and other barriers to trade in agricultural products. Countries
are also required to grant market access for agricultural
imports based on a tariff-rate quota (TRQ) system.
• Domestic support: The AoA sets limits on the level of
domestic support that countries can provide to their
agricultural sector. Countries are required to reduce and/or
eliminate trade-distorting domestic subsidies, such as price
supports, income support, and input subsidies.
• Export competition: The AoA requires countries to reduce

and/or eliminate trade-distorting export subsidies and other
measures that artificially lower the price of exports.
Green Box Amber Box
Blue Box
These are domestic These include
These are domestic
support measures that measures to support
support measures
have minimal or no prices, or subsidies
that are considered
trade-distorting effects, directly related to
to be less trade-
and are considered to production
distorting than
be compatible with the quantities.
Amber Box
objectives of the AoA. Limit: 5% of the
measures. Blue Box
Examples of Green Box value of agricultural
measures are subject
measures include production for
to certain conditions
research and developed countries,
and limits, including
development, disease 10% for most
that they must be
control, and developing
linked to production
infrastructure countries.
reduction programs.
development.
124. With reference to the International Monetary and
Financial Committee (IMFC), consider the following
statements: (2016)
1. IMFC discusses matters of concern affecting the global
economy, and advises the International Monetary Fund
(IMF) on the direction of its work.
2. The World Bank participates as observer in IMFC’s
meetings.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
124. With reference to the International Monetary and
Financial Committee (IMFC), consider the following
statements:
1. IMFC discusses matters of concern affecting the global
economy, and advises the International Monetary Fund
(IMF) on the direction of its work.
2. The World Bank participates as observer in IMFC’s
meetings.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
• The IMFC advises and reports to the IMF Board of Governors
on the supervision and management of the international
monetary and financial system, including on responses to
unfolding events that may disrupt the system.
• It also considers proposals by the Executive Board to amend
the Articles of Agreement and advises on any other matters
that may be referred to it by the Board of Governors.
• Although the IMFC has no formal decision-making powers, in
practice, it has become a key instrument for providing
strategic direction to the work and policies of the Fund.
• A number of international institutions, including the World

Bank, participate as observers in the IMFC’s meetings.
125. India’s ranking in the ‘Ease of Doing Business Index’ is
sometimes seen in the news. Which of the following has
declared that ranking? (2016)
a) Organization for Economic Cooperation and Development
(OECD)
b) World Economic Forum
c) World Bank
d) World Trade Organization (WTO)
125. India’s ranking in the ‘Ease of Doing Business Index’ is
sometimes seen in the news. Which of the following has
declared that ranking?
a) Organization for Economic Cooperation and Development
(OECD)
b) World Economic Forum
c) World Bank
d) World Trade Organization (WTO)
• The Ease of Doing Business (EoDB) index is a ranking system
established by the World Bank Group. In the EODB index, ‘higher
rankings’ (a lower numerical value) indicate better, usually simpler,
regulations for businesses and stronger protections of property
rights.
• Among the chosen 190 countries, India ranked 63rd in Doing
Business 2020: World Bank Report.
• In 2014, the Government of India launched an ambitious program of
regulatory reforms aimed at making it easier to do business in India.
• The program represents a great deal of effort to create a more
business-friendly environment.
• India as one of the top 10 improvers, for the 3rd time in a row, with
an improvement of 67 ranks in 3 years.
• In September, the World Bank discontinued its Doing Business
Report and Ease of Doing Business Index (EBDI), after 18 years,
following the uncovering of possibly serious data irregularities,
motivated by political influence.
126. With reference to the ‘National Intellectual Property
Rights Policy’, consider the following statements: (2017)
1. It reiterates India’s commitment to the Doha Development
Agenda and the TRIPS Agreement.
2. Department of Industrial Policy and Promotion is the nodal
agency for regulating intellectual property rights in India.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
126. With reference to the ‘National Intellectual Property
Rights Policy’, consider the following statements:
1. It reiterates India’s commitment to the Doha Development
Agenda and the TRIPS Agreement.
2. Department of Industrial Policy and Promotion is the nodal
agency for regulating intellectual property rights in India.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
• The Union Cabinet has approved the National Intellectual
Property Rights (IPR) Policy on 12th May, 2016 that shall lay
the future roadmap for IPRs in India.
• The Policy recognises the abundance of creative and
innovative energies that flow in India, and the need to tap into
and channelize these energies towards a better and brighter
future for all.
• It was approved by the Indian cabinet on 12 May 2016 to
ensure compliance to the Doha Development Round and
TRIPS Agreement.
• The Department of Industrial Policy and Promotion (DIPP)
has been nominated as the nodal department.
127. India enacted the Geographical Indications of Goods
(Registration and Protection) Act, 1999 in order to comply with
the obligations to (2018)
a) ILO
b) IMF
c) UNCTAD
d) WTO
127. India enacted the Geographical Indications of Goods
(Registration and Protection) Act, 1999 in order to comply with
the obligations to
a) ILO
b) IMF
c) UNCTAD
d) WTO
• The Geographical Indications of Goods (Registration and
Protection) Act, 1999 (GI Act) is a sui generis Act of the
Parliament of India for protection of geographical indications
in India.
• India, as a member of the World Trade Organization (WTO),
enacted the Act to comply with the Agreement on Trade-
Related Aspects of Intellectual Property Rights.
• The GI tag ensures that only those registered as authorised
users (or at least those residing inside the geographic territory)
are allowed to use the popular product name.
• Darjeeling tea became the first GI tagged product in India, in

2004–05.
Trade-Related Aspects of Intellectual Property Rights
The TRIPS agreement was negotiated in 1995 at the WTO, it

