IAS prelims 2016 Solutions – Economy

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  • Twenty four (24) Questions from economy – Only four really conceptual, rest on current happenings
  • Some questions whch may not be strictly economy questions but covered in economic survey are included here
  • Except for one question – IMF committee, all fairly easy
  • All 23 Questions can be solved by reading CD newscards/explainers/survey/holy bundle/ solved papers

1. Which of the following is/are the indicator/indicators used by IFPRI to compute the Global Hunger Index Report?

  1. Undernourishment
  2. Child stunting
  3. Child mortality

Select the correct answer using the code given below:

(a) 1 only

(b) 2 and 3 only

(c) 1, 2 and 3

(d) 1 and 3 only

  • Covered in economic survey chapter
  • Four Indicators
  1. undernourished population
  2. Wasting in Under 5 children <wasting is very low weight for height i.e very thin child>
  3. Stunting in under 5 children <stunting is very low height for age i.e. very short child>
  4. Under 5 mortality rate

https://www.civilsdaily.com/economic-survey-for-ias-volume-2-chapter-9-part-3-social-infrastructure-employment-and-human-development/

Note that, it isn’t covered in original economic survey or in the summary of other institutions

2. There has been a persistent deficit budget year after year. Which action/actions of the following can be taken by the Government to reduce the deficit?

  1. Reducing revenue expenditure
  2. Introducing new welfare schemes
  3. Rationalizing subsidies
  4. Reducing import duty

Select the correct answer using the code given below.

(a) 1 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1,2,3 and 4

  • Repeat / done in solved papers
  • Holy Bundle
  • Reduce expenditure – Rationalizing subsidies euphemism for cutting subsidies
  • More welfare schemes increases expenditure, would balloon up the deficit

3. The establishment of “Payment Banks’ is being allowed in India to promote Financial inclusion. Which of the following statements is/are correct in this context?

  1. Mobile telephone companies and supermarket chains that are owned and controlled by residents are eligible to be promoters of Payment Banks.
  2. Payment Banks can issue both credit cards and debit cards.
  3. Payment Banks cannot undertake lending activities.

Select the correct answer using the code given below:

(a) 1 and 2 only

(b) 1 and 3 only

(c) 2 only

(d) 1, 2 and 3

  • CD explains
  • Mentioned umpteen times in topics to learn
  • Anyway 2 and 3 are contradictory. can either issue credit card i.e lend or not lend. Can’t do both simultaneously
  • Can not lend, it’s payment bank i.e for remittance, transfers etc.
  • Can invest only in govt securities
  • Statement 1 is obvious, airtel getting payment bank license

4. Which one of the following is a purpose of ‘UDAY’, a scheme of the Government?

a) Providing technical and financial assistance to start-up entrepreneurs in the field or renewable source of energy.

b) Providing electricity to every household in the country by 2018

c) Replacing the coal-based power plants with natural gas, nuclear, solar, wind and tidal power plants over a period of time.

d) Providing for financial turnaround and revival of power distribution companies

  • Ujjawal Discom assurance Yojana
  • Cd explainer
  • Discom word only in option d

5. With reference to ‘IFC Masala Bonds’, sometimes given below is/are correct?

  1. The International Financed Corporation, with offers these bonds, is an arm of the World Bank.
  2. They are the rupee-denominated bonds and are a source of debt financing for the public and private sector.

Select the correct answer using the code given below.

(a) 1 only

(b) 2 Only

(c) Both 1 and 2

(d) Neither 1 nor 2

  • CD explains
  • World bank I did in detail, summary sheet sufficient, IFC one of the 5 organs of WB group
  • 2nd is also true – rupee denominated hence masala
  1. In the context of which of the following do you sometimes find the terms ‘amber box, blue box and green box’ in the news?

(a) WTO affairs

(b)SAARC affairs

(c)UNFCCC affairs

(d) India-EU negotiations on FTA

  • Solved papers
  • WTO in detail article

7. Which of the following is/are included in the capital budget of the Government of India?

  1. Expenditure on acquisition of assets like roads, buildings, machinery, etc.
  2. Loans received from foreign governments.
  3. Loans and advances granted to the States and Union Territories.

