KALAM IAS INSTITUTE
CIVILS PREVIOUS PAPERS
Agriculture
1. India has experienced persistent and high
food inflation in the recent past. What could
be the reasons?
(2011)
a) I only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
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%.
4. Consider the following statements:
2. As a consequence of increasing incomes,
the consumption patterns of the people have
undergone a significant change.
2. The Union Ministry of Consumer Affairs,
Food and Public Distribution has launched the
National Food Security Mission. (2009)
3. The food supply chain has structural
constraints. Which of the statements given
above are correct?
Which of the statements given above is/are
correct?
a) 1 and 2 only
b) 2 and 3 only
c) I and 3 only
d) 1, 2 and 3
2. 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
1. The Commission for Agricultural Costs and
Prices recommends the Minimum Support
Prices for 32 crops.
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
5. Which of the following pairs about India’s
economic indicator and agricultural
production (all in rounded figures) are
correctly matched? (2008)
1. GDP per capita (current prices): Rs 37,000
2. - Rice: 180 million tons
3. Wheat: 75 million tons
3. Consider the following statements: (2010)
1. The Union Government fixes the Statutory
Minimum Price of sugarcane for each sugar
season.
2. Sugar and sugarcane are essential
commodities under the Essential Commodities
Act.
Which of the statements given above is/are
correct?
Select the correct answer using the code given
below:
Codes:
a) 1, 2 and 3
b) 1 and 2 only
c) 2 and 3 only
d) 1 and 3 only
Explanations
1. b. Exp: Though there is pressure on
agricultural land, but the area has not declined
by 30 percent. In fact, total area under
foodgrain crops during the last five years has
been between 120 and 124 million hectares.
Yearly increase and decrease in various crops
can be seen due to weather conditions but
overall there is no decline in total cropped area
under food segment.
Increase in price is due to lower growth rate of
production as compared to rising demand. The
growth rate of demand has been higher
because of rise in income and supply side
management constraints.
2. a. Exp: Commercial banks had total
outstanding loans of Rs 285,799 crore which is
74% of the total loans given by the three
lending institutions- commercial banks, RRBs,
and cooperative banks. Microfinance
institutions total lending to agriculture and allied
activitieswas less than the amount given by the
commercial banks.
3. a. Exp:The Central Government fixes the
Statutory Minimum Price of sugarcane for each
sugar season. Sugar is an essential commodity
under the Essential Commodities Act, but not
sugarcane.
4. d. Exp: The CACP recommends the support
price for 24 crops. The National Food Security
Mission is implemented by ministry of
agriculture. Ref: Wizard Current Affairs for PT
2009, pg. no. 81
5. c. Exp: Rice production is estimated to be
around 95 million tons. Ref: Wizard Current
Affairs for Prelim 2008, Pg No. 19.
Export & Imports
1. Which one of the following groups of
items is included in India’s foreignexchange 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 RB1 and loans from the World Bank
2. 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 fmanced by foreign
companies
4. Portfolio investment
Select the correct answer using the codes
given below:
(a) 1,2,3and4
(b) 2 and 4 only
(c)1 and 3 only
(d)1,2 and 3 only
3. Despite having large reserves of coal,
why does India import millions of tonnes 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 We sent use.
2. Most of the power plants in India are coalbased 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.
Which of the statements given above is/are
correct?
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d)1,2 and 3
4. 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
Explanations
1. b. Exp:lndia’s for4gnhange 8ermes comprise
Fo.ign Currer, Assets (FCAs), gold, Special
Dwiag Rights (SDRs) and Reserve Tranche
Position (RTP) in the IMF.
2. d. E.q,: FDI means foreign capital in the form
of equity inflow with stake. Portfolio investment
(like Fli) has no say in the management.
a) 1 and 2 only
b) 3 only
c) 2 and 3 only
d) 1, 2 and 3
2. Among other things, which one of the
following was the purpose for which the
Deepak Parekh Committee was constituted?
(2009)
(a) To study the current socio-economic
conditions of certain minority communities
(b) To suggest measures for financing the
development of infrastructure
(c) To frame a policy on the production of
genetically modified organisms
(d) To suggest measures to reduce the fiscal
deficit in the Union Budget
Miscellaneous
1. To obtain full benefits of demographic
dividend, what should India do? (2013)
3. b.
a) Promoting skill development
4. a. Exp: Any visit of foreigners mean
utilization of our goods and services during
their stay in the country and they will be paying
for these goods and services. This is exports of
goods and services and in the process earning
of foreign exchange.
Infrastructure
1. The SEZ Act, 2005 which came into effect
in February 2006 has certain objectives. In
this context, consider the following: (2010)
b) Introducing more social security schemes
c) Reducing infant mortality rate
d) Privatization of higher education
2. Economic growth in country X will
necessarily have to occur if (2013)
a) there is technical progress in the world
economy
b) there is population growth in X
c) there is capital formation in X
1. Development of infrastructure facilities
2. Promotion of investment from foreign
sources
3. Promotion of exports of services only
Which of the above are the objectives of this
Act?
d) the volume of trade grows in the world
economy
3. 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
Select the correct answer using the codes
given below:
a) 1 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
4. Consider the following specific stages of
demographic transition associated with
economic development (2012)
1. Low birthrate with low death rate
2. High birthrate with high death rate
3. High birthrate with low death rate
Select the correct order of the above stages
using the codes given below:
a) 1,2,3
b) 2,1,3
c) 2,3,1
d) 3,2,1
5. Which of the following can aid in
furthering the Government’s objective of
inclusive growth? (2011)
b) deficit financing takes place
c) only exports take place
d) neither exports nor imports take place
7. With what purpose is the Government of
India promoting the concept of “Mega Food
Parks”? (2011)
1. To provide good infrastructure facilities for
the food processing industry
2. To increase the processing of perishable
items and reduce wastage.
3. To provide emerging and eco-friendly food
processing technologies to entrepreneurs.
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
8. 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 microfinance is/are: (2011)
1. Credit Facilities 2. Saving Facilities
1. Promoting Self-Help Groups
3. Insurance Facilities 4. Fund Transfer
Facilities
2. Promoting Micro, Small and Medium
Enterprises
Select the correct answer using the codes
given below the lists:
3. Implementing the Right to Education Act
a) 1 only
b) 1 and 4 only
Select the correct answer using the codes
given below:
c) 2 and 3 only
d) 1,2,3 and 4
a) 1 only
b) 1 and 2 only
c) 2 and 3 only
d) 1,2and3
1. The Commonwealth has no charter, treaty or
constitution
6. A “closed economy” is an economy in
which (2011)
a) the money supply is fully controlled
9. Consider the following statements: (2010)
2. All the territories/countries once under the
British empire (jurisdictionfiule/mandate)
automatically joined the Commonwealth as its
members
Which of the statements given above is/are
correct?
human resource creation. All the three are tools
to attain inclusive growth.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
6. d. Exp A closed economy means no
relationship (give or take/import and export)
from other countries.