requires all its signatory countries to enact domestic law.
• It guarantees minimum standards of IP protection. Such legal
consistency enables innovators to monetise their intellectual
property in multiple countries.
• In 2001, the WTO signed the Doha Declaration, which clarified
that in a public health emergency, governments could compel
companies to license their patents to manufacturers, even if
they did not think the offered price was acceptable.
• This provision, commonly referred to as “compulsory
licensing”, was already built into the TRIPS Agreement and the
Doha declaration only clarified its usage.
128. "Gold Tranche" (Reserve Tranche) refers to (2020)
a) a loan system of the World Bank
b) one of the operations of a Central Bank
c) a credit system granted by WTO to its members
d) a credit system granted by IMF to its members
128. "Gold Tranche" (Reserve Tranche) refers to
a) a loan system of the World Bank
b) one of the operations of a Central Bank
c) a credit system granted by WTO to its members
d) a credit system granted by IMF to its members
• The IMF is funded through its members and their quota
contributions. The reserve tranche is basically an emergency
account that IMF members can access at any time without
agreeing to conditions or paying a service fee.
• In other words, a portion of a member country’s quota can be
withdrawn free of charge at its own discretion.
• The reserve tranches that countries hold with the IMF are
considered their facilities of first resort, meaning they will tap
into the reserve tranche before seeking a formal credit tranche.
• Initially, member nations’ reserve tranches are normally 25%
of their quota. However, their RTP can change according to
any lending that the IMF does with its holdings of the
member’s currency.
• Prior to 1978, the reserve tranche was paid in gold, which
was non-interest bearing and known as the gold tranche.
129. With reference to Trade - Related Investment Measures
(TRIMS), which of the following statements is/are correct?
(2020)
1. Quantitative restrictions on imports by foreign investors are
prohibited.
2. They apply to investment measures related to trade in both
goods and services.
3. They are not concerned with the regulation of foreign
investment.
a) 1 and 2 only
b) 2 only
c) 1 and 3 only
d) 1, 2 and 3
129. With reference to Trade - Related Investment Measures
(TRIMS), which of the following statements is/are correct?
1. Quantitative restrictions on imports by foreign investors are
prohibited.
2. They apply to investment measures related to trade in both
goods and services.
3. They are not concerned with the regulation of foreign
investment.
a) 1 and 2 only
b) 2 only
c) 1 and 3 only
d) 1, 2 and 3
• The Agreement on Trade-Related Investment Measures (TRIMS)
recognizes that certain investment measures can restrict and distort
trade.
• It states that WTO members may not apply any measure that
discriminates against foreign products or that leads to
quantitative restrictions, both of which violate basic WTO
principles.
• A list of prohibited TRIMS, such as local content requirements, is
part of the Agreement.
• The TRIMS Committee monitors the operation and implementation
of the Agreement and allows members the opportunity to consult on
any relevant matters.
• The coverage of the Agreement is defined in Article 1, which states
that the Agreement applies to investment measures related to trade
in goods only. Thus, the TRIMs Agreement does not apply to
services.
• As an agreement that is based on existing GATT disciplines on trade
in goods, the Agreement is not concerned with the regulation of
foreign investment.
Planning and LPG Reforms
130. The main objective of the 12th Five-Year Plan is (2014)
a) inclusive growth and poverty reduction.
b) inclusive and sustainable growth
c) sustainable and inclusive growth to reduce unemployment
d) faster, sustainable and more inclusive growth.
130. The main objective of the 12th Five-Year Plan is
a) inclusive growth and poverty reduction.
b) inclusive and sustainable growth
c) sustainable and inclusive growth to reduce unemployment
d) faster, sustainable and more inclusive growth.
Features
• Eleventh Plan was aimed “Towards Faster &
More Inclusive Growth “after UPA rode
back to power on the plank of helping Aam
Aadmi (common man).
• Objectives included: Access to essential
Eleventh Plan services in health and education especially
(2007 - 2012) for poor, Employment through education
Target Growth and skill development, Extension of
9% employment opportunities using National
Actual Growth Rural Employment Guarantee Programme
8% (NREGP), Environmental sustainability,
Reduction of gender inequality.
• The Eleventh Plan started well with the first
year achieving a growth rate of 9.3 per cent,
however the growth decelerated to 6.7 per
cent rate in 2008-09 following the global
financial crisis.
Features
• The second bout of global slowdown in 2011
due to the sovereign debt crisis in Europe
coupled with domestic factors such as tight
monetary policy and supply side
bottlenecks, resulted in deceleration of
Eleventh Plan growth to 6.2 per cent in 2011-12.
(2007 - 2012) • The expansionary measures taken by the
Target Growth government to counter the effect fo global
9% slowdown led to increase in key indicators
through 2009-10 with some moderation
Actual Growth
thereafter.
8%
• The issue of Price Stability remained
resonating for more than half of the Plan
period. Inability to pass on burden on
costlier imported oil prices might have
constrained the supply of investible funds in
the government’s hand causing the 11th
Plan to perform at the levels below its target.
Features
• The stated vision of the Plan Document
is “of India moving forward in a way
that would ensure a broad-based
improvement in living standards of all
sections of the people through a growth
process which is faster than in the past,
Twelfth Five Year more inclusive and also more
Plan environmentally sustainable”.
(2012-17) • This mantra of “faster, sustainable and
more inclusive growth”’ is indeed ideal
and laudable.
• The immediate challenge is to reverse
the observed deceleration in growth by
reviving investment as quickly as
possible.
131. Which of the following has/have occurred in India after
its liberalization of economic policies in 1991? (2017)
1. Share of agriculture in GDP increased enormously.
2. Share of India’s exports in world trade increased.
3. FDI inflows increased.
4. India’s foreign exchange reserves increased enormously.
a) 1 and 4 only
b) 2, 3 and 4 only
c) 2 and 3 only
d) 1, 2, 3 and 4
131. Which of the following has/have occurred in India after
its liberalization of economic policies in 1991?
1. Share of agriculture in GDP increased enormously.
2. Share of India’s exports in world trade increased.
3. FDI inflows increased.
4. India’s foreign exchange reserves increased enormously.
a) 1 and 4 only
b) 2, 3 and 4 only
c) 2 and 3 only
d) 1, 2, 3 and 4
• The post-reform period shows the gradual decline in the
agriculture sector’s contribution to the Indian economy.
India’s traditional occupation, agriculture now contributes
only about 15% to the GDP, down from 29 percent in 1991.
• As a result of the reforms that opened the borders to foreign
goods, there was easier access to foreign technology. Also,
share of India's exports increased since 1991.
• India's share in world FDI inflow has increased from 0.05 per
cent in 1991 to 3.26 per cent in 2018 which is the highest
percentage held by India.
• It indicates that the confidence of foreign investors in India
has increased over the years.
• India's foreign exchange reserves have grown significantly since
1991. The reserves, which stood at US$ 5.8 billion at end-March
1991 increased gradually to US$ 25.2 billion by end-March 1995.
132. With reference to India’s Five -Year Plans, which of the
following statements is/are correct? (2019)
1. From the Second Five -Year Plan, there was a determined
thrust towards substitution of basic and capital good
industries.
2. The Fourth Five -Year Plan adopted the objective of
correcting the earlier trend of increased concentration of
wealth and economic power.
3. In the Fifth Five -Year Plan, for the first time, the financial
sector was included as an integral part of the Plan.
a) 1 and 2 only
b) 2 only
c) 3 only
d) 1, 2 and 3
132. With reference to India’s Five -Year Plans, which of the
following statements is/are correct?
1. From the Second Five -Year Plan, there was a determined
thrust towards substitution of basic and capital good
industries.
2. The Fourth Five -Year Plan adopted the objective of
correcting the earlier trend of increased concentration of
wealth and economic power.
3. In the Fifth Five -Year Plan, for the first time, the financial
sector was included as an integral part of the Plan.
a) 1 and 2 only
b) 2 only
c) 3 only
d) 1, 2 and 3
133. With reference to the Indian economy after the 1991
economic liberalization, consider the following statements: (2020)
1. Worker productivity (rs. per worker at 2004 -05 prices)
increased in urban areas while it decreased in rural areas.
2. The percentage share of rural areas in the workforce steadily
increased.
3. In rural areas, the growth in non -farm economy increased.
4. The growth rate in rural employment decreased
a) 1 and 2 only
b) 3 and 4 only
c) 3 only
d) 1, 2 and 4 only
133. With reference to the Indian economy after the 1991
economic liberalization, consider the following statements:
1. Worker productivity (rs. per worker at 2004 -05 prices)
increased in urban areas while it decreased in rural areas.
2. The percentage share of rural areas in the workforce steadily
increased.
3. In rural areas, the growth in non -farm economy increased.
4. The growth rate in rural employment decreased
a) 1 and 2 only
b) 3 and 4 only
c) 3 only
d) 1, 2 and 4 only
In NITI Aayog’s paper “Changing Structure of Rural Economy
of India Implications for Employment and Growth 2017”,
following observations were made:
• The absolute level of income per worker i.e. worker

