Indian Economy Quiz: Day 39

December 15, 2022

Which of the following is/are correct?
1 The term “hawks” refers to central banks that have a very low threshold for tolerating variation from the targeted inflation level.
2. If core inflation is high, it takes a while to come down, because it implies that inflation has become broad-based.
Select the correct 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)

RBI’s hawkish stance:

Most observers saw the latest policy statement as “hawkish”.

The term “hawks” refers to central banks that have a very low threshold for tolerating variation from the targeted inflation level.

What makes the RBI’s current stance more “hawkish” is the RBI’s reference to “core inflation”.

The trouble is if core inflation is high, it takes a while to come down, because it implies that inflation has become broad-based (i.e., higher prices have seeped through all parts of the economy).

RBI traditionally targets the headline rate, which is moderating.

Core inflation, on the other hand, is going up and thus, it may push the RBI to take a more hawkish stance from here on.

How many of the below given pair(s) is/are correctly matched?
1. Disinflation Inflation is below zero
2. Inflation value of money falls
3. Deflation inflation rate is declining

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

Show Answer

Answer: (a)

According to the 15th Finance Commission, the percentage share of States in the net proceeds of the shareable Central tax revenue should be

(A) 41 percent
(B) 35 percent
(C) 40 percent
(D) 42 percent

Show Answer

Answer: (a)

The share of states in the central taxes for the 2021-26 period is recommended to be 41%, same as that for 2020-21.
This is less than the 42% share recommended by the 14thFinance Commission for 2015-20 period.

Index of Eight Core Industries does not include?

(A) Coal
(B) Fertilizers
(C) Natural Gas
(D) Pharmaceuticals

Show Answer

Answer: (d)

The eight core sector industries in decreasing order of their weightage:

Refinery Products> Electricity> Steel> Coal> Crude Oil> Natural Gas> Cement> Fertilizers.

Which of the following statements is/are correct regarding Cash Reserve Ratio?
1 CRR is a percentage of NDTL (net demand and time liability) of the bank, which bank has to keep with RBI and which bank cannot lend to anyone.
2. CRR is the amount bank has to keep with RBI in form of cash only.
Select the correct 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)

The demand for a “factor of production” is said to be derived demand because?

(A) It is a function of the profitability of an enterprise
(B) It depends on the supply complementary factors
(C) It stems from the demand for the final product
(D) It arises out of means being scarce in relation to wants

Show Answer

Answer: (c)

Customer wants to buy an apartment →
A builder starts constructing an apartment → leads to demand of steel + wood + cement = this is ‘derived demand’.
Also leads to demand of Land + Labour + Capital to build that apartment.

Therefore, ‘Demand for factors of production’ is said to be a ‘derived demand’.

Consider the following statements:
1 The Reserve Bank of India manages and services Government of India Securities but not any State Government Securities.
2. Treasury bills are issued by the Government of India and there are no treasury bills issued by the State Governments.
3. Treasury bills offer are issued at a discount from the par value.
Which of the statements give above is/are correct?

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

Show Answer

Answer: (c)

Which of the following is/are correct?
1 British Indian Government started financial year 1st April to 31st March to align with their home country’s financial year.
2. Preparation of Union budget is done by the Department of Economic Affairs.
Select the answer using the codes below:

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

Show Answer

Answer: (c)

The 2022 edition of the Mercer CFA Institute Global Pension Index ranks India’s pension system at which position?

(A) 31
(B) 21
(C) 51
(D) 41

Show Answer

Answer: (d)

There is an index for ranking the pension systems across the world.
It is called the Mercer CFA Institute Global Pension Index.
The 2022 edition of this index ranks India’s pension system at 41 out of the 44 countries it considers.
That’s a low rank but it is also important to note that India has consistently ranked low on this index even when only 16 countries were analysed in 2011.

Which of following is not a component of ‘Capital Receipts’?

(A) Market borrowings including special bonds
(B) External loans raised by the Central Government from abroad
(C) Receipts from taxes on property and capital transactions
(D) Provident Funds (State Provident Funds and Public Provident Fund)

Show Answer

Answer: (c)

Which of the following statement(s) is/are correct?
1. Input Tax Credit means that when a manufacturer pays the tax on his/her output, he can deduct the tax previously paid on the input purchased.
2. GST is a destination based consumption tax.
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 meant by ‘Public Good’?

(A) A commodity produced by the Government
(B) A commodity whose benefits are indivisibly spread among the entire community
(C) A Government scheme that benefits the poor households
(D) Any Commodity that is very popular among general public

Show Answer

Answer: (b)

The term ‘Human resources’ refers to

(A) Investment on poor people
(B) Expenditure on agriculture
(C) Investment on assets
(D) Collective abilities of people

Show Answer

Answer: (d)

Which of the following statement(s) is/are correct?
1 The Net National Product is considered as a true measure of national output.
2. Final money value of total goods and services produced within the territory of a country during a specified period of time, is known as Gross Domestic Product.
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)

Which of the following is not one of the effects of Black Money on Indian economy?

(A) Loss of revenue to government
(B) Reduced lavish consumption spending
(C) Dual economy
(D) Undermining equity

Show Answer

Answer: (b)