IASbaba Daily Prelims Quiz
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The Current Affairs questions are based on sources like ‘The Hindu’, ‘Indian Express’ and ‘PIB’, which are very important sources for UPSC Prelims Exam. The questions are focused on both the concepts and facts. The topics covered here are generally different from what is being covered under ‘Daily Current Affairs/Daily News Analysis (DNA) and Daily Static Quiz’ to avoid duplication. The questions would be published from Monday to Saturday before 2 PM. One should not spend more than 10 minutes on this initiative.
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Question 1 of 5
1. Question
The phenomenon where increased borrowing by the government to meet its spending needs causes a decrease in the quantity of funds that is available to meet the investment needs of the private sector is known as –
Correct
Solution (a)
Explanation:
Crowding out effect refers to a phenomenon where increased borrowing by the government to meet its spending needs causes a decrease in the quantity of funds that is available to meet the investment needs of the private sector.
In other words, reduction in private investment due to increase in interest rate which is due to fiscal deficit is called crowding out. If the interest rate increases due to monetary policy, then it is not crowding out.
Crowding-out effect increases the vulnerability of the domestic economy from economic shocks which adversely affects business or economic activity of the country.
Sometimes, government adopts an expansionary fiscal policy stance and increases its spending to boost the economic activity.
Article reference: Q3 private investment in manufacturing jumps 102%
Incorrect
Solution (a)
Explanation:
Crowding out effect refers to a phenomenon where increased borrowing by the government to meet its spending needs causes a decrease in the quantity of funds that is available to meet the investment needs of the private sector.
In other words, reduction in private investment due to increase in interest rate which is due to fiscal deficit is called crowding out. If the interest rate increases due to monetary policy, then it is not crowding out.
Crowding-out effect increases the vulnerability of the domestic economy from economic shocks which adversely affects business or economic activity of the country.
Sometimes, government adopts an expansionary fiscal policy stance and increases its spending to boost the economic activity.
Article reference: Q3 private investment in manufacturing jumps 102%
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Question 2 of 5
2. Question
Which of the following can be possible effect when the RBI slashes policy interest rates aggressively?
Correct
Solution (d)
Reduction in any type of rate (CRR, SLR, Bank Rate etc.) by the RBI will lead to the increase in liquidity in the market. Here change in the liquidity is not a correct option because change can be negative/ positive both. So option (d) is more appropriate.
Article link: Planning an exit out of the easy money regime
Incorrect
Solution (d)
Reduction in any type of rate (CRR, SLR, Bank Rate etc.) by the RBI will lead to the increase in liquidity in the market. Here change in the liquidity is not a correct option because change can be negative/ positive both. So option (d) is more appropriate.
Article link: Planning an exit out of the easy money regime
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Question 3 of 5
3. Question
Trade Policy Review (TPR), which is often seen in news, is an important mechanism under which of the following organizations?
Correct
Solution (a)
The second and final Session of India’s seventh Trade Policy Review (TPR) was concluded recently at the World Trade Organization in Geneva. The TPR is an important mechanism under the WTO’s monitoring function in which member countries’ trade and related policies are examined by the WTO with an aim to contribute towards improved adherence to WTO rules, while providing constructive feedback to the Member under review.
Article link: Seventh Trade Policy Review of India at the WTO
Incorrect
Solution (a)
The second and final Session of India’s seventh Trade Policy Review (TPR) was concluded recently at the World Trade Organization in Geneva. The TPR is an important mechanism under the WTO’s monitoring function in which member countries’ trade and related policies are examined by the WTO with an aim to contribute towards improved adherence to WTO rules, while providing constructive feedback to the Member under review.
Article link: Seventh Trade Policy Review of India at the WTO
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Question 4 of 5
4. Question
The Thousand Islands are a chain of islands which are located to the north of –
Correct
Solution (c)
On 9 January 2021, a Boeing 737-500 (PK-CLC) operating Sriwijaya Air Flight 182 went missing after taking off from Jakarta Soekarno–Hatta Airport on route to Pontianak Supadio Airport. The aircraft crashed near the Thousand Islands.
The Thousand Islands (officially Kepulauan Seribu) are a chain of islands to the north of Jakarta’s coast. It forms the only regency of Jakarta, the capital of Indonesia.
It consists of a string of 342 islands stretching 45 km (28 mi) north into the Java Sea at West Jakarta Bay and in fact north of Banten Province.
Article link: Indonesia intensifies search for crashed plane’s black boxes
Incorrect
Solution (c)
On 9 January 2021, a Boeing 737-500 (PK-CLC) operating Sriwijaya Air Flight 182 went missing after taking off from Jakarta Soekarno–Hatta Airport on route to Pontianak Supadio Airport. The aircraft crashed near the Thousand Islands.
The Thousand Islands (officially Kepulauan Seribu) are a chain of islands to the north of Jakarta’s coast. It forms the only regency of Jakarta, the capital of Indonesia.
It consists of a string of 342 islands stretching 45 km (28 mi) north into the Java Sea at West Jakarta Bay and in fact north of Banten Province.
Article link: Indonesia intensifies search for crashed plane’s black boxes
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Question 5 of 5
5. Question
Consider the following statements with reference to Golden Quadrilateral:
- The Golden Quadrilateral project is managed by the National Highways Authority of India (NHAI) under the Ministry of Road, Transport and Highways.
- The longest segment of Golden Quadrilateral is Chennai to Kolkata.
Which of the statements given above is/are correct?
Correct
Solution (c)
The Golden Quadrilateral (GQ) is a national highway network connecting most of the major industrial, agricultural and cultural centres of India.
It forms a quadrilateral connecting the four major metro cities of India, viz., Delhi (north), Kolkata (east), Mumbai (west) and Chennai (south).
The sides of quadrilateral are: Delhi to Mumbai (1419 km), Mumbai to Chennai (1290 km), Chennai to Kolkata (1684 km) and Kolkata to Delhi (1453 km).
It is the largest highway project in India and the fifth longest in the world.
The Golden Quadrilateral project is managed by the National Highways Authority of India (NHAI) under the Ministry of Road, Transport and Highways.
Article link: Indian Railways enhances speed to 130 Kmph on Golden Quadrilateral, Golden Diagonal sections
Incorrect
Solution (c)
The Golden Quadrilateral (GQ) is a national highway network connecting most of the major industrial, agricultural and cultural centres of India.
It forms a quadrilateral connecting the four major metro cities of India, viz., Delhi (north), Kolkata (east), Mumbai (west) and Chennai (south).
The sides of quadrilateral are: Delhi to Mumbai (1419 km), Mumbai to Chennai (1290 km), Chennai to Kolkata (1684 km) and Kolkata to Delhi (1453 km).
It is the largest highway project in India and the fifth longest in the world.
The Golden Quadrilateral project is managed by the National Highways Authority of India (NHAI) under the Ministry of Road, Transport and Highways.
Article link: Indian Railways enhances speed to 130 Kmph on Golden Quadrilateral, Golden Diagonal sections