productivity has increased for both rural and urban areas. For
rural areas it was Rs. 37273 in 2004 -05 and Rs. 101755 in 2011 -
12, while for urban areas it was Rs. 120419 in 2004 -05 and Rs.
282515 in 2011 -12.
• As per 2011 Census, 68.8% of India’s population and 72.4% of
workforce resided in rural areas. However, steady transition
to urbanization over the years has led to a decline in the rural
share in the workforce, from 77.8% in 1993 -94 to 70.9% in 2011
-12.
• About two third of rural income is now generated in non -
agricultural activities. Non -farm economy has increased in
rural areas. The share of agriculture in rural economy has
decreased from 57% in 1993 -94 to 39% in 2011 -12.
• After 2004 -05, the rural areas have witnessed negative growth
in employment inspite of high growth in output. The growth
rate of rural employment was 1.45% during 1994 -2005, which
fell to -0.28% between 2005 -12.
Agriculture
134.The Fair and Remunerative Price (FRP) of surgarcane is
approved by the (2015)
a) Cabinet Committee on Economic Affairs.
b) Commission for Agricultural Costs and Prices.
c) Directorate of Marketing and Inspection, Ministry of
Agriculture
d) Agricultural Produce Market Committee
134.The Fair and Remunerative Price (FRP) of surgarcane is
approved by the
a) Cabinet Committee on Economic Affairs.
b) Commission for Agricultural Costs and Prices.
c) Directorate of Marketing and Inspection, Ministry of
Agriculture
d) Agricultural Produce Market Committee
• FRP is the minimum price that mills have to pay to sugarcane
growers.
• With the amendment of the Sugarcane (Control) Order, 1966

on October 22, 2009, the concept of Statutory Minimum Price
(SMP) of sugarcane was replaced with the ‘Fair and
Remunerative Price (FRP)’ of sugarcane.
• The cane price announced by the central government is

decided on the basis of the recommendations of the
Commission for Agricultural Costs and Prices (CACP) in
consultation with the state governments and after taking
feedback from associations of sugar industry.
• The Cabinet Committee on Economic Affairs approves the Fair

and Remunerative Price (FRP) of sugarcane.
135. In India, markets in agricultural products are regulated
under the (2015)
a) Essential Commodities Act, 1955
b) Agricultural Produce Market Committee Act enacted by
States
c) Agricultural Produce (Grading and Marking) Act, 1937
d) Food Products Order, 1956 and Meat and Food Products
Order, 1973
135. In India, markets in agricultural products are regulated
under the
a) Essential Commodities Act, 1955
b) Agricultural Produce Market Committee Act enacted by
States
c) Agricultural Produce (Grading and Marking) Act, 1937
d) Food Products Order, 1956 and Meat and Food Products
Order, 1973
• The Agricultural Produce Market Committee (APMC) Act,
passed by State Governments, currently governs agricultural
product markets.
• The Agricultural Produce Marketing Committee (APMC) Act

gives the concerned State Governments the power to
announce commodities, identify markets and market areas
where regulated trade occurs, and establish APMCs that are
responsible for the markets' smooth operation.
• A state's entirety is divided and designated as a market area,

with markets under the control of Market Committees
established by the State Governments.
• The state governments' initiatives, which are used to establish
all markets.
• The APMC Act also specifies the legal entities—including

people, groups, businesses, farmers, and local governments—
that may submit applications for the opening of new
agricultural produce markets in a particular region.
• In addition to this restriction, consumers, farmers, and private

