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Today the questions are based on Basics of economics. You can also visit the basics of economics section in here under Focus on Prelims

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Questions Day 5 – Economics

1.Consider the following statements regarding Index of Industrial Production (IIP):

  1. IIP is an index for which details out the growth of 8 core industries in an economy
  2. It is compiled and published monthly by the Central Statistical Organisation (CSO).
  3. Base year of IIP is 2011-12

Which of the above statements is/are true?

  1. 1 and 2
  2. 2 only
  3. 2 and 3
  4. All the above

  2. Which of the following could be the possible positive outcome of improved financial inclusion?

  1. Rationalisation of subsidies.
  2. Improved household savings.
  3. Better delivery of welfare schemes.
  4. Formalisation of Indian economy.

Select the correct answer using the code given below?

  1. 2,3 and 4
  2. 1,2 and 3
  3. 3 and 4
  4. All the above

3. Through Fiscal Responsibility and Budget Management (FRBM) Act India aims to make its fiscal deficit to 3% of GDP. In this context which of the following steps can aid in achieving the targets?

  1. An increase in tax to GDP ratio.
  2. Rationalizing subsidies through aadhaar enabled Direct Benefit Transfer Scheme.
  3. Getting more external loans for infrastructure investments

Select the correct answer using the code given below.

  1. 1 and 2
  2. 2 and 3
  3. 1 and 3
  4. 1, 2 and 3

4. Which of the following can result in a cost push inflation?

  1. Decrease in government subsidies on fuels.
  2. Decrease in indirect taxes on various commodities.
  3. Non availability of raw materials for production.

Select the correct answer using the code given below.

  1. 1 and 2
  2. 2 and 3
  3. 1 and 3
  4. 1, 2 and 3

5. Which of the following is/are instruments/components of money market in India?

  1. Treasury Bills
  2. Call Money Market
  3. Mutual Funds
  4. Repo and Reverse Repo rates
  5. Commercial Papers

Select the correct answer using the code given below.

  1. 1, 2 ,4 and 5
  2. 1,2,3 and 5
  3. 1, 2 and 5
  4. All the above

  6. If RBI has reduced the Cash Reserve Ratio(CRR). Which of the following could happen in economy?

  1. Cash availability with bank may rise.
  2. Lending capacity of Bank may rise.
  3. Economy may suffer from inflation
  4. Economy will start grow at a higher pace

Select the correct answer using the code given below.

  1. 1 and 3
  2. 1, 2 and 3
  3. 1,3 and 4
  4. 1, 2, 3 and 4

7. Which of the following indices is considered as the most accurate indicator of price rise in an economy?

  1. Wholesale Price Index
  2. Consumer Price Index
  3. GDP deflator
  4. Producer Price Index

8. Which of the following is/are features of an economic depression?

  1. Abnormally large increases in unemployment.
  2. Comparatively higher inflation rates.
  3. Extremely low aggregate demand.

Select the correct answer using the code given below.

  1. 1 only
  2. 1 and 2 only
  3. 1 and 3 only
  4. 1 ,2  and 3

9. An IT employee who quit his well paying job to dedicate himself for full-time preparation of civil service has cracked the examination after a couple of years.The unemployment experienced by him in the meantime can be categorized under which of the following types of unemployment?

  1. Disguised Unemployment.
  2. Structural Unemployment.
  3. Frictional Unemployment
  4. Cyclical unemployment

10. Consider the following statements:

  1. Incidence of tax refers to the immediate burden of the tax or those who bear first the responsibility of paying them.
  2. In GST, the impact of tax and incidence of tax fall at the same person.

Which of the above statements is/are true?

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

11. Consider the following statements regarding inclusive growth

  1. Inclusive growth basically means making sure everyone is included in growth, regardless of their economic class, gender, sex, disability and religion
  2. Gross Domestic Product (GDP) is an indicator of level of inclusive growth achieved by a country.

Select the correct answer using the code given below.

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

12. Consider the following statements

  1. Government need permission from the Parliament to operate Public account of India.
  2. Revenue from small savings are credited to the Public account of India.

Which of the above statements is/are correct?

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 and 2

13. Consider the Statements regarding Equalisation Levy:

  1. It is colloquially known as Google Tax.
  2. The levy will only apply to business to business transactions.
  3. India is the first country to implement Equalisation Levy.

Which of the above statements are true?

  1. 1 and 2
  2. 2 only
  3. 2 and 3
  4. 1, 2 and 3

14. RBI is often referred to as “banker to banks” because it performs which of the following functions?

  1. Enabling banks to maintain their accounts with the Reserve Bank for statutory reserve requirements and maintenance of transaction balances .
  2. Acting as a lender of last resort
  3. Fixing Marginal Cost of Funds based Lending Rate (MCLR) to be maintained by banks

Select the correct answer using the code given below.

  1. 1 only
  2. 1 and 2 only
  3. 2 and 3 only
  4. 1 , 2 and 3

15. For the purpose of national income accounting, which of the following comes under the definition of India’s domestic territory?

  1. Planes operated by Air India between USA and Russia
  2. Indian embassy in Moscow
  3. Russian embassy in New Delhi.
  4. Fishing vessels owned by Indians in India’s Exclusive economic zone in Bay of Bengal

Select the correct answer using the code given below.

  1. 2 and 3
  2. 2 , 3 and 4 only
  3. 1 , 2 and 4 only
  4. 1 , 2 , 3 and 4

16. Consider the following statements regarding demand of money

  1. An Increase in transaction demand of money will lead to increase in real GDP
  2. An Increase in interest rate will result in increase in speculative demand.

Which of the above statements is/are correct?

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 and 2

17. Consider the following statements with regards to monetary policy in India

  1. The primary objective of monetary policy is to maintain price stability while keeping in mind the objective of growth.
  2. The inflation target in the country is to be set by the Government of India, in consultation with the Reserve Bank, once in every five years.

Which of the above statements is/are true?

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

18. Which of the following statements regarding Gross Capital Formation are correct?

  1. An increase in Gross Domestic Savings will invariably result in increase in Gross capital formation.
  2. As gross consumption increases, the relative increases in Gross capital formation is likely to be less.

Select the correct answer using the code given below.

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 and 2

19. Consider the following statements regarding cess and surcharges:

  1. Both cess and surcharge comes under the divisible pool of central tax revenue and hence they shall be shared with the states with the recommendations of the Finance Commission.
  2. Revenue form Surcharge goes to the consolidated fund of India and can be spent for any purposes.
  3. Revenue from cess goes to Public Accounts Fund of India and will be spent for specific purposes only.

Which of the above statements is/are NOT true?

  1. 1 only
  2. 1 and 2 only
  3. 1 and 3 only
  4. 2 and  3 only

20. Consider the following statements regarding demand laws.

  1. If price of a commodity is directly proportional to its demand its is called price demand.
  2. If the demand of a commodity is influenced by its substitutes it is called as Cross demand.

Which of the above statements is/are true?

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

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