Indian Economy Quiz: Day 124

October 7, 2022

Consider the following statements regarding inflation:
1. Core inflation has a wider ambit than the Headline inflation.
2. Core inflation is preferred over headline inflation due to less volatility.
Select the correct statement(s) using the codes given below:

(A) 1 only
(B) 2 only
(C) Both 1 and 2
(D) None of the above

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Answer: (b)

Headline inflation refers to the change in value of all goods in the basket.
Core inflation excludes food and fuel items from headline inflation.
Since the prices of fuel and food items tend to fluctuate and create ‘noise’ in inflation computation, core inflation is less volatile than headline inflation
CORE INFLATION = HEADLINE INFLATION – (FOOD & FUEL INFLATION)

How many of the below given pair(s) is/are correctly matched?
1. Doubtful = Remaining NPAs for more than 12 months
2. Loss assets = Loss has been identified by the bank or internal/external auditors
3. Sub-standard = NPAs for less than or equal to 12 months

(A) 1 pair only
(B) 2 pairs only
(C) All the pairs
(D) None of the pairs

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Answer: (c)

NPAs classified into three types:

Sub-standard: remaining NPAs for less than or equal to 12 months;
Doubtful: remaining NPAs for more than 12 months; and
Loss assets: where the loss has been identified by the bank or internal/external auditors

Consider the following statements:
1. Incremental capital output ratio explains the relationship between the level of investment made in the economy and the subsequent increase in the GDP.
2. A lower ICOR is preferred as it indicates a country's production is more efficient.
Select the incorrect statement(s) using the codes given below:

(A) 1 only
(B) 2 only
(C) Both 1 and 2
(D) None of the above

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Answer: (d)

Incremental capital output ratio (ICOR) is a frequently used tool that explains the relationship between the level of investment made in the economy and the subsequent increase in the gross domestic product (GDP).

Which of the following best defines the term ‘Head Count Ratio’?

(A) When the number of poor is estimated as the proportion of people below the poverty line.
(B) When the number of poor is estimated as the proportion of people above the poverty line.
(C) When the number of poor is estimated as the proportion of people exactly on the poverty line.
(D) None of the above

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Answer: (a)

‘Head Count Ratio’

When the number of poor is estimated as the proportion of people below the poverty line, it is known as ‘Head Count Ratio’.
The Head Count Ratio is calculated with the following formula:

HCR = Number of people living below the poverty line/Total population of the country

Which one of the following refers to the sustained price rise in some particular commodities only?

(A) Reflation
(B) Disinflation
(C) Shrinkflation
(D) Skewflation

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Answer: (d)

Skewflation can be regarded as inflation in some commodities, while other commodities can show deflation. In other words we can say skewflation is sustained price rise in some particular commodities only.

Hence, option d is the correct answer

Consider the following statements :
1. GNP at Factor Cost measures value of output received by the factors of production belonging to a country in a year GDP at FC =
2. GDP at MP + Net Product Taxes - Net Production Taxes
Select the correct statement(s) using the codes below:

(A) 1 only
(B) 2 only
(C) Both 1 and 2
(D) Neither 1 nor 2

Show Answer

Answer: (a)

GNP at Factor Cost measures value of output received by the factors of production belonging to a country in a year.

Hence statement 1 is correct.

GDP at FC = GDP at MP – Net Product Taxes – Net Production Taxes

Hence statement 2 incorrect

Which of the following statement(s) is/are correct?
1. Effective Revenue deficit is a term introduced in the Union Budget 2011-12.
2. Effective Revenue Deficit is the difference between revenue deficit and grants for creation of capital assets.
Select the answer using the codes given below:

(A) 1 only
(B) 2 only
(C) Both 1 and 2
(D) Neither 1 nor 2

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Answer: (c)

Effective Revenue Deficit is the difference between revenue deficit and grants for creation of capital assets.
Effective Revenue Deficit signifies that amount of capital receipts that are being used for actual consumption expenditure of the Government.
Effective Revenue deficit is a term introduced in the Union Budget 2011-12

Hence statement both the statements are correct.

Which of the following things form part of the consumption or consumer goods?
1. Tools and implements
2. Goods like food and clothing
3. Home decor
Select the answer using the codes below:

(A) 1 and 3 only
(B) 2 only
(C) 2 and 3 only
(D) 1, 2 and 3

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Answer: (c)

Capital goods are man-made products used by a business to produce consumer or other capital goods.
Consumer goods are products used by consumers.
Capital goods include items like buildings, machinery, and tools.
Examples of consumer goods include food, appliances, clothing, and automobiles

Which of the following is incorrect regarding Regional rural Banks?

(A) Regional rural Banks are joint ventures between the Central government, State government and a Commercial Bank.
(B) RRBs are required to provide 90% of their total credit as priority sector lending
(C) RRBs are registered under Regional Rural Bank Act, 1976.
(D) The area of operation for them is limited to the area notified by the government of India.

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Answer: (b)

Priority Sector Lending (PSL) issued by RBI prescribe an enhanced target of 75% for RRBs for lending to the priority sector
Regional Rural Banks (RRBs) are government-owned scheduled commercial banks of Indiathat operate at the regional level in different states of India.
The area of operation is limited to thearea notified by the government of India covering, and it covers one or more districts in the State.
The equity of the Regional Rural Banks is held by the stakeholders in a fixed proportion.

1.Central Government – 50%

2.Sponsor Bank – 35%

State Government – 15%

The famous ‘Global Financial Stability Report’ is released by which of the following organizations?

(A) International Monetary Fund (IMF)
(B) United Nations Conference on Trade and Development (UNCTAD)
(C) World Trade Organisation (WTO)
(D) United Nations General Assembly (UNGA)

Show Answer

Answer: (a)

The International Monetary Fund (IMF) releases the Global Financial Stability Report twice in a year — April and October