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DAILY STATIC QUIZ will cover all the topics of Static/Core subjects – Polity, History, Geography, Economics, Environment and Science and technology.
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Consider the following statements:
Which of the statements given above is/are NOT correct?
Solution (c)
Any entity raising INR denominated ECB is not permitted to convert the liability arising out of INR ECB into foreign currency liability in any manner.
Hence Statement 1 is incorrect.
Transactions on account of External Commercial Borrowings (ECB) and Trade Credit (TC) are governed by clause (d) of sub-section 3 of section 6 of the Foreign Exchange Management Act, 1999 (FEMA).
Hence Statement 2 is incorrect.
Solution (c)
Any entity raising INR denominated ECB is not permitted to convert the liability arising out of INR ECB into foreign currency liability in any manner.
Hence Statement 1 is incorrect.
Transactions on account of External Commercial Borrowings (ECB) and Trade Credit (TC) are governed by clause (d) of sub-section 3 of section 6 of the Foreign Exchange Management Act, 1999 (FEMA).
Hence Statement 2 is incorrect.
Consider the following statements:
Which of the statements given above is/are correct?
Solution (c)
Merchandise trade deficit is the largest component of India’s Current Account Deficit significantly impacting the BoP position.
Hence Statement 1 is correct.
Net terms of trade (NTT) of a country is the ratio of unit value index of export to that of import.
Hence Statement 2 is correct.
Solution (c)
Merchandise trade deficit is the largest component of India’s Current Account Deficit significantly impacting the BoP position.
Hence Statement 1 is correct.
Net terms of trade (NTT) of a country is the ratio of unit value index of export to that of import.
Hence Statement 2 is correct.
Consider the following statements
Which of the statements given above is/are correct?
Solution (b)
In terms of total trade, USA account for the highest trade with India followed by China.
Hence Statement 1 is incorrect.
India has a trade surplus (total export value is greater than total import value) with USA and trade deficit with China in 2018-19.
Hence Statement 2 is correct.
Solution (b)
In terms of total trade, USA account for the highest trade with India followed by China.
Hence Statement 1 is incorrect.
India has a trade surplus (total export value is greater than total import value) with USA and trade deficit with China in 2018-19.
Hence Statement 2 is correct.
Consider the following statements:
Which of the statements given above is/are NOT correct?
Solution (d)
The appreciation in Real Effective Exchange Rate may lead to increase in imports.
An increase in REER implies that exports become more expensive and imports become cheaper.
Hence Statement 1 is correct.
Petroleum Products were the largest exported commodity from India during 2018-19, in terms of value.
Hence Statement 2 is correct.
Solution (d)
The appreciation in Real Effective Exchange Rate may lead to increase in imports.
An increase in REER implies that exports become more expensive and imports become cheaper.
Hence Statement 1 is correct.
Petroleum Products were the largest exported commodity from India during 2018-19, in terms of value.
Hence Statement 2 is correct.
Consider the following statements:
Which of the statements given above is/are correct?
Solution (c)
China is the largest exporter to India in 2018-19 followed by USA.
Hence Statement 1 is correct.
Software services constitute the highest share (around 40-45%) of service exports by India, followed by business services at about 18-20 per cent, travel at 11-14 per cent and transportation at 9-11 per cent.
Hence Statement 2 is correct.
Solution (c)
China is the largest exporter to India in 2018-19 followed by USA.
Hence Statement 1 is correct.
Software services constitute the highest share (around 40-45%) of service exports by India, followed by business services at about 18-20 per cent, travel at 11-14 per cent and transportation at 9-11 per cent.
Hence Statement 2 is correct.
Which of the following items is not a part of Current Account in a country’s Balance of Payment?
Solution (c)
The current account on the balance of payments measures the inflow and outflow of goods, services and investment incomes.
The main components of the current account are:
Solution (c)
The current account on the balance of payments measures the inflow and outflow of goods, services and investment incomes.
The main components of the current account are:
Consider the following statements with reference to depreciation of a currency
Which of the above statements is/are correct?
Solution (a)
Currency depreciation is the loss of value of a country’s currency with respect to one or more foreign reference currencies, typically in a floating exchange rate system in which no official currency value is maintained.
In a floating exchange rate system, a currency’s value goes up (or down) if the demand for it goes up more (or less) than the supply does.
On the other hand, when the government lowers the exchange rate of its currency, it is called Devaluation, it is intentional and is done to promote the exports of the country.
Solution (a)
Currency depreciation is the loss of value of a country’s currency with respect to one or more foreign reference currencies, typically in a floating exchange rate system in which no official currency value is maintained.
In a floating exchange rate system, a currency’s value goes up (or down) if the demand for it goes up more (or less) than the supply does.
On the other hand, when the government lowers the exchange rate of its currency, it is called Devaluation, it is intentional and is done to promote the exports of the country.
Consider the following statements with reference to Free Trade Agreement (FTA):
Which of the above statements is/are INCORRECT?
Solution (b)
In FTAs, tariffs on items covering substantial bilateral trade are eliminated between the partner countries; however each maintains individual tariff structure for non-members. India Sri Lanka FTA is an example.
Hence Statement 1 is correct.
In a PTA there is a positive list of products on which duty is to be reduced; in an FTA there is a negative list on which duty is not reduced or eliminated.
Hence Statement 2 is incorrect.
Solution (b)
In FTAs, tariffs on items covering substantial bilateral trade are eliminated between the partner countries; however each maintains individual tariff structure for non-members. India Sri Lanka FTA is an example.
Hence Statement 1 is correct.
In a PTA there is a positive list of products on which duty is to be reduced; in an FTA there is a negative list on which duty is not reduced or eliminated.
Hence Statement 2 is incorrect.
Consider the following statements regarding Purchasing Power Parity:
Which of the following is/are correct?
Solution (d)
Law of one price, i.e., identical goods and services (in quantity as well as quality) must have the same price in different markets when measured in a common currency.
Solution (d)
Law of one price, i.e., identical goods and services (in quantity as well as quality) must have the same price in different markets when measured in a common currency.
Which of the following refers to Invisible balance in the context of BoP?
Solution (b)
The invisible balance or balance of trade on services is that part of the balance of trade that refers to services and other products that do not result in the transfer of physical objects. Examples include consulting services, shipping services, tourism, and patent license revenues. This figure is usually generated by tertiary industry. The term ‘invisible balance’ is especially common in the United Kingdom.
Solution (b)
The invisible balance or balance of trade on services is that part of the balance of trade that refers to services and other products that do not result in the transfer of physical objects. Examples include consulting services, shipping services, tourism, and patent license revenues. This figure is usually generated by tertiary industry. The term ‘invisible balance’ is especially common in the United Kingdom.
