Indian Economy Quiz: Day 100

February 27, 2023

With reference to the Indian economy, consider the following statements:
1 Core inflation provides a sense of how the broader economy is doing.
2. Super core inflation is calculated by removing gold and silver price inflation from core inflation.
3. Inflation being sticky essentially means that inflation is taking longer than expected to fall.
Which of the statements given below is/are correct?

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

Show Answer

Answer: (d)

Core inflation is a measure of inflation arrived at by removing the prices of food and fuel.
Since food and fuel prices fluctuate massively, often looking at core inflation provides a sense of how the broader economy is doing.
Even stricter measures of core inflation such as super core inflation (calculated by Nomura Research) too has gone up in January.
Super core inflation is calculated by removing gold and silver price inflation from core inflation.
Inflation being sticky essentially means that inflation is taking longer than expected to fall.
Essentially, higher food and fuel prices have seeped into the broader economy and made other things costlier.

With reference to the Certificate of deposit, consider the following statements:
1. It was first introduced in 1989 on the recommendation of the Vaghul Committee. They are issued by Commercial Banks which are freely transferable from one party to another.
2. It is essentially a money market instrument.
Which of the statements given below is/are correct?

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

Show Answer

Answer: (d)

The Certificate of deposit was first introduced in 1989 on the recommendation of the Vaghul Committee.
Certificate of Deposit (CDs) are short-term instruments issued by Commercial Banks and Special Financial Institutions (SFIs), which are freely transferable from one party to another.
The maturity period of CDs ranges from 91 days to one year.
These can be issued to individuals, co-operatives and companies.

Which of the following is/are correct regarding GST?
1 The Goods and Services Tax (GST) Council recently approved the creation of a national tribunal mechanism with state benches for the redressal of disputes.
2. GST Council is a statutory body under the GST Act.
Select the answer using the codes:

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

Show Answer

Answer: (a)

GST Council is a constitutional body under article 279A.

Advance digital skills are related to which of the following?

(A) Cloud architecture
(B) Application development
(C) Machine learning
(D) All of the above

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Answer: (d)

Which of the following statements is/are correct regarding Unicorns?
1 The valuation of unicorns is not expressly linked to their current financial performance, but largely based on their growth potential.
2. Unicorns are privately held, venture-capital backed startups with a valuation of $1 billion.
Select the answer using the codes given below:

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

Show Answer

Answer: (c)

What is a unicorn startup?

Unicorns are privately held, venture-capital backed startups that have reached a value of $1 billion.
The valuation of unicorns is not expressly linked to their current financial performance, but largely based on their growth potential as perceived by investors and venture capitalists who have taken part in various funding rounds.

Which one of the following is not correct regarding Consumer Price Index?

(A) The base year for it is 2011-12
(B) The RBI uses it for targeting inflation in the country.
(C) It is an indicator comprising of goods but not services.
(D) The National Statistical Office releases the index.

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Answer: (c)

Consider the following statements:
1 UPI supports both Person-to-Person (P2P) and Person-to-Merchant (P2M) payments.
2. UPI has collaborated with PayNow which is a fast payment system in Singapore.
Select the correct statements using the code given below:

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

Show Answer

Answer: (c)

Unified Payments Interface (UPI) is India’s mobile-based fast payment system, which facilitates customers to make round-the-clock payments instantly, using a Virtual Payment Address (VPA) created by the customer.
UPI supports both Person-to-Person (P2P) and Person-to-Merchant (P2M) payments and it also enables a user to send or receive money.
PayNow is a fast payment system in Singapore.
It enables peer-to-peer funds transfer service, available to retail customers through participating banks and Non-Bank Financial Institutions (NFIs) in Singapore.

Which of the following is incorrect regarding the FLDG structure?

(A) It is a lending model.
(B) It is a lending model. It is a credit-risk sharing agreement, between a fintech and a regulated entity.
(C) The RBI has banned the usage of the FLDG model in India
(D) None of the above

Show Answer

Answer: (c)

What is FLDG structure?

FLDG is a lending model, a credit-risk sharing agreement, between a fintech and a regulated entity in which a third party guarantees to compensate up to a certain percentage of default in a loan portfolio of the regulated entities.
Banks and non-banking financial companies (NBFCs) have almost paused tie-ups with fintech players, or digital lending apps, under the first loan default guarantee (FLDG) structure for lending in the absence of clarity on contractual agreement from the Reserve Bank of India (RBI).

This Plan had set ‘monitorable targets’ for few key indicators (11) of development besides 8 % growth target. The targets included reduction in gender gaps in literacy and wage rate, reduction in Infant & maternal mortality rates, improvement in literacy, access to potable drinking water cleaning of major polluted rivers, etc. Which plan is being referred to here?

(A) Tenth Five year Plan
(B) Fifth Five year Plan
(C) Ninth Five year Plan
(D) Twenty Five year Plan

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Answer: (a)

Consider the following statements regarding the Emissions Trading Scheme (ETS)?
1 The Bureau of Energy Efficiency (BEE) would be the nodal coordinator of the scheme.
2. Under it the companies would not be required to cut carbon emissions in absolute terms.
Which of the above given statement(s) is/are incorrect?

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

Show Answer

Answer: (d)

The Bureau of Energy Efficiency (BEE), a Power Ministry body, would be the nodal coordinator of the scheme.
One significant difference in the Indian emissions trading scheme from the ones in Europe or other countries is that companies wouldn’t be required to cut carbon emissions in absolute terms.
The EU is required to cut emissions under the provisions of the United Nations Framework Convention on Climate Change. India doesn’t have an obligation. However, India has committed to reducing the emissions intensity (emissions per unit of GDP) of our GDP by 45% (of 2005 levels) by 2030.

Which of the following statement(s) is/are incorrect?
1 The Giffen good or inferior good is an exception to the law of demand.
2. When the price of an inferior good falls, the poor will buy less and vice versa.
Select the answer using the codes given below:

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

Show Answer

Answer: (d)

Giffen Paradox: The Giffen good or inferior good is an exception to the law of demand. When the price of an inferior good falls, the poor will buy less and vice versa. For Example: Rice, Ragi

Consider the following statements:
1 Law of Demand explains the direction of change in demand due to change in the price.
2 Demand for a commodity is said to be “Elastic” when the quantity demanded increases by a large amount due to a little fall in the price.
Which of the above given statement(s) is/are correct?

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

Show Answer

Answer: (c)

Consider the following statements:
1. Payment made to others for the purchase of factors of production is known as Explicit costs.
2. It includes, wages, payment for raw material, rent for the building, interest for capital invested, expenditure on transport and advertisement other expenses like license fee.
Which of the above given statement(s) is/are correct?

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

Show Answer

Answer: (c)

Consider the following statements:
1 Oligopoly is a market situation in which there are a few firms selling homogeneous or differentiated products.
2. The oligopolistic firms do not change their prices due to the fear of rivals’ reaction.
Which of the above given statement(s) is/are correct?

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

Show Answer

Answer: (c)

Oligopoly is a market situation in which there are a few firms selling homogeneous or differentiated products. Examples are oil and gas.
It implies that prices are difficult to be changed.
The oligopolistic firms do not change their prices due to the fear of rivals’ reaction.

Consider the following statements:
1 The Net National Product (NNP) is considered as a true measure of national output.
2. Purchasing power parity allows us to estimate what exchange between two currencies is needed to express the accurate purchasing power of the two currencies in the respective countries.
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

Show Answer

Answer: (c)