Explanations
1. a. Exp: Demographic dividend means getting
the benefit of high percentage of working age
population in the process of economic
development. But it is possible only if youth and
working age population is skilled and trained to
take up economic activities.
2. c. Exp:Technical prcgress in the world may
not benefit the country X. Similarly, trade
growth in the world economy may not benefit
the country X if it is not able to export more.
Even growth in population without growth in
other resources necessary for growth will not
support economic growth. But most likely,
capital formation in the country will induce
economic activities and economic growth in the
country X.
3.a. Exp: The MPI has three dimensions:
health, education and standard of living. These
three dimensions have been measured using
10 parameters. Each dimension is equally
weighted. Each parameter within a dimension
is also equally weighted. Education: Each
dimension is equally weighted at 1/6.
Health: Each indicator is weighted equally
weighted at 1/6.
Standard of Living: Each indicator is equally
weighted at 1/18.
4. c. Exp: In the First phase, it is high birth rate
and high death rate. After beginning of the
development process, death rate starts
declining first and followed by birth rate after
some time.
5.d. Exp: All the methods are for helping in
employment generation, income generation or
7. d. Exp: The purpose of the mega food parks
is to provide infrastructure facilities to a number
of units located at one place. The objective is
to boost food processing industry in the country
to reduce wastage of perishable goods and
also make the country competitive in world
market on the basis of quality as well as price
by the use of latest technologies.
8. d. Exp: Microfinance that is being provided in
India right now is concentrated on credit facility
only, though the SHG programme of banks are
also providing saving facilities with the credit
facility. But the wider concept is to provide all
the facilities mentioned in the options
9.a. Exp: Conferences of British and colonial
Prime Ministers had occurred periodically since
1887, leading to the creation of the Imperial
Conferences in 1911 . The formal organisation
of the Commonwealth developed from the
Imperial Conferences, where the independence
of the self-governing colonies and especially of
dominions was recognised. Thus, present
Commonwealth has not been created out of
any treaty, charter or constitution.
Among the fomer British protectorates and
mandates, those that never became members
of the Commonwealth are Egypt, Iraq,
Transjordan, Palestine, Sudan, Kuwait Bahrain,
Oman ,Qatar, and the United Arab Emirates.
National Income
1. 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
options give half the definition each. But out of
the two possible answers, (a) is more probable.
c) sum of personal income of all individuals
2. d.
2. In the context of Indian economy,
consider the following statements: (2011)
3. b. Exp: With the growth of the economy,
there is increase in employment and income
levels. This increases demand in the economy
and there is demand pull inflation in a growing
economy.
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
3. Economic growth is usually coupled with
(2011)
a) Deflation
b) Inflation
c) Stagflation
d) Hyperinflation
d) money value of final goods and services
produced
4. With reference to Indian economy,
consider the following statements: (2010)
1. The Gross Domestic Product (GDP) has
increased by four times in the last 10 years
2. The percentage share of Public Sector in
GDP has declined in the last 10 yearsWhich of
the statements given above is! are correct?•
4.b. Exp:GDP in 2000-01 was Rs 19.2 lakh
crore which increased to Rs 58 lakh crore in
2009-10. Wth 6.7% growth rate in 2009-10, it is
nearly three times the GDP in 2000-01.
With the rapid growth of the private sector after
1991, the share of public sector in GDP has
gone down.
Programmes
1. With reference to National Rural Health
Mission, which of the following are the jobs
of ‘ASHA’, a trained conununity health
worker? (2012)
I. 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 only
b) 2 only
Select he correct answer using the codes given
below:
c) Both 1 and 2
d) Neither I nor 2
a) 1, 2 and 3 only
b) 2 and 4 only
c) 1 and 3 only
d) 1,2,3 and 4
Explanations
1 . a. E,p: National income of a country is the
money value of all final goods and services
produced by the nationals. In the question,
options (a) and (d) may be correct but both the
2. The endeavour of ‘Janani Suraksha
Yojana’ Programme is (2012)
1. to promote institutional deliveries
2. to provide monetary assistance to the
mother to meet the cost of delivery
3. to provide for wage loss due to pregnancy
and confinement
Which of the statements given above is/are
correct?
(a) 1 and 2 only
(b) 2 only
(c) 3 only
(d)1,2 and 3
3. 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 pumpsets and micro-irrigation equipment free of cost
to farmers
Select the correct answer using the codes
given below:
a) 1 and 2 only
b) 2 only
c) 1and 3 only
d) 1,2 and 3
4. Consider the following: (2012)
1. Hotels and restaurants
5. How do !)istrict Rural Development
Agencies (DRDAs) hem in the reduction of
rural poverty in India? (2012)
1. DRDAS act as Panchyati 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 interdepartmental coordination and cooperation for
effective implementation of anti-poverty
programmes.
4. DRDAS watch over and ensure effective
utilization of the thnds intended for anti-poverty
programmes: given above is/are correct?
(a) ,2 and 3 only
(b) 3 and 4 only
(c) 4 only
(d) 1, 2, 3 and 4
Which of the statements
6. Among the following who are eligible to
benefit from the “Mahatma Gandhi National
Rural Employment Guarantee Act”? (2011)
a) Adult members of only the scheduled caste
and scheduled tribe households
b) Adult members of below poverty line (BPL)
households
2. Motor transport undertakings
c) Adult members of house holds of all
backward communities
3. Newspaper establishments
d) Adult members of any household
4. Private medical institutions
7. An objective of the National Food
Security Mission is to increase the
production of certain crops through area
expansion and productivity enhancement in
a sustainable manner in the identified
districts of the country What are those
crops? (2010)
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
a) Rice and wheat only
b) Rice, wheat and pulses only
c) Rice, wheat, pulses and oil seeds only
d) Rice, wheat, pulses, oil seeds and
vegetables
8. With reference to the schemes launched
by the Union Government, consider the
following statements: (2009)
1. Ministry of Health and Family Welfare
launched the Rashtriya Swasthya Bima Yojana.
2. Ministry ofTextiles launched the Rajiv
Gandhi Shilpi Swasthya Bima Yojana.
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
Explanations
1. a. Exp:ASHA is not trained to conduct the
delivery of baby.
2.a. Exp: Janarii Suraksha Yojana Programme
is to promote institutional deliveries and to
provide monetary assistance to the mother to
meet the cost of delivery.
3. a. Exp: NRLM may have twofold strategy for
poverty alleviation and rural prosperity. In the
first stage of 4 to 5 years, NRLM may totally
focus on promoting SHGs and SHG federations
and financial inclusion. In the second stage the
SHG federations may be assisted to promote
livelihood organizations such as commodity
cooperatives, producer companies, etc
4.d. Exp: The ESI Act applies to any
premises/precincts, where 10 or more persons
are employed. The “appropriate Government”
State or Central is empowered to extend the
provisions of the ESI Act to various classes of
establishments,
industrial,
commercial,
agricultural orotherwise in nature. Under these
enabling provisions, most of the State
Governments have extended the ESI Act to
certain specific classes of establishments, such
as, Medical and Educational Institutes, shops,
hotels, restaurants, cinemas, preview theatres,
motor transport undertakings, newspaper and
advertising establishments etc., employing 10
or more persons.
