IASbaba ’60 Day Plan- Prelims Test 2016 ECONOMICS & CURRENT AFFAIRS [DAY 21]

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IASbaba ’60 Day Plan’ – Prelims Test 2016 [Day 21]

Q.1) RBI merged two funds to create a new Financial Inclusion Fund (FIF) to support developmental and promotional activities for expanding reach of banking services. Consider the following w.r.t FIF

1. The new FIF will be administered by NABARD.
2. FIF is created by merging National Innovation Fund and Financial Inclusion Technology Fund

Select the correct statement/s

a) Only 1

b) Only 2

c) Both

d) None

Q.2) Consider the following regarding River Information Services (RIS)

1. They are software based system, combination of modern tracking equipment designed to optimize traffic and transport processes in inland navigation.
2. They would facilitate environment protection and better safety provisions for ship to ship collisions.

Select the correct code

a) Only 1

b) Only 2

c) Both

d) None

Q.3) Consider the following statements about inflation.

1. Inflation means a persistent rise the price of goods and services.
2. Inflation increases the purchasing power of money.
3. Inflation hurts those with fixed and rising incomes equally.

Which of the above are correct?

a) 1 only

b) 2 only

c) 2 and 3 only

d) All of the above 

Q.4) Which of the following are probable effects of inflation?

1. It reduces savings
2. Leads to depreciation of currency
3. Make imports cheap
4. Increases borrowing costs for businesses

Select the correct answer:

a) 1 only

b) 1 and 2 only

c) 1, 2 and 3 only

d) 1, 2 and 4 only 

Q.5) The GDP price deflator is an economic metric that accounts for inflation by converting output measured at current prices into constant-dollar GDP. Consider the following.

1. It is the ratio of the value of goods and services an economy produces in a particular year at current prices to that at prices prevailing during any other reference (base) year.
2. The deflator covers the entire range of goods and services produced in the economy — as against the limited commodity baskets for the wholesale or consumer price indices — it is seen as a more comprehensive measure of inflation.

Select the correct answer:

a) 1 only

b) 2 only

c) Both 1 and 2

d) None of the above

Q.6) Which of the following are correct about Producer Price Index?

a) The Producer Price Index (PPI)program measures the change in prices received by the seller.

b) The PPI provides a broader coverage in terms of products and industries and it also includes services, something which is not a part of the WPI.

c) PPI measures the price pressure due to increase in cost of finished goods.

d) All of the above. 

Q.7) Consider the following.

1. Demand Pull inflation involves inflation decreasing as real GDP rises and unemployment decreases.
2. It can be a result of easy money policy and also referred to as growth inflation.

Select the correct answer:

a) 1 only

b) 2 only

c) Both 1 and 2

d) None of the above 

Q.8) Which of the following is incorrect?

a) Supply shock inflation is caused by reduced supplies due to increased prices of inputs.

b) A type of persistent inflation that occurs by deficiencies in the condition of the economy is structural inflation.

c) Speculation and cartelization can cause inflation and hence vitiate the market dynamics.

d) None of the above.

Q.9) Consider the relation of inflation with BOP.

1. Inflation discourages exports as domestic sales are attractive
2. Inflation may erode external competitiveness of domestic products if it leads to higher production costs.
3. Inflation leads to currency appreciation and hence increases imports.
4. High inflation thus boosts trade and hence solve BOP crisis as such.

Select the correct answer:

a) 1 only

b) 1 and 2 only

c) 1 and 3 only

d) 3 and 4 only 

Q.10) Which are possible consequences of inflation?

1. Repo rates may go up to squeeze out money.
2. More OMO’s may be conducted by RBI by selling G-Secs.
3. Government’s fiscal deficit may go up in need to subsidise and make services affordable.

Select the correct answer:

a) 2 only

b) 1 and 2 only

c) 2 and 3 only

d) 1 and 3 only

Q.11) Which of the following is correct about Inflation tax?

a) Inflation taxis a term which refers to the financial loss of value suffered by holders of cash and as well those on fixed income, due to the effects of inflation;

b) Inflation tax is the tax people pay in developed countries to help governments fight inflation.

c) Inflation tax is imposed on the super-rich to subsidize the poor against the risks of inflation.

d) Inflation tax is imposed on those who strike and cause harm to public property in times of high inflation.  

Q.12) Which of the following is incorrect about Wholesale Price Index?

a) Wholesale Price Index (WPI) represents the price of goods at a wholesale stage i.e. goods that are sold in bulk and traded between organizations instead of consumers.

b) The WPI has 3 categories namely Primary article group, fuel and power category and the manufactured products category.

c) Primary articles have the highest weightage whereas the manufactured products have the lowest weightage.

d) Indian WPI is published by the Economic Advisor, Ministry of Commerce and Industry. 

Q.13) Call and Term money markets are the sub-markets of Indian money market. Which of the following statements are correct about these short term markets?

