Indian Economy Quiz: Day 53

December 29, 2022

Which of the following is/are correct regarding Implicit Price Deflator?
1. If the value of Implicit Price Deflator is less than 1 it indicates that there is deflation in the economy.
2. If the value of Implicit Price Deflator is greater than 1 it indicates that there is inflation in the economy.
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 GDP deflator is used to measure the nation’s change in price level for all outputs produced for a certain period.
A GDP deflator greater than 1 means that there is inflation and a GDP deflator less than 1 means that there is deflation.

How many of the below given pair(s) is/are correctly matched?
1. Commercial banks - 40% priority sector lending
2. RRBs - 75% priority sector lending
3. Foreign banks - 15% priority sector lending

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

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Answer: (b)

The Khadi and Village Industries Commission was established during which of the Five Year Plans?

(A) 4th
(B) 2nd
(C) 3rd
(D) 6th

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Answer: (b)

KVIC – a statutory body established under the Khadi and Village Industries Commission Act, 1956.
It functions under the Ministry of Micro, Small and Medium Enterprises.
The Second Five Year Plan covers the period from April 1956 through March 1961.

Which of the following is correct measure of Infant Mortality Rate (IMR)?

(A) Number of infant deaths for every 1,00,000 still births
(B) Number of infant deaths for every 1,00,000 live births
(C) Number of infant deaths for every 1,000 still births
(D) Number of infant deaths for every 1,000 live births

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Answer: (d)

The infant mortality rate is the number of infant deaths for every 1,000 live births.
In addition to giving us key information about maternal and infant health, the infant mortality rate

Which of the following statements is/are correct regarding Elasticity of demand?
1. The demand is said to be perfectly elastic when a slight change in the price of a commodity causes an infinite change in its quantity demanded.
2. Luxury products are the examples of perfectly elastic products.
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)

Perfectly Elastic Demand Definition:

When a small change (rise or fall) in the price results in a large change (fall or rise) in the quantity demanded, it is known as perfectly elastic demand.
Under such type of elasticity of demand, a small rise in price results in a fall in demand to zero, while a small fall in price causes an increase in demand to infinity.

Which of the following best defines the term reflation?

(A) It is a fiscal or monetary policy designed to expand output & stimulate spending
(B) It is a fiscal or monetary policy designed to cut output & curtail spending
(C) It describes the first phase of economic slowdown after a period of expansion
(D) None of the above

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Answer: (a)

Reflation is a fiscal or monetary policy designed to expand output, stimulate spending, and curb the effects of deflation, which usually occurs after a period of economic uncertainty or a recession.
The term may also be used to describe the first phase of economic recovery after a period of contraction.

Consider the following statements regarding the efforts by the government to promote ease of doing business:
1. The Jan Vishwas Amendment Bill is an effort in this direction.
2. This bill seeks to decriminalise minor offences by amending multiple provisions in various Acts.
Which of the statements give above is/are correct?

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

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Answer: (c)

The Commerce and Industry Minister in Lok Sabha introduced the Jan Vishwas Amendment Bill 2022.
It amends 42 Acts to reduce the compliance burden on individuals and businesses and ensure ease of doing business.
Some Acts that are amended by the Bill include: the Indian Post Office Act, 1898, the Environment (Protection) Act, 1986, the Public Liability Insurance Act, 1991, and the Information Technology Act, 2000.

Which of the following is/are correct regarding the Harmonized System of Nomenclature?
1. It was developed by the World Customs Organization.
2. It has about 5,000 commodity groups, each identified by a six-digit code.
3. India is a member of World Customs Organization(WCO) since 1971.
Select the answer using the codes below:

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

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Answer: (d)

HSN code stands for “Harmonized System of Nomenclature”.
This system has been introduced for the systematic classification of goods all over the world.
India is a member of World Customs Organization(WCO) since 1971.
It was originally using 6-digit HSN codes to classify commodities for Customs and Central Excise.
Later Customs and Central Excise added two more digits to make the codes more precise, resulting in an 8 digit classification.

This Plan focused on agriculture, price stability, power and transport. It was a successful plan primarily because of good harvests in the last two years of the plan. Which plan is being referred to here?

(A) Second Five year Plan
(B) Fifth Five year Plan
(C) Third Five year Plan
(D) First Five year Plan

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Answer: (d)

With reference to National Mobile Monitoring System, consider the following?
1. It is mandatory for all MGNREGS workers to mark their attendance under this system from 1st January 2023.
2. The Rural Development Ministry started digital attendance system in 2022 on a pilot basis at worksites where 20 or more workers were employed under MGNREGS.
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

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Answer: (c)

Which of the following statement(s) is/are correct?
1. Complementary goods are pair of competing goods, which in the opinion of buyers can replace each other.
2. Substitute goods are a pair of goods that are interdependent or compatible.
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: (d)

A complementary good is a product or service that provides value to another product or service.
In other words, they are two things that the customer utilises in conjunction with one another. Cereal and milk, for example, or a car and fuel(petrol/diesel).
A substitute refers to a product or service that consumers see as essentially the same or similar-enough to another product. Put simply, a substitute is a good that can be used in place of another.
E.g. Physical books and e-books, Tea and coffee

Which of the following statement(s) is/are incorrect?
1. Wholesale Price Index (WPI) is a purely commodity index.
2. WPI is published by the National Statistical Office under MoSPI.

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

Show Answer

Answer: (b)

Consider the following statements regarding Carbon Border Adjustment Mechanism:
1. It falls short of compliance with World Trade Organization (WTO) rules.
2. Under the system, EU importers will buy carbon certificates corresponding to the carbon price that would have been paid, had the goods been produced under the EU's carbon pricing rules.
Select the correct statement(s) 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: (b)

Designed in compliance with WTO rules & other international obligations of the EU.
The CBAM system will work as follows:

EU importers will buy carbon certificates corresponding to the carbon price that would have been paid, had the goods been produced under the EU’s carbon pricing rules.

Conversely, once a non-EU producer can show that they have already paid a price for the carbon used in the production of the imported goods in a third country, the corresponding cost can be fully deducted for the EU importer.

The CBAM will help reduce the risk of carbon leakage by encouraging producers in non-EU countries to green their production processes.

To provide businesses and other countries with legal certainty and stability, the Carbon Border Adjustment Mechanism will be phased in gradually….
…and will initially apply only to a selected number of goods at high risk of carbon leakage:

iron and steel, cement, fertiliser, aluminium and electricity generation.

A reporting system will apply as from 2023 for those products with the objective of facilitating a smooth roll out and to facilitate dialogue with third countries, and importers will start paying a financial adjustment in 2026.

Consider the following statements:
1. Fiscal Consolidation refers to the policies adopted by the government to reduce their deficits.
2. The path for fiscal consolidation is enumerated in the FRBM Act.
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)