5.b. Exp: DADA cannot act as PRI under any
circumstances, nor they are the implementing
agencies. 219. d. Exp Adult members of all
rural households are eligible for benefit under
the MGNREGA, provided they are registered
with the village panchayat and have job cards
issued.
6. b. Exp:The target is to increase production of
rice, wheat and pulses by 10, 8 and 2 million
tones respectively.
7. d. Exp:Rashtriya Swasthya Bima Yojana
was launched by ministry of Labour and
Employment. Rajiv Gandhi Shilpi Swasthya
Bima Yojana was launched by Commissioner
of Handicrafts.
8. d. Exp:Rashtriya Swasthya Bima Yojana
was launched by ministry of Labour and
Employment. Rajiv Gandhi Shilpi Swasthya
Bima Yojana was launched by Commissioner
of Handicrafts.
Reforms & Liberalisation
1. In the last one decade, which one among
the following sectors has attracted the
highest Foreign Direct Investment inflows
into India? (2004)
a) Chemicals other than fertilizers
b) Services sector
c) Food processing
d) Telecommunication
2. Consider the following statements: (2004)
1. The Oil Pool Account of Government of India
was dismantled with effect from 1 April 2002
2. Subsidies on PDS kerosene and domestic
LPG are borne by Consolidated Fund of India
3. An expert committee headed by Dr RA
Mashelkar to formulate a national auto fuel
policy recommended Lhat Bharat State-il
Emission Norms should be applied throughout
the country by 1 April, 2004
Which of the statements given above are
correct?
c) Both 1 and 2
d) Neither 1 nor 2
5. The Government holding in BPCL is
(2003)
a) more than 70%
b) between 60% and 70%
c) between 50% and 60%
d) less than 50%
6. Consider the following statements: (2002)
a) land2
c) land3
The objectives of the National Renewal Fund
set up in
b) 2and3
d) l,2and3
February 1992 were
3. Consider the following statements: (2003)
1. The maximum limit of shareholding of Indian
promoters in private sector banks in India is
49% of paid up capital.
1. to give training and counselling for workers
affectd by retrenchment or VRS.
2. redeployment of workers Which of these
statements is/are correct?
2. Foreign Direct Investment upto 49 per cent
from all sources is permitted in private sector
banks in India under the automatic route.
a) Neither 1 nor.2
b) Both I and 2
c) 1 only
d) 2 only
Which of these statements is/are correct?
7. With reference to Power Sector in India,
consider the following statements: (2002)
a) Only 1
c) Both 1 and
b) Only 2
d) Neither 1 nor 2
4.With reference to Government of India’s
decisions regarding Foreign Direct
Investment (FDI) during the year 200 1-02,
consider the following statements: (2003)
1. Out of the 100% FDI allowed by India in tea
sector, the foreign firm would have to disinvest
33% of the equity in favour of an Indian partner
within four years.
2. Regarding the FDI in print media in India, the
single largest Indian shareholder should have a
holding higher than 26%.
Which of these statements is/are correct?
a) Only I
b) Only 2
1. Rural electrification has been treated as a
Basic Minimum Service under the Prime
Minister’s Gramodaya Yojana
2. 100 percent Foreign Direct Investment in
power is allowed without upper limit
3. The Union Ministry of Power has signed a
Memoranda of Understanding with 14 States
Which of these statements is/are correct?
a) 1 only
b) 1 and 2
c) 2 and 3
d) 3 only
8. The largest share of Foreign Direct
Investment (1997-2000) went to (2001)
a) Food and food-product sector
b) Engineering sector
7. Food processing industries (3.72%)
c) Electronics and electric equipment sector
8. Drugs and Pharmaceuticals (3.21%)
d) Services sector
9. Cement and Gypsum products (2.57%)
9.Which of the following committees
examined and suggested Financial Sector
reforms? (2001)
10. Metallurgical industries (2.13%)
a) Abid Hussain Committee
b) Bhagwati Committee
c) Chelliah Committee
d) Narasimham Committee
10. Economic liberalisation in India started
with (2000)
a) substantial changes in industrial licensing
policy
b) the convertibility of Indian rupee
c) doing away with procedural formalities for
foreign direct investment
d) significant reduction in tax rates
Explanations
1. d. Exp: Sectors attracting highest FDI during
August 1991 to September 2005, in their
descending order are as follows:
1. Electrical equipments (including computer
software and electronics) (16.62%)
2. Transportation Industry (10.39%)
3. Telecommunications (radio paging, cellular
mobile, basic telephone services) (9.60%)
4. Services Sector (Finance and non-financial)
(9.53%)
5. Fuels (Power + oil refinery) (8.49%)
6. Chemicals (other than ftrtilizers) (5.92%)
2. a. Exp: The oil pool acccunt has been wound
up with effect from 01 .04.2002. The
Government of India Issued (on 30th March
2002) 6.96 per cent oil companies’ Government
of India special bonds 2009 amounting to 9000
crore, to the Oil Companies in lieu of a part of
the estimated outstanding claims of the Oil
Companies on the oil coordination committee
as on March 31, 2002. The balance
outstanding of the oil companies will be
liquidated subsequently by issue of further
special government bonds.
As per “PDS Kerosene and Domestic LPG
subsidy scheme 2002”, a flat rate of subsidy
per selling unit was approved to be given to
public sector Oil Marketing companies. This
subsidy was equal to the difference between
the cost price and the issue price per selling
unit as on March 31,2001 and was tobe
phased out in three to five years. The Oil
Marketing companies were to adjust the retail
selling prices of these products in line with
international prices during the year. In order to
compensate the public sector oil marketing
companies on account of their mounting under
recoveries, over and above the amount allowed
as direct subsidy, budget 2005-06 provided an
additional Rs 5750 crore oil bonds. Bharat
stage II norms were to be applied from April
2005.
3. b. Ref:lndia Year Book 2003
4. b. Exp:The compulsory disinvestments
required is 26% in favour of Indian partner
within 5 yrs. Ref: Wizard Current Affairs for
Prelim 2003
5. b Exp: After acquisition of two Burma-shell
companies in January 1976, the name of
Burma-shell Refineries Limited was changed to
Bharat Refineries Limited on February 12,
1976. The name of company was changed to
Bharat Petroleum Corporation Limited (BPCL)
from August 1,1977 as it was a integrated
refining and marketing company. The company
is engaged in processing of crude oil in its
refinery at Mumbai and storage, distribution
and marketing of petroleum products in the
country. The government holding in BPCL is
between 60% and 70%.