1. Call money refers to borrowing and lending of funds for one day.
2. Term money refers to borrowing and lending of funds for a period of more than 14 days.
3. Interest rates in these markets are fixed by banks.
4. Since banks work as both lenders and borrowers in these markets, they are also known as Inter-Bank market.

Select the code from the following:

a) 1,2 and 3

b) 2,3 and 4

c) 1,2 and 4

d) All of the above

Q.14) Consider the following statements:

1. Import of gold is inflationary
2. Providing subsidies through Direct Benefit Transfer causes demand pull inflation
3. International increase in crude prices will cause cost push inflation in Indian market
4. Inflow of FOREX causes inflation

Which of the above statements are correct?

a) 1 and 4

b) 1,2 and 3

c) 2,3 and 4

d) All of the above

Q.15) Which of the following statements correctly explains the term ‘Stagflation’ 

a) Persistent high inflation combined with high unemployment

b) Reduction of the general level of prices in the economy

c) Decrease in the rate of inflation

d) Constant prices of commodities for a long time in an economy 

Q.16) Which of the following economic entities is are benefitted with inflation?

1. Debtors
2. Exporters
3. Savings bank account holders
4. Creditors

Select the code from the following:

a) 1 and 2

b) 1 only

c) 2,3 and 4

d) None of the above

Q.17) Consider the following statements regarding sugarcane and sugar pricing policy.

1. The concept of Statutory Minimum Price (SMP) of sugarcane was replaced with the ‘Fair and Remunerative Price (FRP)’ of sugarcane.
2. Sugar is an essential commodity under the Essential Commodities Act, 1955.
3. The Central Government has been following a policy of partial control and dual pricing for sugar.

Which of the above statements are correct?

a) 1 and 2

b) 2 and 3

c) 1 and 3

d) All of the above 

Q.18) Consider the following statements with respect to Missile technology control regime (MTCR)

1. For signatories of missile technology control regime the maximum permissible payload of a missile can be up to 1 ton
2. The range of missiles for signatories of MTCR should not exceed more than 300 Kms

Select the correct answer

a) 1 only

b) 2 only

c) Both

d) None

Q.19) Consider the following statements with respect to RBI

1. RBI or Reserve bank of India was established under the government of India act 1935
2. A palm tree and a Bengal tiger form the logo of RBI

Select the correct option

a) 1 only

b) 2 only

c) Both

d) None

Q.20) Consider the following

1. Tiger
2. One horned rhinoceros
3. Elephant
4. Peacock

Which of the following animals are found in the ten rupees Indian currency note?

a) 1,2&4 only

b) 2,3&4 only

c) 1,3&4 only

d) 1,2&3 only

Q.21) The recent New Delhi Declaration is related to which of the following themes

a) Satellite coordination to monitor human induced greenhouse gases

b) To curb violence against women in tribal areas

c) To enhance scientific temper among school going students

d) To aim 100 % adult literacy by 2020

Q.22) Consider the following

1. Chimmonoy Wild life sanctuary
2. Parambikulam wild life sanctuary
3. Eravikilam national park

Which of the above wild life sanctuary/national park is not located in Kerala?

a) 1&2 only

b) 3 only

c) 2&3 only

d) All are present in Kerala

Q.23) Consider the following statements.

1. An extremely low aggregate demand.
2. Comparatively lower inflation.
3. Production houses go for forced labour cut in order to reduce production cost.

Which of the following stage of Business cycle best represents the above characteristics?

a) Recession

b) Recovery

c) Depression

d) Boom

Q.24)  Consider the following statements with regards to inflation indexed bonds (IIBs).

1. IIBs will provide inflation protection to principal only.
2. Existing tax provisions will be applicable on interest payment and capital gains on IIBs.
3. Foreign institutional investors (FIIs) are not allowed to invest in IIBs.

Which of the above statements are NOT correct?

a) 2 and 3 only

b) 1 and 2 only

c) 1 and 3 only

d) All of the above 

Q.25) GPS-Aided Geo Augmented Navigation (GAGAN) system will provide augmentation service over which of the following areas?

1. Bay of Bengal
2. Middle East
3. South East Asia
4. Africa
5. Russia
6. Scandinavia

Choose the correct code

a) 1,2,3 and 4

b) 2,4,5 and 6

c) 3,4,5 and 6

d) 1 and 3 only

Q.26) Consider the following statements with respect to Kaladan Multi-modal Transit Transport Project

1. It is a project between India, Bangladesh and Myanmar
2. The project consists of only naval routes
3. It will reduce the need to transport goods through the “Chicken’s neck”

Which of the following is incorrect?

a) Only 1

b) Only 2

c) 1 and 2

d) 2 and 3

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P.S- Attempt these questions within 20 minutes with full honesty and write your results in the comment box. Next day, come back and check your result. You can also discuss the important concepts and issues, in case of doubts (among peers)

All the best

IASbaba