Select the correct answer using the code given below.

(a) 1 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

  • Solved papers/ titbits/ holy bundle
  • Assets and loans given – Capital Expenditure
  • Loan received – capital receipt
  1. Recently, which one of the following currencies has been proposed to be added to the basket of IMF’s SDR?

(a) Rouble

(b) Rand

(c) Indian Rupee

(d) Renminbi

  • Simple / CD explains/ newscards
  • Very much in news
  • Renminbi

9.  With reference to the International Monetary and Financial Committee (IMFC), consider the following statements:

  1. IMFC discusses matters of concern affecting the global economy, and advises the International Monetary Fund (IMF) on the direction of its work.
  2. The World Bank participates as observer in IMFC’s meetings.

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

  • Difficult one/ not covered in our IMF article
  • Both the statements are true
  1.  Which of the following best describes the term “import cover”, sometimes seen in the news?

(a) It is the ratio of value of imports to the Gross Domestic product of a country

(b) It is the total value of imports of a country in a year.

© It is the ratio between the value of exports and that of imports between two countries

(d)It is the number of months of imports that could be paid for by a country’s international reserves

  • Import cover – very simple
  • 25 Years of BOP crisis
  • Forex reserve to buy for imports – in 1991, it was sufficient only for 3 weeks – at present some 8 months
  • 25 years of BOP crisis

11. With reference to ‘Pradhan Mantri Fasal Bima Yojana’, consider the following statements:

  1. Under this scheme, farmers with have to pay a uniform premium of two percent for any crop they cultivate in any season of the year.
  2. This scheme covers post-harvest losses arising out of cyclones and unseasonal rains.

Which of the statements given about is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

  • Cd explains/ holy bundle / red flag
  • Different rates for Kharif and Rabi
  • Post harvest losses covered – Pros over earlier schemes
  • https://www.civilsdaily.com/pradhan-mantri-fasal-bima-yojana-min-premium-max-insurance/
  1. Why does the Government of India promote the use of ‘Neem-coated Urea’ in agriculture?

(a) Release of Neem oil in the soil increases nitrogen fixation by the soil microorganisms

(b) Neem coating slows down the rate of dissolution of urea in the soil

(c) Nitrous oxide, which is a greenhouse gas, is not at all released into atmosphere by crop fields

(d) It is a combination of a weedicide and a fertilizer for particular crops

  • Cd explains/ Economic survey
  • Neam coating reduces nitrogen losses from the soil
  • Also makes it difficult to divert for other activities
  • https://www.civilsdaily.com/economic-survey-for-ias-chapter-08-reforming-the-fertiliser-sector/

13. The term ‘Core Banking Solution’ is sometimes such in the news. Which of the following statements best describes/describe this term?

  1. It is a networking of a bank’s branches which enables customers to operate their accounts from any branch of the bank on its network regardless of where they open their accounts.
  2. It is an effort to increase RBI’s control over commercial banks through computerization.
  3. It is a detailed procedure by which a bank with huge non-performing assets is taken over by another bank.

Select the correct answer using the code given below:

(a) 1 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

  • 3rd is incorrect
  • CBS has nothing to do with NPAs

14. India’s ranking in the ‘Ease of Doing Business Index’ is sometimes seen in the news. Which of the following has declared that ranking?

  1. a) Organization for Economic Cooperation and Development (OECD)
  2. b) World Economic Forum
  3. c) World Bank
  4. d) World Trade Organization (WTO
  • Simple / Economic survey/ Newscards/ Cd explains
  • https://www.civilsdaily.com/story/ease-of-doing-business/

15. With reference to the ‘Trans-Pacific Partnership’, consider the following statements:

  1. It is an agreement among all the Pacific Rim countries except China and Russia.
  2. It is a strategic alliance for the purpose of maritime security only.