6. c. Exp: NRF was to provide resou,es for
employment generation schemes in both the
organised and unorganized sectors. It had 3
component: Employment Generation Fund, the
National Renewal Grant Fund to deal with RVS
and the Insurance Fund for Employees to cater
compensation needs of the employees in
future. It was abolished in August 2000.
7.b. E’p:PM’s Gramodaya Yojana deals in
health, primary education, drinking water,
housing, rural roads. In power sector there is
no upper limit for FDI. Ref: India Year Book
2002.
8. b. Exp: In 2000, the largest share of FDI
went to engineering sector to the tune of
around 30% of total FDI. During 2005-06,
maximum FDI was attracted by Electrical
Equipments (including computer software and
electronics) to the tune of around 16.62% of
the total FDI.
9. d. Exp: Narasimham committee was
constituted on August 14, 1999 to advise on
financial reforms in Banking Sectors. Abid
Hussein Committee — on
small scale industries. Chelliah Committee —
Tax Reforms
10. a. Eo:The BoP crisis of 1991-92 forced the
government open up the Indian economy. It
first made substantial changes in industrial
licensing to attract foreign capital to ensure
capital for development. Ref.Datta-Sundaram
Employment
1. Disguised
means (2013)
unemployment
generally
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
2. Consider the following statements in
respect of the National Rural Employment
Guarantee Act, 2005 : (2006)
1. Under the provisions of the Act, 100 days of
employment in a year to every household
whose adult members volunteer to do unskilled
manual work has become a fundamental right.
2. Under the provisions of the Act, women are
to get priority to the extent that one-half of
persons who are given employment are women
who have asked for work.
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
Explanations
1. c. Exp: Disguised unemployment refers to a
situation where more people are employed that
required. So the extra people are actually not
contributing to the work. Technically speaking,
their marginal productivity is zero.
2. a. Exp: Pilority to women: Women will get
priority and 1 /3rd beneficiaries under the
programme are to be women Ref: Pg 56 of
Wizard Current Affairs for Prelim 2006.
Industry
1. What is/are the recent policy intiative(s)
of Government of India to promote the
growth of 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 the codes
given below:
a) 1 only
b) 2 and 3 only
c) 1 and 3 only
d)1,2 and 3
2. 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.
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
3. Which one of the following is not a
feature of Limited Liability Partnership firm?
(2010)
a) Partners should be less than 20
b) Partnership and management need not be
separate
c) Internal governance may be decided by
mutual agreement among partners
d) It is corporate body with perpetual
succession
4. Consider the following statements: (2009)
1. MMTC Limited is India’s largest international
trading organization.
2. Neelachal Ispat Nigam Limited has been set
up by MMTC jointly with the Government of
Orissa.
Which of the statements given above islare
correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
5. Which of the following are public sector
undertakings of the Government of India?
(2008)
1. Balmer Lawrie and Company Ltd.
2. Dredging Corporation of India
3. Educational Consultants of India Ltd.
Select the correct answer using the code given
below:
Code:
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1,2 and 3
Explanations
1. d.
2. c. Exp:’ Eight Core Industries included in lip
are — Cement, Fertilizers. Natural Gas,
Refinery products, coal, crude oil, steel and
electricity.
3. d. Exp: Since 2004, the declared objective of
disinvestment is to increase resources for
social sector spending and restructuring of
PSEs. The declared policy is to retain the
management control and sell only upto 49%
equity.
4. a. Exp: Maximum limit of partners is 20 in
case of partnership firms and not LLPs.
5. c. Ref. Wizard Current Affairs for PT 2009,
pg. no. 128
International Economy
1. 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
2. Consider the following actions which the
Government can take: (2011)
1. Devaluing the domestic currency.
b) Fil helps in increasing capital availability in
general, while FDI only targets specific sectors
c) FDI flows only into the secondary market,
while Fil targets primary market
d) FIT is considered to be more stable than FDI
4. In order to comply with TRIPS
Agreement, India enacted the Geographical
Indications of Goods (Registration &
Protection) Act, 1999. The
difference/differences between a “Trade
Mark” and a Geographical Indication is/are
(2010)
1. A Trade Mark is an individual or a cortipany’s
right whereas a Geographical Indication is a
community’s right
2. A Trade Mark can be licensed whereas a
Geograpnical Indication cannot be licensed
3. A Trade Mark is assigned to the
manufactured goods whereas the
Geographical Indication is assigned to the
agricultural goods/products and handicrafts
only
Which of the statements given above is/are
correct?
2. Reduction in the export subsidy.
a) 1 only
3. Adopting suitable policies which attract
greater FDI and more funds from FlIs.
b) 1 and 2 only
c) 2 and 3 only
d) 1,2 and 3
a) 1 and 2
b) 2 and 3
5. In the context of the affairs of which of
the following is the phrase “Special
Safeguard Mechanisms” mentioned in the
news frequently? (2010)
c) 3 only
d) 1and 3
a) United Nations Environment Programme
Which, of the above action! actions can help in
reducing the current account deficit?
3. Both Foreign Direct Investment (FDI) and
Foreign Institutional Investor (FlI) are
related to investment in a country. Which
one of the following statements best
represents an important difference between
the two? (2011)
a) Fli helps bring better management skills and
technology, while FDI only brings in capital
b) World Trade Organization
c) ASEAN- India Free Trade Agreement
d) G-20 Summits
6. A great deal of Foreign Direct Investment
(FDI) to India comes from Mauritius than
from many major and mature economies
like UK and France. Why? (2010)
a) India has preference for certain countries as
regards receiving FDI
10. Stiglitz Commission established by the
President of the United Nations General
Assembly was in the international news.
The commission was supposed to deal with
(2010)
b) India has double taxation avoidance
agreement with Mauritius
a) The challenges posed by the impending
global climate change and prepare a road map
c) Most citizens of Mauritius have ethnic
identity with India and so they feel secure to
invest in India
b) The workings of the global financial systems
and to explore ways and means to secure a
more sustainable global order
d) Impending dangers of global climatic change
prompt Mauritius to make huge investments in
India
c) Global terrorism and prepare a global action
plan for the mitigation of terrorism
7. Consider the fdllowing countries: (2010)
d) Expansion of the United Nations Security
Council in the present global scenario
1. Brazil
11. As regards the use of international food
safety standards as reference point for the
dispute settlements, which one of the
following does WTO collaborate with?