individuals may set up multiple markets in a specific market
area.
1. The Accelerated Irrigation Benefits Programme was
launched during 1996-97 to provide loan assistance to poor
farmers.
2. The Command Area Development Programme was
launched in 1974-75 for the development of water-use
efficiency.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
1. The Accelerated Irrigation Benefits Programme was
launched during 1996-97 to provide loan assistance to poor
farmers.
2. The Command Area Development Programme was
launched in 1974-75 for the development of water-use
efficiency.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
• Central Government launched the Accelerated Irrigation
Benefits Programme (AIBP) in the year 1996-97 to provide
Central Assistance to major/medium irrigation projects in the
country, with the objective to accelerate implementation of
such projects which were beyond resource capability of the
States or were in advanced stage of completion.
• Priority was given to those projects which were started in
Pre-Fifth and Fifth Plan period and also to those which were
benefiting Tribal and Drought Prone Areas.
• Command Area Development and Water Management
(CADWM) programme is a Centrally Sponsored Plan Scheme
being implemented in the State since 1976-77.
• The vision of CAD is to reduce the gap between irrigation
potential created and that utilized by construction of On-farm
Developmental works like, construction of field channel, field
drain etc. by judicious and equitable distribution of the
available irrigation water and with active involvement of
farmers through participatory irrigation management(PIM).
137. Which one of the following best describes the main
objective of 'Seed Village Concept’? (2015)
a) Encouraging the farmers to use their own farm seeds and
discouraging them to buy the seeds from others
b) Involving the farmers for training in quality seed production
and thereby to make available quality seeds to others at
appropriate time and affordable cost
c) Earmarking some villages exclusively for the production of
certified seeds
d) Identifying the entrepreneurs in villages and providing them
technology and finance to set up seed Companies.
137. Which one of the following best describes the main
objective of 'Seed Village Concept’?
a) Encouraging the farmers to use their own farm seeds and
discouraging them to buy the seeds from others.
b) Involving the farmers for training in quality seed
production and thereby to make available quality seeds to
others at appropriate time and affordable cost.
c) Earmarking some villages exclusively for the production of
certified seeds.
d) Identifying the entrepreneurs in villages and providing them
technology and finance to set up seed Companies.
• Seed village concept is to promote the quality seed production
of foundation and certified seed classes.
• The area which is suitable for raising a particular crop will be
selected, and raised with single variety of a kind.
Concept
• Organizing seed production in cluster (or) compact area
• Replacing existing local varieties with new high yielding
varieties.
• Increasing the seed production
• To meet the local demand, timely supply and reasonable cost
• Self sufficiency and self reliance of the village
• Increasing the seed replacement rate
Features
• Seed is available at the door steps of farms at an appropriate
time
• Seed availability at affordable cost even lesser than market
price
• Increased confidence among the farmers about the quality
because of known source of production
• Producer and consumer are mutually benefited
• Facilitates fast spread of new cultivars of different kinds
138. Which of the following is/are the advantage/advantages of
practicing drip irrigation? (2016)
1. Reduction in weed
2. Reduction in soil salinity
3. Reduction' in-soil erosion
a) 1 and 2 only
b) 3 only
c) 1 and 3 only
d) None of the above is an advantage of practising drip
irrigation
138. Which of the following is/are the advantage/advantages of
practicing drip irrigation? (2016)
1. Reduction in weed
2. Reduction in soil salinity
3. Reduction' in-soil erosion
a) 1 and 2 only
b) 3 only
c) 1 and 3 only
d) None of the above is an advantage of practising drip
irrigation
Advantages of Drip Irrigation:
1. Higher consistent quality yields
2. Huge water savings: no evaporation, no run off, no waste
3. 100% land utilization - drip irrigates uniformly in any topography
and soil type
4. Energy savings: drip irrigation works on low pressure
5. Efficient use of fertilizer and crop protection, with no leaching
6. Less dependency on weather, greater stability and lower risks
7. High availability of water and nutrients
8. Doses of water and nutrients tailored to plant’s development
needs
9. No saturation and good soil aeration
10. Avoids high salinity caused by excessive fertilizer application
11. No wetting of foliage that can result in fungal diseases
Disadvantages of Drip Irrigation:
In spite of the fact that drip irrigation has so many potential
benefits , they’re a certain limitation also, there are as follow:
1. Expense specially initial cost is high.
2. The lifetime of the tubes used in drip irrigation can be
shortened by the sun causing wastage.
3. May cause clogging if water is not filtered correctly.
4. Problems in moisture distribution.
5. Salinity problem.
6. Germination problem.
7. High skills are required.
139. What is/are the advantage/advantages of implementing
the ‘National Agriculture Market’ scheme?
1. It is a pan-India electronic trading portal for agricultural
commodities.
2. It provides the farmers access to nationwide market, with
prices commensurate with the quality of their produce.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
139. What is/are the advantage/advantages of implementing
the ‘National Agriculture Market’ scheme?
1. It is a pan-India electronic trading portal for agricultural
commodities.
2. It provides the farmers access to nationwide market, with
prices commensurate with the quality of their produce.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
• NAM is envisaged as a pan-India electronic trading portal
which seeks to network the existing APMC and other market
yards to create a unified national market for agricultural
commodities.
• NAM is a “virtual” market but it has a physical market
(mandi) at the back end.
• Small Farmers’ Agribusiness Consortium (SFAC) is
designated as Lead Agency, to roll out the NAM in
partnership with a Strategic Partner (SP), which will be
responsible for developing, running and maintaining the
proposed e-marketing platform.
• NAM will create a national network of physical mandis which
can be accessed online.
• It seeks to leverage the physical infrastructure of the mandis
through an online trading portal, enabling buyers situated
even outside the State to participate in trading at the local
level.
1. The quantity of imported edible oils is more than the
domestic production of edible oils in the last five years.
2. The Government does not impose any customs duty on all
the imported edible oils as a special case.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
1. The quantity of imported edible oils is more than the
domestic production of edible oils in the last five years.
2. The Government does not impose any customs duty on all
the imported edible oils as a special case.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
• The Central government, on 24 May 2022, exempted customs
duty and AIDC on yearly import of 20 lakh metric tonne each
of crude soya bean and sunflower oil for the years 2022-23 and
2023-24.
• The basic duty on refined palm oil was reduced from 17.5 per
cent to 12.5 per cent w.e.f 21 December 2021 until 31 March,
2022 and the basic duty on crude palm oil was reduced from
7.5 per cent to 5 per cent w.e.f 13 February 2022 until 30
September 2022.
• The Central Government has allowed free import of refined

palm oil until 31 December 2022.
141. Consider the following: (2018)
1. Areca nut
2. Barley
3. Coffee
4. Finger millet
5. Groundnut
6. Sesamum
7. Turmeric
The Cabinet Committee on Economic Affairs has announced the
Minimum Support Price for which of the above?
a) 1, 2, 3, and 7 only
b) 2, 4, 5, and 6 only
c) 1, 3, 4, 5, and 6 only
d) 1, 2, 3, 4, 5, 6 and 7
141. Consider the following:
1. Areca nut
2. Barley
3. Coffee
4. Finger millet
5. Groundnut
6. Sesamum
7. Turmeric
The Cabinet Committee on Economic Affairs has announced the
Minimum Support Price for which of the above?
a) 1, 2, 3, and 7 only
b) 2, 4, 5, and 6 only
c) 1, 3, 4, 5, and 6 only
d) 1, 2, 3, 4, 5, 6 and 7
• The Government fixes MSP of 22 mandated agricultural crops
on the basis of the recommendations of Commission for
Agricultural Costs & Prices (CACP) and after due
consideration of the views of State Governments and the
concerned Central Ministries/ Departments.
• The 22 mandated crops include
• 14 Kharif crops viz. paddy, jowar, bajra, maize, ragi, tur
(arhar), moong, urad, groundnut, soybean (yellow),
sunflower seed, sesamum, nigerseed, cotton and
• 6 Rabi crops viz. wheat, barley, gram, masur (lentil),
rapeseed and mustard, safflower
• and 2 commercial crops viz. jute and copra.
142. The economic cost of food grains to the Food Corporation
of India is Minimum Support Price and bonus (if any) paid to
the farmers plus (2019)
a) transportation cost only
b) interest cost only
c) procurement incidentals and distribution cost
d) procurement incidentals and charges for godowns
142. The economic cost of food grains to the Food Corporation
of India is Minimum Support Price and bonus (if any) paid to
the farmers plus
a) transportation cost only
b) interest cost only
c) procurement incidentals and distribution cost
d) procurement incidentals and charges for godowns
143. Among the agricultural commodities imported by India,
which one of the following accounts for the highest imports in
terms of value in the last five years? (2019)
a) Spices
b) Fresh fruits
c) Pulses
d) Vegetable oils
143. Among the agricultural commodities imported by India,
which one of the following accounts for the highest imports in
terms of value in the last five years?
a) Spices
b) Fresh fruits
c) Pulses
d) Vegetable oils
144. With reference to land reforms in independent India,
which one of the following statements is correct? (2019)
a) The ceiling laws were aimed at family holdings and not
individual holdings.
b) The major aim of land reforms was providing agricultural
land to all the landless.
c) It resulted in cultivation of cash crops as a predominant form
of cultivation.
d) Land reforms permitted no exemptions to the ceiling limits.
144. With reference to land reforms in independent India,
which one of the following statements is correct?
a) The ceiling laws were aimed at family holdings and not
b) The major aim of land reforms was providing agricultural
land to all the landless.
c) It resulted in cultivation of cash crops as a predominant form
of cultivation.
d) Land reforms permitted no exemptions to the ceiling limits.
The comprehensive land reform policy that evolved so far after
independence consisted of
• Abolition of intermediaries between the State and tenants;
• Tenancy reforms that provide - Security to tenants, -
Rationalisation and regulation of rent, - Conferment of
ownership rights on tenants;
• Fixation of ceiling on landholdings;
• Consolidation of holdings;
Land Ceiling laws were applied to family holdings as well as

