IAS PT Solved 2020 – Indian Economy

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Q 1.   “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 WTOs to its members

           (d)  a credit system granted by IMF to its members

Ans. (d) a credit system granted by IMF to its members

Q 2.   Which of the following phrases defines the nature of the ‘Hundi’ generally referred to in the sources of the post-Harsha period?

           (a)  An advisory issued by the king to his subordinates

           (b)  A diary to be maintained for daily accounts

           (c)  A bill of exchange

           (d)  An order from the feudal lord to his subordinates

Ans. (c) A bill of exchange

Q 3.   If another global financial crisis happens in the near future, which of the following actions/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

           Select the correct answer using the code given below:

           (a)  1 only

           (b)  1 and 2 only

           (c)  2 only

           (d)  1, 2 and 3

Ans. (a) 1 only

Q 4.   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

Ans. (d) To leave it unchanged

Q 5.   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.

Ans. (b) It is a largely non-debt creating capital flow

Q 6.   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, fertilizers 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.

           Select the correct answer using the code given below:

           (a)  1 and 2 only            (b)   2 and 4 only

           (c)  3 only                       (d)   1, 3 and 4 only

Ans. (d) 1, 3 and 4 only

Q 7.   The term ‘West Texas Intermediate’, sometimes found in news, refers to a grade of:

           (a)  Crude oil

           (b)  Bullion

           (c)  Rare earth elements

           (d)  Uranium

Ans. (a) Crude oil

Q 8.   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

           Select the correct answer using the code given below:

           (a)  1 only              (b)   1 and 2 only

           (c)  3 only              (d)   1, 2 and 3

Ans. (d) 1, 2 and 3

Q 9.   With reference to Trade-Related Investment Measures (TRIMS), which of the following statements is/are correct?

           (1)  Quantitative restriction on imports by foreign investors is 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.

           Select the correct answer using the code given below:

           (a)  1 and 2 only

           (b)  2 only

           (c)  1 and 3 only

           (d)  1, 2 and 3

Ans. (c) 1 and 3 only

Q 10.   If the RBI decides to adopt an expansionist monetary policy, which of the following would it not do?

           (1)  Cut and optimize the Statutory Liquidity Ratio

           (2)  Increase the Marginal Standing Facility Rate

           (3)  Cut the Bank Rate and Repo Rate

           Select the correct answer using the code given below:

           (a)  1 and 2 only

           (b)  2 only

           (c)  1 and 3 only

           (d)  1, 2 and 3

Ans. (b) 2 only

Q 11.   With reference to the Indian economy after the 1991 economy liberalization, consider the following statements

           (1)  Worker productivity (`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.

           Which of the statements given above is/are correct?

           (a)  1 and 2 only

           (b)  3 and 4 only

           (c)  3 only

           (d)  1 2 and 4 only

Ans. (b) 3 and 4 only

Q 12.   Consider the following statements:

           (1)  In terms of short-term credit delivery to the agriculture sector, District Central Cooperative Banka (DCCB) delivers 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 Agricultural Credit Societies.

           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

Ans. (b) 2 only

Q 13.   In India, under cyber insurance for individuals, which of the following benefits are generally covered, in addition to payment for the loss of funds and other benefits?

           (1)  Cost of restoration of the computer system in case of malware disrupting access to one’s computer

           (2)  Cost of a new computer if some miscreant willfully damages it, if proved so

           (3)  Cost of hiring a specialized consultant to minimize the loss in case of cyber extortion

           (4)  Cost of defence in the Court of Law if any third party files a suit

           Select the correct answer using the code given below:

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

           (c)  2 and 3 only            (d)   1, 2, 3 and 4

Ans. (b) 1, 3 and 4 only

Q 14.   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.

           Select the correct answer using the code given below:

           (a)  1, 2 and 5 only

           (b)  1, 2, 4 and 5 only

           (c)  2, 3 and 6 only

           (d)  1, 2, 3, 4, 5 and 6

Ans. (c) 2, 3 and 6 only

Q 15.   What is the importance of the term “Interest Coverage Ratio” of a firm in India?

           (1)  Its helps in understanding the present risk of a firm that a bank is going to give loan to.

           (2)  Its 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.

           Select the correct answer using the code given below:

           (a)  1 and 2 only

           (b)  2 only

           (c)  1 and 3 only

           (d)  1, 2 and 3

Ans. (a) 1 and 2 only

Q 16.   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

           Select the correct answer using the code given below

           (a)  1, 2 and 4 only

           (b)  1, 3 and 4 only

           (c)  2 and 3 only

           (d)  1, 2, 3 and 4

Ans. (d) 1, 2, 3 and 4

Q 17.   Consider the following statements:

           (1)  The value of Indo-Sri Lanka trade has consistently increased in the last decade

           (2)  “Textile and textile articles” constitute and important item of trade between India and Bangladesh.

           (3)  In the last five years, Nepal has been the largest trading partner of India in South Asia.

           Which of the statements given above is/are correct?

           (a)  1 and 2 only

           (b)  2 only

           (c)  3 only

           (d)  1, 2 and 3

Ans. (b) 2 only

Q 18.   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 expenses

           (5)  Construction of family house and setting up of village cold storage facility

                  Select the correct answer using the code given below:

           (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

Ans. (b) 1, 3 and 4 only

Q 19.   Consider the following statements:

           (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.

           Which of the statements given above is/are correct?

           (a)  1 and 2 only

           (b)  2only

           (c)  3 only

           (d)  1, 2 and 3

Ans. (a) 1 and 2 only

Q 20.   Consider the following statements:

           (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.

           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

Ans. (d) Neither 1 nor 2

Q 21.   With reference to the Indian economy, consider the following statements.

           (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 bonds issued by the Scheduled Commercial Banks to corporations.

           Which of the statements given above is/are correct?

           (a)  1 and 2 only

           (b)  4 only

           (c)  1 and 3 only

           (d)  2, 3 and 4 only

Ans. (c) 1 and 3 only

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