(2010)
2. Mexico
3. South Africa
According to UNCTAD, which of the above
is/are categorized as “Emerging Economies”?
a) Codex Alimentarius Commission
a) 1only
b) 1 and 3 only
b) International Federation of Standards Users
c) 2 and 3 only
d) 1,2 and 3
c) International Organisation for
Standardization
8. With reference to BRIC countries,
consider the following statements: (2010)
1. At present, China’s GDP is more than the
combined GDP of all the three other countries
2. China’s population is more than the
combined population of any two other countries
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
9. Which of the following is/are treated as
artificial currency?
a) ADR
b) 2 only
c) SDR
d) Both ADR and SDR
d) World Standards Cooperation
12. As a result of their annual survey, the
National Geographic Society and an
international polling firm GlobeScan gave
India top rank in Greendex 2009 score. What
is this score? (2010)
a) It is a measure of efforts made by different
countries in adopting technologies for reducing
carbon footprint
b) It is a measure of environmentally
sustainable consumer behaviour in different
countries
c) It is an assessment of programmes/schemes
undertaken by different countries for improving
the conservation of natural resources
d) It is an index showing the volume of carbon
credits sold by different countries
d) UN Climate Change Conference,
Copenhagen, 2009
13. In the context of bilateral trade
negotiations between India and European
Union, what is the difference between
European Commission and European
Council? (2010)
16. The International Development
Association, a lending agency, is
administrated by the (2010)
1. European Commission represents the EU in
trade negotiations whereas European Council
participates in the legislation of matters
pertaining to economic policies of the
European Union
2. European Commission comprises the Heads
of State or government of member countries
whereas the European Council comprises of
the persons nominated by European
Parliament.
Which of the statements given above is/are
correct?
a) International Bank for Reconstruction &
Development
b) International Fund for Agricultural
Development
c) United Nations Development Programme
d) United Nations Industrial Development
Organization
17. NAMA-11(Name-11) group of countries
frequently appears in the news in the
context of the affairs of which one of the
following? (2009)
a) Nuclear Suppliers Group
a) 1 only
b) 2 only
b) World Bank
c) Both1 and 2
d) Neither 1 nor 2
c) World Economic forum
14. Which one of the following is not related
to United Nations? (2010)
a) Multilateral Investment Guarantee Agency
b) International Finance Corporation
c) International Centre for Settlement of
Investment Disputes
d) Bank for International Settlements
15. The United Nations Framework
Convention on Climate Change (UNFCCC)
is an international treaty drawn at (2010)
a) United Nations Conference on the Human
Environment, Stockholm, 1972
b) UN Conference on Environment and
Development, Rio de Janeiro, 1992
c) World Summit on Sustainable Development,
Johannesburg, 2002
d) World Trade Organization
Explanations
1. c. Exp: IMF grants loans to only member
countries. The current membership is 187. The
IMF works to foster global growth and
economic stability. It provides policy advice and
financing to members in economic difficulties
and alsoorks vith developing nations
tohelpthem achieve macroeconomic stability
and reduce poverty.
2. d. Ep:There can be an effect on current
account deficit if capital account inflow is more.
So the probable answer is (d). Though
statement (3) is wrong, the examiner might
have chosen option (d).
3. b. Exp:FDI is direct investment in productive
assets, while Fil is investment in financial
securities. FDI can enter only in those sectors
in which FDI is allowed while Fli enters into the
financial market which is of general nature and
no specific industry or sector is involved. Fil is
volatile by nature, while FDI is considered more
stable.
(particularly South Africa). Emphasizing the
fluid nature of the category political scientist Ian
Bremmer defines an emerging market as “a
country where politics matters at least as much
as economics to the markets.”
4. b. Exp: Trade mark is a right of a company
or manufacturer while geographical indication
is related with a particular area. It applies to the
products which are area specific like particular
variety of mango produced in specific area in a
country. Geographical Indications (Cl) are like
trade marks, except that they are indicators of
a geographical area. They can belong to any
goods or products whether natural, agricultural
or manufacturing. Examples of Gis are basmati
rice, champagne, swiss watches etc. GIs are
area specific as an identity, so it can not be
licensed.
8. b. Exp: GDP of BRIC countries: China $
4.326 trillion; India 1.217 trillion; Brazil $ 1.612
trillion and Russia $ 1 .607 trillion. Population:
China 134.57 million; India 119.8 million; Arazil
19.37 million and Russia 14.08 million.
5. b. Exp: SSM (Special Safeguard
Mechanism) is a provision in the WTO to
provide safeguard to member countries against
surge in imports. It was a major issue in 2008
when the WTO talks failed to progress due to
lack of unanimity on the issue.
6. b. Exp: India has a double tax avoidance
treaty with Mauritius. Investors from Mauritius
are exempted from tax in India and the tax
rates arevery low in Mauritius. So it is
favourable for investors to get registered in
Mauritius and then invest in India as an entity
from Mauritius. This investment is not from
Mauritius but through Mauritius.
7. d. Exp: Emerging markets are nations with
social or business activity in the process of
rapid growth and industrialization. Currently,
there are 28 emerging markets in the world,
with the economies of China and India
considered to be the two largest. Examples of
emerging markets include China, India, some
countries of Latin America (particularly
Argentina, Brazil, Chile, Mexico, Colombia and
Peru), some countries in Southeast Asia, most
countries in Eastern Europe, Russia, some
countries in the Middle East (particularly in the
Persian Gulf Arab State) and parts of Africa
9. c. Exp: SDR is the currency of IMF while
ADR/GDR are financial instruments.
10. b. Exp: In the wake of the global financial
and economic crisis, the President of the UN
General Assembly, Miguel d’Escoto
Brockmann, set up a commission of experts
chaired by Nobel Prize Laureate Joseph
Stiglitz, whose mandate was to reflect on the
causes of the crisis, assess its impacts on all
countries and suggest adequate responses to
avoid its recurrence and restore global
economic stability.
11. a. Exp: The Codex Alimentarius
Commission was created in 1963 by FAQ and
WHO to develop food standards, guidelines
and related texts such as codes of practice
under the Joint FAQ/WHO Food Standards
Programme. The main purposes of this
Programme are protecting health of the
consumers and ensuring fair trade practices in
the food trade, and promoting coordination of
all food standards work undertaken by
international governmental and nongovernmental organizations.
12. b. Exp: National Geographic and the
international polling firm GlobeScan have just
conducted their second annual study
measuring and monitoring consumer progress
toward environmentally sustainable
consumption in 17 countries around the world.
Consumer Greendex, is a scientifically derived
sustainable consumption index of actual
consumer behavior and material lifestyles
across these countries. The Greendex is
comparable across the selection of countries
representing both the developed and
developing world. -
International Bank for Reconstruction and
Development to provide assistance on
concessionary terms to the poorest countries.
13. a. Exp: The European Council is the
institution of the European Union (EU)
responsible for defining the general political
direction and priorities of the Union. It
comprises the heads of state or government of
EU member states, along with its President and
the President of the Commission.
17. d. Exp: NAMA-1 1 is a group of countries
for negotiations on reduction of import duty on
industrial goods. Ref. Wizard Current Affairs for
PT 2009, pg. no. 124
The European Commission is the executive
body of the European Union. The body is
responsible for proposing legislation,
implementing decisions, upholding the Unions
treaties and the general day-today running of
the Union.
1. The Reserve Bank of India regulates the
commercial banks in matters of (2013)
The Commission operates as a cabinet
government, with 27 Commissioners.