Certain exemptions in land reforms were permitted to the
ceiling limits. Example -Exemptions for Garden Lands, Forest
Land, Barren Land, etc.
145. Among the following which one is the largest exporter of
rice in the world in the last five years? (2019)
a) China
b) India
c) Myanmar
d) Vietnam
145. Among the following which one is the largest exporter of
rice in the world in the last five years?
a) China
b) India
c) Myanmar
d) Vietnam
146. With reference to chemical fertilizers in India, consider
the following statements: (2020)
1. At present, the retail price of chemical fertilizers is market -
driven and not administered by the Government.
2. Ammonia, which is an input of urea, is produced from
natural gas.
3. Sulphur, which is a raw material for phosphoric acid
fertilizer, is a by -product of oil refineries.
a) 1 only
b) 2 and 3 only
c) 2 only
d) 1, 2 and 3
146. With reference to chemical fertilizers in India, consider
the following statements:
1. At present, the retail price of chemical fertilizers is market -
driven and not administered by the Government.
2. Ammonia, which is an input of urea, is produced from
natural gas.
3. Sulphur, which is a raw material for phosphoric acid
fertilizer, is a by -product of oil refineries.
a) 1 only
b) 2 and 3 only
c) 2 only
d) 1, 2 and 3
• In order to make fertilisers easily accessible to farmers and
maintain India's agricultural self-sufficiency, the Indian
government provides subsidies.
• The same has largely been accomplished by regulating the cost

of fertiliser and the volume of production. Farmers are
receiving the urea for a statutorily specified Maximum Retail
Price (MRP).
• In accordance with the NBS Policy, the Government annually

announces a fixed rate of subsidy (in Rs per Kg) on each
nutrient of subsidised fertilisers, namely Nitrogen (N),
Phosphate (P), Potash (K), and Sulfur (S).
• Ammonia that has been produced synthetically (Standard
Industrial Classification 2873) from natural gas is known as
synthetic ammonia (NH3). The molecules of natural gas are
broken down into carbon and hydrogen.
• After being cleaned, the hydrogen is combined with nitrogen

to create ammonia. Ammonia is used as fertiliser in about 75%
of cases, either directly as ammonia or indirectly through the
creation of urea, ammonium nitrate, and mono- or
diammonium phosphates.
• Sulphur is a by-product of processing natural gas and refining

high-sulfur crude oils. Also, Sulphur is a raw material for
phosphoric acid fertilizer.
147. In India, which of the following can be considered as
public investment in agriculture? (2020)
1. Fixing Minimum Support Price for agricultural produce of
all crops.
2. Computerization of Primary Agricultural Credit Societies
3. Social Capital development
4. Free electricity supply to farmers
5. Waiver of agricultural loans by the banking system
6. Setting up of cold storage facilities by the governments.
a) 1, 2 and 5 only
b) 1, 3, 4 and 5 only
c) 2, 3 and 6 only
d) 1, 2, 3, 4, 5 and 6
147. In India, which of the following can be considered as
public investment in agriculture?
1. Fixing Minimum Support Price for agricultural produce of
all crops.
2. Computerization of Primary Agricultural Credit Societies
3. Social Capital development
4. Free electricity supply to farmers
5. Waiver of agricultural loans by the banking system
6. Setting up of cold storage facilities by the governments.
a) 1, 2 and 5 only
b) 1, 3, 4 and 5 only
c) 2, 3 and 6 only
d) 1, 2, 3, 4, 5 and 6
• Public Investment here refers to the creation of either physical
infrastructure or intangible capital.
• Subsidies and loan waivers are not investments.
148. Which of the following factors/policies were affecting the
price of rice in India in the recent past? (2020)
1. Minimum Support Price
2. Government's trading
3. Government's stockpiling
4. Consumer subsidies
a) 1, 2 and 4 only
b) 1, 3 and 4 only
c) 2 and 3 only
d) 1, 2, 3 and 4
148. Which of the following factors/policies were affecting the
price of rice in India in the recent past?
1. Minimum Support Price
2. Government's trading
3. Government's stockpiling
4. Consumer subsidies
a) 1, 2 and 4 only
b) 1, 3 and 4 only
c) 2 and 3 only
d) 1, 2, 3 and 4
• The domestic factors which affect prices of rice in India are as
follows-
• The intensity of seasonal monsoon across India and
production of Basmati and non-basmati rice.
• Minimum support price and government's trading of rice
results in the diversion of stocks from the open market
hence driving up the price for the ultimate consumers
which will lead to increase in price for ultimate customers.
• Rice tenders by Food Corporation of India and other
organizations
• Consumer subsidies
• The government's stockpiling (lower stockpiling will lead
to less buffer, hence price rise).
• Climatic shocks can impact rice production and prices in
the short run (if the demand increases).
149. Under the Kisan Credit Card scheme, short-term credit
support is given to farmers for which of the following
purposes? (2020)
1. Working capital for maintenance of farm assets
2. Purchase of combine harvesters, tractors and mini trucks.
3. Consumption requirements of farm households
4. Post-harvest expense
5. Construction of family house and setting up of village cold
storage facility.
a) 1, 2 and 5 only
b) 1, 3 and 4 only
c) 2, 3, 4 and 5 only
d) 1, 2, 3 4 and 5
149. Under the Kisan Credit Card scheme, short-term credit
support is given to farmers for which of the following
purposes?
1. Working capital for maintenance of farm assets
2. Purchase of combine harvesters, tractors and mini trucks.
3. Consumption requirements of farm households
4. Post-harvest expense
5. Construction of family house and setting up of village cold
storage facility.
a) 1, 2 and 5 only
b) 1, 3 and 4 only
c) 2, 3, 4 and 5 only
d) 1, 2, 3 4 and 5
• The Kisan Credit Card scheme is a Government of India
scheme which provides farmers with timely access to credit.
• The Kisan Credit Card (KCC) scheme was launched in 1998
with the aim of providing short-term formal credit to farmers
and was created by NABARD (National Bank for Agriculture
and Rural Development).
• Kisan Credit Card (KCC) scheme meets the financial
requirements of farmers at various stages of farming.
• The scheme aims at providing adequate and timely credit
support from the banking system under a single window with
flexible and simplified procedure to the farmers for their
cultivation and other needs as indicated below:
• To meet the short-term credit requirements for cultivation
of crops;
• Post-harvest expenses;
• Produce marketing loan;
• Consumption requirements of farmer household;
• Working capital for maintenance of farm assets and
activities allied to agriculture;
• Investment credit requirement for agriculture and allied
activities.
• Eligibility
• All Farmers – Individuals / Joint borrowers who are owner
cultivators
• Tenant Farmers, Oral Lessees & Share Croppers
• Self Help Groups (SHGs) or Joint Liability Groups of
Farmers including tenant farmers, share croppers etc.
1. In the case of all cereals, pulses and oil-seeds, the
procurement at Minimum Support Price (MSP) is unlimited
in any State/UT of India.
2. In the case of cereals and pulses, the MSP is fixed in any
State/UT at a level to which the market price will never rise.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
1. In the case of all cereals, pulses and oil-seeds, the
procurement at Minimum Support Price (MSP) is unlimited
in any State/UT of India.
2. In the case of cereals and pulses, the MSP is fixed in any
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
• The Government fixes MSP of 22 mandated agricultural crops
on the basis of the recommendations of Commission for
Agricultural Costs & Prices (CACP) and after due
consideration of the views of State Governments and the
concerned Central Ministries/ Departments.
• The 22 mandated crops include