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

  • Simple/ CD explains/ Newscards/ Economic survey
  • It’s trade alliance
  • Not all countries are involved, where is colombia? Where is papua new guinea?
  • Can be done using redflag tidam
  • https://www.civilsdaily.com/economic-survey-for-ias-chapter-08-preferential-trade-agreements/

16. What is/are the purpose/purposes of the ‘Marginal Cost of Funds based Lending Rate (MCLR)’ announced by RBI?

  1. These guidelines help improve the transparency in the methodology followed by banks for determining the interest rates on advances
  2. These guidelines help ensure availability of bank credit & interest rates which are fair to the borrowers as well as the banks

Select the correct answer using the code given below:

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

17. With reference to ‘Financial Stability and Development Council’, consider the following statements:

  1. It is an organ of NITI Aayog.
  2. It is headed by the Union Finance Minister.
  3. It monitors macro prudential super-vision of the economy.

Which of the statements given above is/are correct?

  1. a) 1 and 2 only
  2. b) 3 Only
  3. c) 2 and 3 only
  4. d) 1, 2 and 3
  • Simple/ CD newscard
  • Niti Ayog I said was important topic
  • You would know it isn’t part of NITI
  • CP – FM
  • Eliminate , include 2 – answer
  • https://www.civilsdaily.com/fsdc-an-introduction/
  1. The term ‘Base Erosion and profit shifting’ is sometimes seen in the news in the context of

(a) mining operation by multinational companies in resource-rich by backward areas

(b) curbing of the tax evasion by multinational companies

(c )exploitation of genetic resources of a country by multinational companie

(d ) Lack of consideration of environmental costs in the planning of development projects

  • Simple / Cd newscards/ Explains
  • Look at the newscards/ also a user question and my comment
  • https://www.civilsdaily.com/story/black-money-the-economics-around-it/

19. With reference to ‘Bitcoins’ sometimes seen in the news, which of the following statements is/are correct?

  1. Bitcoins are tracked by the Central Banks of the countries.
  2. Anyone with a Bitcoin address can send and receive Bitcoins from anyone else with a Bitcoin address.
  3. Online payments can be sent without either side knowing the identity of the other.

Select the correct answer using the code given below.

(a) 1 and 2 only

(b) 2 and 3 only

(c) 3 only

(d) 1, 2 and 3

  • Simple/ CD newscrads
  • 1 is clearly wrong. Central bankers are clueless
  • 2 and 3 are obviously true.
  • Anonymity means can be used in tax evasion/ drug trafficking etc
  • Look any is red flag but just as anyone with bank account can send money to anyone else with bank account, this statement is also true
  • https://www.civilsdaily.com/what-are-bitcoins/
  • Consider the following statements:

20.

  1. New Development Bank has been set up by APEC.
  2. The headquarters of New Development Bank is in Shanghai.

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

  1. The term ‘Regional Comprehensive Economic Partnership’ often appears in the news in the context of the affairs of a group of countries known as

(a)    G20

(b)    ASEAN

(c)    SCO

(d)    SAARC

  1. ‘Global Financial Stability Report’ is prepared by the

(a)    European Central Bank

(b)    International Monetary Fund

(c)    International Bank for Reconstruction and Development

(d)    Organization for Economic Cooperation and Development

  1. PradhanMantri MUDRA Yojana is aimed at

(a)    Bringing the small entrepreneurs into formal financial system

(b)    Providing loans to poor farmers for cultivating particular crops

(c)    Providing pensions to old and destitute persons

(d)    Funding the voluntary organization involved in the promotion of skill development and employment generation

24. What is/are the purpose/purposes of Government’s ‘Sovereign Gold Bond Scheme’ and Gold Monetization Scheme?

  1.    To bring the idle gold lying with India households into the economy
  2.    To promote FDI in the gold and jewelry sector
  3.    To reduce India’s dependence on gold imports

Select the correct answer using the code given below

  1. a)    1 Only
  2. b)    2 and 3 Only
  3. c)    1 and 3 only
  4. d)    1, 2 and 3
  • Simple/Common sense/news card/ explains/ mains question
  • http://www.thebetterindia.com/51742/gold-monetisation-scheme/
  • How and why will FDI come? No reason

By Dr V

Doctor by Training | AIIMSONIAN | Factually correct, Politically not so much | Opinionated? Yes!

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