14. d. Exp: Multilateral Investment Guarantee
Agency (MIGA) is a specialized agency of the
United Nations, formed in 1988, with
headquarters in Washington, D.C. International
Finance Corporation (IFC) is a specialized
agency of United Nations (UN), affiliated with
but legally separate from the International Bank
for Reconstruction and Development (World
Bank), founded in 1956, headquartered in
Washington, D.C. International Center for
Settlement of Investment Disputes (ICSID) is a
specialized agency of the United Nations. A
member of the World Bank Group, it was
formed in 1966 and has its headquarters in
Washington, D.C.
15. b. Exp: The United Nations Framework
Convention on Climate Change (UNFCCC or
FCCC) is an international environmental treaty
produced at the United Nations Conference on
Environment and Development (UNCED),
informally known as the Earth Summit, held in
Rio de Janeiro from 3 to 14 June, 1992.
16. a. Exp: The International Development
Association (IDA) is the part of the World Bank
group. It is an agency administered by the
Money & Banking
1. Liquidity of assets 2. Branch expansion
3. Merger of banks 4. Winding-up of banks
Select the correct answer using the codes
given below:
a) 1 and 4 only
b) 2, 3 and 4 only
c) 1, 2 and 3 only
d) 1, 2, 3 and 4
2. 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
3. Priority Sector Lending by banks in India
constitutes the lending to (2013)
a) agriculture
b) micro and small enterprises
c) weaker sections
d) All of the above
4. A rise in general level of prices may be
caused by (2013)
1. an increase in the money supply
c) 1 and 3 only
d) 1, 2 and 3
2. a decrease in the aggregate level of output
7.Consider the following statements : (2013)
3. an increase in the effective demand
1. Inflation benefits the debtors.
Select the correct answer using the codes
given below.
2. Inflation benefits the bondholders.
a) 1 only
b) 1 and 2 only
Which of the statements given thcwe is/are
correct?
c) 2 and 3 only
d) 1, 2 and 3
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
5.Which one of the following is likely to be
the most inflationary in its effect? (2013)
a) Repayment of public debt
b) Borrowing from the public to finance a
budget deficit
c) Borrowing from banks to finance a budget
deficit
d) Creating new money to finance a budget
deficit
6. 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 112.Which of the following
grants/grant direct credit
assistance to rural households? (2013)
8. 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
9. In the context of Indian economy, ‘Open
Market Operations’ refers to (2013)
a) borrowing by scheduled banks from the RBI
b) lending by commercial banks to industry and
trade
1. Regional Rural Banks
c) purchase and sale of government securities
by the RB!
2. National Bank for Agriculture and Rural
Development
d) None of the above
3. Land Development Banks
10. Which of the following measures would
result in an increase in the money supply in
the economy? (2012)
Select the correct answer using the codes
given below.
a) 1 and 2 only
b) 2 only
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
Select the correct answer using the codes
given below:
(a) 1 only
(b) 2 and 4 only
(c) 1 and 3
(d) 2,3 and 4
11. 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 RB! lends funds to the commercial
banks in times of need.
3. The RBI advises the commercial banks on
monetary matters.
Select the correct answer using the codes
given below:
(a) 2, and 3 only
(b) 1 and 2 only
(c) 1 and 3 only
(d) 1,2 and 3
12. Consider the following statements: The
price of any currency in international
market is decided by the (2012)
1. World Bank
2. Demand for goods/services provided by the
country concerned
3. Stability of the government of the concerned
country
4. Economic potential of the country in question
Which of the statements given above are
correct?
(a)1,2,3and4
(b) 2 and 3 only
(c) 3 and 4 only
(d) 1 and 4 only
13. 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
districts for intensive development
(d) all the banks should make intensive efforts
to mobilize deposits
14. 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
15. 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.
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
16. The lowering of Bank Rate by the
Reserve Bank of India leads to (2011)
c) Both 1 and 2
d) Neither 1 nor 2
a) More liquidity in the market
20. In the context of Indian economy,
consider the following pairs: (2010)
b) Less liquidity in the market
Most appropriate description
c) No change in the liquidity in the market
Fall in stockprices
d) Mobilization of more deposits by commercial
banks
Fall in growth rate
Fall in GDP
17. Which of the following terms indicates a
mechanism used by commercial banks for
providing credit to the government? (2010)
Which of the pairs given above is/are correctly
matched?
a) Cash Credit Ratio
a) 1 only
b) 2 and 3 only
b) Debt Service Obligation
c) 1 and 3 only
d) 1, 2 and 3
c) Liquidity Adjustment Facilities
21. In India, the interest rate on savings
accounts in all the nationalized commercial
banks is fixed by (2010)
d) Statutory Liquidity Ratio
18. Which one of the following statements is
an appropriate description of deflation?
(2010)
a) It is a sudden fall in the value of a currency
against other currencies
b) It is a persistent recession in both the
financial and real sectors of economy
c) It is a persistent fall in the general price level
of goods and services
d) It is a fall in the rate of inflation over a period
of time
19. With reference to the Non-banking
Financial Companies (NBFCs) in India,
consider the following statements: (2010)
a) Union Ministry of Finance
b) Union Finance Commission
c) Indian Banks’ Association
d) None of the above
22. When the Reserve Bank of India
announces an increase of the Cash Reserve
Ratio, what does it mean? (2010)
a) The commercial banks will have less money
to lend
b) The Reserve Bank of India will have less
money to lend
c) The Union Government will have less money
to lend
1. They cannot engage in the acquisition of
securities issued by the government
d) The commercial banks will have more
money to lend
2. They cannot accept demand deposits like
Savings Account
23. In India, which of the following is
regulated by th& Forward Markets
Commission? (2010)
Which of the statements given above is/are
correct?
a) 1 only
b) 2 only
a) Currency Futures Trading
b) Commodities Futures Trading
c) Equity Futures Trading
d) Both Commodities Futures and Financial
Futures Trading
24. With reference to the institution of
Banicing Ombudsman in India, which one of
the statements is not correct? (2010) Term
1. Melt down
1. Purchase and sale of shares and securities
on behalf of customers.