• 14 Kharif crops viz. paddy, jowar, bajra, maize, ragi, tur
(arhar), moong, urad, groundnut, soybean (yellow),
sunflower seed, sesamum, nigerseed, cotton and
• 6 Rabi crops viz. wheat, barley, gram, masur (lentil),
rapeseed and mustard, safflower
• and 2 commercial crops viz. jute and copra.
• While recommending MSPs, the CACP looks at the following
factors:
• the demand and supply of a commodity;
• its cost of production;
• the market price trends (both domestic and international);
• inter-crop price parity;
• the terms of trade between agriculture and non-agriculture
(that is, the ratio of prices of farm inputs and farm
outputs);
• a minimum of 50 per cent as the margin over the cost of
production; and
• the likely implications of an MSP on consumers of that
product.
• MSP fixed for each crop is uniform for the entire country.
However, there is no instance of MSP being fixed in any
• The government does not procure all farm produce at MSPs.
Actual procurement (at MSP) varies with crop and geography.
Also, MSPs have no statutory backing — a farmer cannot
demand MSP as a matter of right.
• While the government announces MSP for 23 crops, effective
MSP linked procurement occurs mainly for wheat, rice and
cotton.
• Procurement is open-ended, it is not unlimited since our
buffer stock is limited.
Industry and Infrastructure
151. How does the National Rural Livelihood Mission seek
to improve livelihood options of rural poor? (2012)
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.
a) 1 and 2 only
b) 2 only
c) 1 and 3 only
d) 1, 2 and 3
151. How 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.
a) 1 and 2 only
b) 2 only
c) 1 and 3 only
d) 1, 2 and 3
• Deendayal Antyodaya Yojana-National Rural Livelihood
Mission (DAY-NRLM) is a flagship poverty alleviation
program implemented by the Ministry of Rural Development,
Government of India.
• It aims to reduce poverty by enabling the poor household to
access gainful self-employment and skilled wage employment
opportunities resulting in sustainable and diversified
livelihood options for the poor.
• This is one of the world's largest initiatives to improve the
livelihoods of the poor.
• The Mission seeks to achieve its objective through investing in
four core components viz., (a) social mobilization and
promotion and strengthening of self-managed and financially
sustainable community institutions of the rural poor women;
(b) financial inclusion; (c) sustainable livelihoods; and (d)
social inclusion, social development and access to entitlements
through convergence.
The Mission seeks to achieve its objective through investing in
four core components viz.,
• social mobilization and promotion and strengthening of self-
managed and financially sustainable community institutions
of the rural poor women;
• financial inclusion;
• sustainable livelihoods; and
• social inclusion, social development and access to entitlements
through convergence.
152. What is/are the recent policy initiative(s) of
Government of India to promote the growth
manufacturing sector? (2012)
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:
a) 1 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
152. What 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:
a) 1 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
• The National Manufacturing Policy was approved by the
Government in October 2011.
• The major objectives of the policy are enhancing the share of
manufacturing in the gross domestic product (GDP) to 25 per
cent and creating an additional 100 million jobs over a decade
or so.
• The NMP provides for the promotion of clusters and
aggregation, especially through the creation of National
Investment and Manufacturing Zones (NIMZs).
• Technology Acquisition & Development Fund (TADF)
• The scheme is funded by Department of Industrial Policy &
Promotion (DIPP), Ministry of Commerce & Industry, under
National Manufacturing Policy to help Indian new & existing
Micro, Small & Medium Enterprises (MSMEs) to acquire
Clean, Green & Energy Efficient Technologies, in form of
Technology / Customized Products / Specialized Services /
Patents / Industrial Design (with requisite level of proof)
available in Indian or Global market.
153. In 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? (2012)
1. Cement
2. Fertilizers
3. Natural Gas
4. Refinery products
5. Textiles
a) 1 and 5 only
b) 2, 3 and 4 only
c) 1, 2, 3 and 4 only
d) 1, 2, 3, 4 and 5
153. In 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
a) 1 and 5 only
b) 2, 3 and 4 only
c) 1, 2, 3 and 4 only
d) 1, 2, 3, 4 and 5
• The monthly Index of Eight Core Industries (ICI) measures
collective and individual performance of production in
selected eight core industries like Coal, Crude Oil, Natural
Gas, Refinery Products, Fertilizers, Steel, Cement and
Electricity.
• This is an index of the eight most fundamental industrial

