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Question 1 of 10
1. Question
2 points
In relation to the Exchange rate system followed by India, which of the statements given below is/are correct?
India follows a dual exchange rate system consisting of the official and the market rates.
The official exchange rate of India has a direct bearing on the market exchange rate.
Select the correct answer using the codes given below:
Correct
Ans a
The market variations of demand and supply decides the market exchange rate. The official exchange rate is then dependent on the market exchange rate and not the other way round.
Incorrect
Question 2 of 10
2. Question
2 points
Consider the following statements:
Market cost in production is an incurred cost on rent, power and interest of loan.
Factor cost in the production is incurred on the various factors of indirect taxes rates in the economy.
Which of the statements given above is/are correct?
Correct
Ans d
Factor cost is the ‘input cost’ the producer has to incur in the process of producing something (such as cost of capital, i.e., interest on loans, raw materials, labour, rent, power, etc.).
Market cost is derived after adding the indirect taxes to the factor cost of the product.
Incorrect
Question 3 of 10
3. Question
2 points
India calculates its national income at constant prices, while the developed nations calculate it at the current prices because of:
Correct
Ans c
Calculation of National income at constant prices does not contain the inflation values.
National Income is calculated by NSO and not NITI Aayog.
Incorrect
Question 4 of 10
4. Question
2 points
In the Early period economists used progress, growth and development—interchangeably but during the 1970s clear meanings of these terms evolved in different directions.
In the context of Growth and Development consider the following statements:
Economic growth is a qualitative term, it’s hard to measure in real terms like net growth of the road network.
Economic growth can be measured in parameters like the level of nutrition and healthcare facilities available in the country.
Higher economic growth does not automatically convert into higher economic development.
Select the correct answer using the code given below:
Correct
Ans c
The defining trait of Growth is quantifiability (Quantitative) i.e., one can measure it in absolute terms unlike qualitative terms.
EconomIc growth can be measured in parameter like:
Growth in food production during a decade which could be measured in tonnes.
The growth of the road network in an economy, measured for a decade or any period in miles or kilometres.
The value of the total production of an economy, measured in currency terms which means the economy is growing.
Per capita income for an economy, measured in monetary terms over a period.
Incorrect
Question 5 of 10
5. Question
2 points
Which of the following statements about the Human Development index (HDI) is correct?
Correct
Ans c
The HDR measures development by combining three indicators—Health, Education and Standard of Living—converted into a composite human development index, the HDI.
For the first time in 2020, the United Nations Development Programme introduced a new metric to reflect the impact caused by each country’s per-capita carbon emissions and its material footprint, which measures the amount of fossil fuels, metals and other resources used to make the goods and services it consumes.
India is ranked at 131st position out of 190 countries by the United Nations Development Programme (UNDP).
Incorrect
Question 6 of 10
6. Question
2 points
India’s decision for a planned economy was also moulded by some contemporary experiences in the world. Which of the following is/are correct about it?
Correct
Ans c
Both statements are correct.
Incorrect
Question 7 of 10
7. Question
2 points
Consider the following statements:
The appreciation and depreciation of a currency is a feature of the floating exchange rate regime.
The official annual rate of appreciation and depreciation of an asset are fixed by a country.
The concept of deficit and surplus exists only in relation to the Current Account.
Which of the statements given above is/are correct?
Correct
Ans c
The concept of appreciation and depreciation are also linked to the increase and the decrease in the value of an asset. Every asset undergoes wear and tear with time and hence depreciates in its value. This depreciation is officially fixed by the government annually. However, there is no such official fixation for the appreciation of assets as it is for the depreciation of the assets.
Incorrect
Question 8 of 10
8. Question
2 points
With reference to various reserve ratios of RBI, consider the following statements:
Cash Reserve Ratio is to be maintained on a daily basis whereas the Statutory Liquidity ratio is to be maintained on a fortnightly basis.
The Cash Reserve Ratio is to be maintained as per the Banking Regulation Act, 1949 whereas the Statutory Liquidity Ratio is to be maintained as per the Reserve Bank of India Act, 1934.
The Reserve Bank of India can decide CRR without any floor or ceiling rate as per the situational demands of the economy
Select the incorrect statements by using the codes given below:
Correct
Ans a
The amount of cash that the scheduled and non-scheduled commercial banks are required to maintain with RBI with respect to their Net Deposit and Time Liabilities (on a fortnightly basis) is called the Cash Reserve Ratio (CRR).
On the other hand, the Statutory Liquidity Ratio (SLR) is the amount of reserves that the scheduled commercial banks are required to maintain with themselves on a daily basis in safe and liquid assets such as government securities, gold and cash with respect to their NDTL i.e., Net Deposit and Time Liabilities.
All Commercial and Cooperative Banks (either scheduled or non-scheduled) are required to maintain CRR and SLR. For scheduled banks, the maintenance of CRR is governed through The Reserve Bank of India Act 1934 and for Non-Scheduled banks CRR is governed through Banking Regulation Act 1949.
The Banking Regulation Act 1949 (Section 24) governs maintenance of SLR for all banks (Scheduled and non-scheduled) commercial and cooperative.
Incorrect
Question 9 of 10
9. Question
2 points
In the context of Indian economy, which of the following events are likely to happen as a result of the surge in the Capital Inflows of the country?
Increase the levels of investment which will result in economic growth
Indian Rupee will depreciate
Increased competitiveness of exports
Rise in inflation
Select the correct answer using the codes given below:
Correct
Ans c
The surging capital inflows can also lead to destabilizing side effects, including a tendency of the local currency to appreciate. Hence, the Indian Rupee will appreciate instead of depreciating as a result of increasing capital inflows. This will have a negative impact on the exports of the country as it undermines the competitiveness of exports of the country.
Incorrect
Question 10 of 10
10. Question
2 points
The Reserve Bank of India regulates the public sector banks (PSBs) in matters of
Revoking the Banking license
Merger of banks
Winding-up of banks
Select the correct answer using the codes given below:
Correct
Ans d
RBI cannot revoke the banking licence as well.
In case of Private sector banks, RBI regulates the merger of banks, however, it doesn’t have the same powers when it comes to public sector banks.
RBI cannot merge or wind up the public sector banks because they are under the dual regulation of RBI and Central Govt. Along with this, RBI also cannot supersede the board of public sector banks.