2. Acting as executors and trustees of wills.
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
27. With reference to India, consider the
following statements: (2010)
2. Recession
3. Slow down
a) The Banking Ombudsman is appointed by
the Reserve Bank of India
b) The Banking Ombudsman can consider
complaints from Non-Resident Indians having
accounts in India
c) The orders passed by the Banking
Ombudsman are final and binding on the
parties concerned
d) The service provided by the Banking
Ombudsman is free of any fee
25. With reference to India, consider the
following: (2010)
1. Nationalization of Banks
2. Formation of Regional Rural Banks
3. Adoption of villages by Bank Branches
Which of the above can be considered as steps
taken to achieve the “financial inclusion” in
India?
a) 1 and 2 only
b) 2 and 3 only
c) 3 only
d) l,2and3
26. Consider the following statements:
(2010)
The functions of commercial banks in India
include
1. The Wholesale Price Index (WPI) in India is
available on a monthly basis only
2. As compared to Consumer Price Index for
Industrial Workers (CPI(IW)), the WPI gives
less weight to food articles
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
28. Consider the following statements: In
India, taxes on transactions in Stock
Exchanges and Futures Markets are (2010)
1. levied by the Union 2. collected by the
States Which of the statements given above
is/are correct?
a) 1 only
c) Both 1 and 2
b) 2 only
d) Neither 1 nor 2
29. In the parlance of financial investments,
the term ‘bear’ denotes (2010)
a) An investor who feels that the price of a
particular security is going to fall
b) An investor who expects the price of
particular shares to rise
c) A shareholder or a bondholder who has an
interest in a company, financial or otherwise
d) Any lender whether by making a loan or
buying a bond
Explanations
1. d. Exp:The balance of payments of country
is a systematic record of transaction between a
country and rest of the world. It is not only
exports. It is also not the transaction between
the governments only. It is also not the capital
movement only
2. d. Exp: An Increase in bank rate means that
the banks will get loan from the central bank at
higher rate which will increase the cost of funds
for the banks forcing them to raise their lending
rates. It is called monetary tightening
3. d. Eo:Areas under priority sector lending are
notfied by the RBI in India. As per the current
gdeiines of RBi, aN the above areas are
included in the list of priority sector landing.
4. d. Exp: Increase in money supply will reduce
the purchasing power of money as more
money will be chasing lesser goods and wiI4
cause prices to rise. It is a monetary reason of
price rise. Less availability of goods due to
lower output or faster increase in demand
without increase in suppLy causes demand pull
inflation/ price rise.
5. d. Exp: New money into the economy will
increase the money supply which will be
inflationary. In case deficit financing without
creating money, the money supply remains the
same.
6. b. Exp: In case of any financial or physical
asset, if demand increase without
corresponding increase in supply, the price
increases. Interest is the price of money which
will increase if there is increase in demand for it
without corresponding increase in supply.
7. c. Exp: Inflation redces the actual value of
money repaid by the debtor. So, in real terms,
the debtor is the gainer as he is repaying less
in real terms to the lender. Bondholders get a
fixed return and inflation reduces the real value
of the money that the bondholders get at the
time of redemption of the bond. So, the
bondholder is a looser during higher inflation
rates
8. d. Exp: Liquidity means cash or near cash.
Closer to the cash more is the liquidity.
Currency is in the form of cash and it is the
most liquid. Time deposits with banks can not
be immediately converted into cash, so they
are least liquid among the optionsgiven.
Demand deposits include savings bank
deposits as well as current account deposits.
Current account deposits are more liquid than
savings bank deposits.
9. c. Exp: ‘Open Market Operations’ is an act of
buying and selling of securities by the RBI.
Generally, the government securities are used
for open market operations by the RBI
10.a. Exp: There is no recommendation
regarding creation of jobs by the 13th Finance
Commission. Also devolution to local bodies in
the form of grants is fixed at Rs.87.519 but
there is no specified percentage of central
taxes to arrive at this number.
11. d. Exp: The RBI performs all the three
functions for commercial banks.
12. b Exp: World Bank provides financial help
for development projects. It has nothing to do
with the price of any currency. Economic
potential of the country in question is a long
term factor that may affect the flow of capital
but it will not affect price of the currency which
is a short term phenomenon.
13. c. Exp : Lead bank scheme was started in
1969 to coordinate the activities of nationalized
banks for development of banking facilities in
particular districts.
14. c. Exp :Inflation rate is calculated as the
change in average price levels with respect to
previous year is the base for calculating the
change. If last year, the price rise was sharper
as compared to the current year, the inflaction
rate will be falling.
general it is fall in GDP. Slowdown means
reduction in the growth rate of GDP
15.a. Exp:Teaser loans are loans are loans in
which for the first couple of years, rate of
interest is concessional (sub-prime) but after
that it becomes normal which is higher as
compared to the initial rate. Consequently,
borrowers may face difficulty in repayment,
once the EMI increase due to higher rates of
interest. In India these loans were offered by
banks in housing segment.
Melt down is the term used for weakness in the
financial markets which implies security prices
1 6 . c. lowering of bank rate means that banks
can borrow at lower rate from the RBI and this
may lead to lowering of interest rates in the
banks. At lower interest rates, there will be less
incentive to the depositors and banks will
mobilize fewer resources through deposits.
Also, rates affect the lending rates while ratios
(CRR and SLR) affect liquidity in the banking
system.
17. d. Exp: SLR (Statutory Liquidity Ratio) is
the ratio used by the RBI as a monetary tool.
Banks prefer to keep a part of the prescribed
ratio in the form of treasury bills, thus financing
the government short term borrowing
18.b.
19. b. Exp: Non-Banking Finance
Company(NBFC) is a company registered
under the companies Act, 1956 and is engaged
in the business of loans and advances,
acquisition at
shares/stock/bonds/debentures/securities
issued by government or local authority or
other securities of marketable nature, lessing,
hirepurchase, insurance business, chit
business. NBFCs are finance companies but
not banks and are thus not allowed to function
as bank but to take deposits in other forms like
fixed deposits. They are not allowed to open
savings bank accounts and are not members of
the cleaning houses.
20. a. Exp:Recession means negative growth
in GDP for two consecutive quarters but in
21. d. Exp: Interest rate on saving bank
account is fixed by the RBI
22. a. Exp: Increase in CRR means that the
banks have to deposit more with the RBI and
will have less to lend to the borrowers.
23. b. Exp: Forwards Market Commission is the
regulator of commodity futures market. For
financial markets, the role is performed by the
SEBI.
24. C. Exp: If one is not satisfied with the
decision passed by the Banking Ombudsman,
one can approach the appellate authority
against the Banking Ombudsmen’s decision.
Appellate Authority is vested with a Deputy
Governor of the RBI. One can also explore any
other recourse and/or remedies available to
him/her as per the law. The bank also has the
option to file an appeal before the appellate
authority under the scheme.
25. d. Exp: All the steps targeted financial
inclusion in one way or the other.
Nationalisation targeted expansion of bank
branches in rural areas and also a control on
concentration of economic powers in the hands
of few. RRBs were planned to cater to the
needs of the rural areas.
26.b. Exp: Commercial banks are not directly
engage in capital market. Capital market is the
primary concern of Investment Banks. They act
as executors and trustees of wills of their
clients. by
27. c. Exp: Earlier WPI was available on
weakly basis. Last year it was changed to
monthly basis. Weight of food items- WPI —
food articles — 15.402% and food products —
11 .538% Consumer Price Index for Industrial
Workers (CPI(IW) - 57%
28. a. Exp: The tax was introduced as StT and
CU which are central taxes.
29. a. Exp: Bears are the investors who expect
the prices of securities to fall and they sell the
securities ad buy again when the prices
actually fall.