sectors of the Indian economy and comprises 40.27 percent of
the weight in IIP.
154. Despite having large reserves of coal, why does India
import millions of tones of coal? (2012)
1. It is the policy of India to save its own coal reserves for
future, and import it from other countries for the present
use.
2. Most of the power plants in India are coal-based and they
are not able to get sufficient supplies of coal from within the
country.
3. Steel companies need large quantity of coking coal which
has to be imported.
a) 1 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
154. Despite having large reserves of coal, why does India
import millions of tones of coal?
1. It is the policy of India to save its own coal reserves for
future, and import it from other countries for the present
use.
2. Most of the power plants in India are coal-based and they
are not able to get sufficient supplies of coal from within the
country.
3. Steel companies need large quantity of coking coal which
has to be imported.
a) 1 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
155. In the 'Index of Eight Core Industries', which one of the
following is given the highest weight? (2015)
a) Coal production
b) Electricity generation
c) Fertilizer production
d) Steel production
155.In the 'Index of Eight Core Industries', which one of the
following is given the highest weight?
a) Coal production
b) Electricity generation
c) Fertilizer production
d) Steel production
• The monthly Index of Eight Core Industries (ICI) measures
collective and individual performance of production in
selected eight core industries like Coal, Crude Oil, Natural
Gas, Refinery Products, Fertilizers, Steel, Cement and
Electricity.
• This is an index of the eight most fundamental industrial

sectors of the Indian economy and comprises 40.27 percent of
the weight in IIP.
Sector Weight
Coal 10.3335
Crude Oil 8.9833
Natural Gas 6.8768
Refinery Products 28.0376
Fertilizers 2.6276
Steel 17.9166
Cement 5.3720
Electricity 19.8530
Overall Index 100.0000
156. Which one of the following is a purpose of ‘UDAY’, a
scheme of the Government? (2016)
a) Providing technical and financial assistance to startup
entrepreneurs in the field of renewable sources of energy
b) Providing electricity to every household in the countries by
2018
c) Replacing the coal-based power plants with natural gas,
nuclear, solar, wind and tidal power plants over a period of
time
d) Providing for financial turnaround and revival of power
distribution companies
156. Which one of the following is a purpose of ‘UDAY’, a
scheme of the Government?
a) Providing technical and financial assistance to startup
entrepreneurs in the field of renewable sources of energy
b) Providing electricity to every household in the countries by
2018
c) Replacing the coal-based power plants with natural gas,
nuclear, solar, wind and tidal power plants over a period of
time
d) Providing for financial turnaround and revival of power
distribution companies
• Ministry of Power, GoI launched Ujwal DISCOM Assurance Yojana
(UDAY) which was approved by Union Cabinet on 5th November,
2015.
The scheme envisages:
• Financial Turnaround
• Operational improvement
• Reduction of cost of generation of power
• Development of Renewable Energy
• Energy efficiency & conservation
• The Ujwal DISCOM Assurance Yojana is a centrally sponsored

scheme.
• The long term vision of this scheme was to ensure an uninterrupted
supply of electricity to the whole of India. It also aims to find the
right balance between revenue and cost for these companies so as to
ensure smooth financial and operational activity.
157. What is/are the purpose/purposes of ‘District Mineral
Foundations’ in India? (2016)
1. Promoting mineral exploration activities in mineral-rich
districts
2. Protecting the interests of the persons affected by mining
operations
3. Authorizing State Governments to issue licenses for mineral
exploration
a) 1 and 2 only
b) 2 only
c) 1 and 3 only
d) 1, 2 and 3
157. What is/are the purpose/purposes of ‘District Mineral
Foundations’ in India?
1. Promoting mineral exploration activities in mineral-rich
districts
2. Protecting the interests of the persons affected by mining
operations
3. Authorizing State Governments to issue licenses for mineral
exploration
a) 1 and 2 only
b) 2 only
c) 1 and 3 only
d) 1, 2 and 3
• In 2015, the Indian government introduced a mechanism for
establishing the District Mineral Foundations (DMF) which
were to drive developmental work in the mining-affected
areas.
• District Mineral Foundations (DMF) is a trust, setup as non-

profit body in all districts of India, to work for the interest and
benefit of persons and areas affected by mining related
operations.
• It is funded through the contribution from miners.
• The objective of District Mineral Foundation is to work in such

manner as may be prescribed by the State Government.
1. Coal sector was nationalized by the Government of India
under Indira Gandhi.
2. Now, coal blocks are allocated on lottery basis.
3. Till recently, India imported coal to meet the shortages of
domestic supply, but now India is self - sufficient in coal
product.
a) 1 only
b) 2 and 3 only
c) 3 only
d) 1, 2 and 3
1. Coal sector was nationalized by the Government of India
under Indira Gandhi.
2. Now, coal blocks are allocated on lottery basis.
3. Till recently, India imported coal to meet the shortages of
domestic supply, but now India is self - sufficient in coal
product.
a) 1 only
b) 2 and 3 only
c) 3 only
d) 1, 2 and 3
• Right from its genesis, the commercial coal mining in modern
times in India has been dictated by the needs of the domestic
consumption.
• On account of the growing needs of the steel industry, a thrust
had to be given on systematic exploitation of coking coal
reserves in Jharia Coalfield.
• Adequate capital investment to meet the burgeoning energy
needs of the country was not forthcoming from the private
coal mine owners.
• Unscientific mining practices adopted by some of them and
poor working conditions of labour in some of the private coal
mines became matters of concern for the Government.
• On account of these reasons, the Central Government took a
decision to nationalise the private coal mines. The
nationalisation was done in two phases, the first with the
coking coal mines in 1971-72 and then with the non-coking
coal mines in 1973.
• From an earlier restrictive model, we have moved on to
granting coal mining blocks pursuant to a competitive bidding
process, and from prescribing specific end-use to permitting
commercial sale of coal.
• The auction-based regime introduced in 2014 allowed private
sector participation, however it was limited to captive usage in
own end use plants.
• Now, the sector has been opened up for commercial coal
mining by private players in 2020.
• As per the coal directory 2020-21, India is the second largest

importer, and it mainly imports coal from Indonesia,
Australia, South Africa and USA.
Miscellaneous
159. Consider the following: (2012)
1. Hotels and restaurants
2. Motor transport undertakings
3. Newspaper establishments
4. Private medical institutions
The employees of which of the above can have the ‘Social
Security’ coverage under Employees’ State Insurance
Scheme?
a) 1, 2 and 3 only
b) 4 only
c) 1, 3 and 4 only
d) 1, 2, 3 and 4
159. Consider the following:
1. Hotels and restaurants
2. Motor transport undertakings
3. Newspaper establishments
4. Private medical institutions
The employees of which of the above can have the ‘Social
Security’ coverage under Employees’ State Insurance
Scheme?
a) 1, 2 and 3 only
b) 4 only
c) 1, 3 and 4 only
d) 1, 2, 3 and 4
• The Employees' State Insurance Act, passed in 1948, is a piece
of social security legislation that offers workers medical care
and cash benefits in the event of sickness, pregnancy,
disability, or death resulting from an occupational injury.
• The Act firstly applies to non-seasonal factories with 10 or
more employees. The Act's provisions are gradually being
expanded in scope.
• An enabling clause in the Act gives the "appropriate
government" the authority to apply the Act's provisions to
other types of establishments, including industrial,
commercial, agricultural, and other types.
• In accordance with these provisions, the majority of State
governments have expanded the application of the Act's
provisions to new types of businesses, including shops, hotels,
restaurants, road-motor transport companies, and newspaper
establishments with 20 or more employable workers.
160. The substitution of steel for wooden ploughs in
agricultural production is an example of (2015)
a) labour-augmenting technological progress
b) capital-augmenting technological progress
c) capital-reducing technological progress
160. The substitution of steel for wooden ploughs in
agricultural production is an example of
a) labour-augmenting technological progress
b) capital-augmenting technological progress
c) capital-reducing technological progress
• Labor augmenting is technology that increases skills and
productivity of existing labor force (example - teaching people
how to use the computer).
• Capital augmenting technology increases productivity of