Planning
1. 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
Select the correct answer using the codes
given below:
a) 1 and 2 only
b) 3 and 4 only
c) 2,3 and 4 only
d) 1,2,3 and 4
2, Inclusive growth as enunciated in the
Eleventh-Five Year Plan does not include
one of the following: (2010)
a) Reduction of poverty
b) Extension of employment opportunities
c) Eight Plan
d) Tenth Plan
3. During which Five Year Plan was the
Emergency clamped, new elections took
place and the Janata Party was elected?
(2009)
(a) Third
(b) Fourth
(c) Fifth
(d) Sixth
4. Consider the following statements
regarding Indian Planning: (2009)
1. The Second Five-Year Plan emphasized on
the establishment of heavy industries.
2. The Third Five-Year Plan introduced the
concept of import substitution as a strategy for
industrialization.
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
placed within the domain of private and
multinational sectors
b) with markets assuming a central place, the
role of central planning in many sectors has
been ren4ered redundant
c) the focus of planning has shifted to sectors
like human resource development,
infrastructure, population control and welfare
d) the nation’s priorities have shifted away from
industrial development to rural development
c) Strengthening of capital market
Explanations
d) Reduction of gender inequality
101. In the context of India’s Five Year
Plans, a shift in the pattern of
industrialization, with lower emphasis on
heavy industries and more on infrastructure
begins in (2010)
a) Fourth Plan
b) Sixth Plan
1. d.
2. c. Exp: Poor people don’t participate in the
capital market.
3 . b. Exp: Industrial sector was given more
weightage from second five year plan to fifth
five year plan. Since the sixth five year plan,
allocation for industrial sector has been
reduced in favour of infrastructure.
c) 2,3 and 4
4. e: Emergency was clarnpeci in 1975 and
new elections took place in 1977. Thefifth plan
period was 1974-79. Ref: Wizard Current
Affairs for PT 2009, pg. no. 106, Wizard
April2009 Issue, pg. no. 84.
4. Which of the following is/are among the
noticeable features of the recommendations
of the Thirteenth Finance Commission?
(2012)
103.c. Exp: Main objective of second pia was
rapid industrial4saticn which was based on hea
inciiatries. Main objective of third plan was self
reliance which was based on import
substitution. Ref: Wizar.d Current Affairs for PT
209, pg. no. 105,106
Public Finance
1. In India, deficit financing is used for
raising resources (2013)
a) Economic development
b) Redemption of public debt
c) Adjusting the balance of payments
d) Reducing the foreign debt
2. 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
3. Which of the following constitute Capital
Account? (2013)
1. Foreign Loans
2. Foreign Direct Investment
3. Private Remittances
4. Portfolio Investment
Select the correct answer using the codes
given below.
a) 1,2 and 3
b) l,2 and 4
d) 1,3 and 4
1. A design for the Goods and Services Tax,
and a compensation package linked to
adherence to the proposed design
2. A design for the creation of lakhs of jobs in
the next ten years in consonance with India’s
demographic dividend
3. Devolution of a specified share of central
taxes to local bodies as grants Select the
correct answer using the codes given below:
a) 1 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
5. 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 ue to increase in its
popularity
Select the correct answer using the codes
given below:
(a) 1 only
(b) 2 and 3 only
(c) 2 only
(d)1,2 and 3
6. 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
7. Which one of the following is not a
feature of “Value Added Tax”? (2011)
a) It is a multi-point destination-based system
of taxation
b) It is a tax levied on value addition at each
stage of transaction in the productiondistribution chain
c) It is a tax on the final consumption of goods
or services and must ultimately be borne by the
consumer
d) It is basically a subject of the Central
Government and the State Governments are
only a facilitator for its successful
implementation
8. Which on of the following was not
stipulated in the Fiscal Responsibility and
Budget Management Act, 2003? (2010)
a) Elimination of revenue deficit by the end of
the fiscal year 2007-0 8
b) Non-borrowing by the central government
from Reserve Bank of India except under
certain circumstances
c) Elimination of primary deficit by the end of
the fiscal year 200 8-09
d) Fixing government guarantees in any
financial year as a percentage of GDP
9. Consider the following actions by the
Government: (2010)
1. Cutting the tax rates
2. Increasing the government spending
3. Abolishing the subsidies
In the context of economic recession, which of
theabove actions can be considered a part of
the “fiscal stimulus” package?
a) 1 and 2 only
c) I and 3 only
b) 2 only
d) 1, 2 and 3
10. With reference to the National
Investment Fund to which the
disinvestment proce.ds are routed, consider
the following statements: (2010)
1. The assets in the National Investment Fund
are managed by the Union Ministry of Finance
2. The National Investment Fund is to be
maintained within the Consolidated Fund of
India
3. Certain Asset Management Companies are
appointed as the fund managers
4. A certain proportion of annual income is
useJ for financing select social sectors Which
of the statements given above’ is/are correct?
a) 1 and 2
b) 2 only
c) 3 and 4
d) 3 only
11. In India, he tax proceeds of which one of
the following as a percentage of gross tax
revenue has significant declined in the last
five years? (2010)
a) Service tax
b) Personal income tax
c) Excise duty
d) Corporation tax
Explanations
1.d. Exp: An Increase in bank rate means that
the banks will get loan from the central bank at
higher rate which will increase the cost of funds
for the banks forcing them to raise their lending
rates. It is called monetary tightening.
2. a. Exp: The balance of payments of country
is a systematic record of transaction between a
country and rest of the world, It is not only
exports. It is also not the transaction between
the governments only. It is also not the capital
movement only.
3. b. Exp: Private remittances are included in
the current account
4. a. Exp:There is no recommendation
regarding creation of jobs by the 13th Finance
Commission. Also devolution to local bodies in
the form of grants is fixed at Rs. 87,519 but
there is no specified percentage of central
taxes to arrive at this number.
5. b. Exp: Capital gains refer to increase in the
values of assets. In case of 2 and 3, there is
increase in the value of assets — property and
painting.
6. b. Exp Fiscal stimulus basically means use
of fiscal tools to boost demand in the economy
if the economy is facing the problem of
deficiency in demand. The fiscal tooIs are:
reduction in tax rates and higher spending by
the government. In both the cases the
purchasing power of the people will increase
and boost demand in the economy.
7.d. Exp: Value Added Tax is levied in the
whole production and distribution chain. In
India, CENVAT is a VAT —based tax and
levied by the central government but state level
VAT is levied by the state governments.
8. c. Exp: In the FRBM Act, the target has been
set for reduction in revenue deficit and fiscal
deficit only and not for primary deficit
9. a. Exp: In the fiscal stimulus package either
taxes are reduced or government spending is
increased to increase the purchasing power of
the people
10. c. Exp: UTI,SBI and LIC AMCs to act as
fund managers; 75 p.c.of income from the fund
will go to social sector.
11. c. Exp: Excise duty rates have been
gradually lowered in the past few years as a
measure to help the producers more
competitive in the world market by reduction in
the price. At the same time with expansion of
services in the service tax net and growing
economy and income other tax revenues have
improved.