existing capital goods. In this case, replacement of wooden by
steel, increases the productivity of plough.
161. With reference to 'Water Credit', consider the following
statements: (2021)
1. It puts microfinance tools to work in the water and
sanitation sector.
2. It is a global initiative launched under the aegis of the World
Health Organization and the World Bank.
3. It aims to enable the poor people to meet their water need
without depending on subsidies.
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
161. With reference to 'Water Credit', consider the following
statements:
1. It puts microfinance tools to work in the water and
sanitation sector.
2. It is a global initiative launched under the aegis of the World
Health Organization and the World Bank.
3. It aims to enable the poor people to meet their water need
without depending on subsidies.
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
• The Water Credit Initiative has been funded by social
entrepreneur Gary White and Hollywood Actor Matt Damon
through their organization Water.org which has invested US$
2.2 million in Water Credit programs.
• Water credit applies the principles of microfinance to the
water and sanitation sector in developing countries.
• By making small loans to individuals and communities who
do not have access to credit, Water-Credit empowers people to
address their own water and sanitation needs instead of
depending on government funds and charity.
• WaterCredit helps bring small loans to those who need access
to affordable financing and expert resources to make
household water and toilet solutions a reality.
How it works
1. It identifies a region where people need access to water and
sanitation and that is ready for a microfinance solution.
2. It partners with carefully selected institutions to provide
affordable financing for water and sanitation to families in
need.
3. These microfinance partners establish water and sanitation
loans in their portfolio of offerings. It supports them by
providing technical assistance, connections and resources to
get them started.
4. People in need use these small, affordable loans to put a tap
or toilet in their homes and access local resources to do the
work. It enables poor households to meet their water and
sanitation needs without depending on subsidies.
5. Every repaid loan can be lent to another family in need of
safe water or sanitation.
162. In India, which one of the following compiles
information on industrial disputes, closures, retrenchments
and lay - offs in factories employing workers? (2022)
a) Central Statistics Office
b) Department for Promotion of Industry and Internal
Trade
c) Labour Bureau
d) National Technical Manpower Information System
162. In India, which one of the following compiles
information on industrial disputes, closures, retrenchments
and lay - offs in factories employing workers?
a) Central Statistics Office
b) Department for Promotion of Industry and Internal
Trade
c) Labour Bureau
d) National Technical Manpower Information System
• Labour Bureau has been bringing out Statistics on Industrial
Disputes, Closures, Retrenchments and Lay-offs in India, based
on the voluntary returns received every month from the
Labour Departments of the States and Union Territories and
the Regional Labour Commissioners.
• It releases annual publication titled, ‘Industrial Disputes,
Closures, Retrenchments and Lay-Offs in industries in India’.
• It provides data on work shutdowns, closures, layoffs, and
lockouts that can be used to inform policy decisions aimed at
preserving amicable and harmonious working relationships
between management and employees.
• This report is also aimed at meeting the demand for historical

data and information on industrial conflicts and their causes by
the planners, policy makers and decision makers in industry
and government.

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Prelims PYQ - Marathon

• As international visitors would purchase Indian goods and

• India will also receive foreign dollars.

• An import is an item or service that is purchased outside of its

• Consider a US citizen purchasing products and services in

• The sole purpose of such an economy is to meet all the

• Despite their benefits, these technologies require a

• For the tax/GDP ratio to decrease either the tax collection

• The relationship between an investment and the output that

• The capital needed to produce one unit of output is measured

• Capital formation might not lead to a considerable increase in

• The national poverty line for rural regions in 2011–12,

• The population's income distribution and consumer spending

• The cost of the consumption basket, which varies from state to

• To boost economic output and advance GDP, for instance,

• Due to its ability to produce enough goods and services to

• Loans and mortgages account for a sizable amount of the

• This industry group includes a wide range of businesses, such

• Hence, financial sector activities, not real sector activities,

• Several components of food inflation are found to be driven by

• Cereal inflation is mostly driven by rising production costs

• But an unusual element in the base can give a misleading

• Investors should adjust for this distortion to avoid erroneous

• When an economy's total demand for goods and services grows

• Inflation is also brought on by a decline in overall output and a

• On the other hand, cost-push inflation happens when the cost of

• A tool for raising money to create a budget deficit is known as

There are three ways to finance a budget:

• The government comes out with two indices — one for

Composition of Wholesale Price Index

• The CPI-based inflation data is compiled by the Ministry of

• The law of diminishing marginal utility, which states that

• The total quantity demanded across all market consumers at

• Although price changes do not by themselves cause demand to

• Complementary goods will have a negative cross elasticity of

• If the price of one good increases, demand for both

• Thus, a consumer’s demand for a normal good moves in the

• Such goods are called Inferior Goods. As the income of the

The demand-pull inflation is caused by:

• The main objective of Inflation Indexed Bonds is to provide a

• While fixed deposit offers a fixed rate of interest for the

• Capital increases with the inflation, so actual interest is better

• 2013 - New bonds by the name of inflation-indexed bonds (IIBs) were

• Now, IIBs are linked to CPI

• The Financial Markets Committee (FMC) meets daily to

Responsibilities of ASHA workers

• The DRDAs are expected to coordinate effectively with the

• The DRDAs are expected to coordinate effectively with the

Benefits under PMJDY

• Common teaser loans include credit cards with low introductory

• Subprime lending is the practice of lending to borrowers with low

• It has nothing to do with the experience of the entrepreneurs as the

• When Bank Rate is increased by the central bank, a

• As RBI controls the money supply in the economy as well

• Financial services like insurance, savings, and remittance are

• Additionally, non-financial services like training, counselling,

• Promotional duties: The central bank also carries out

• In order to achieve this goal, it was introduced in 1969.

• The Gadgil Study Group and Banker's Committee's

• In view of the several changes that had taken place in the