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IAS Prelims : GS Economy MCQ Set 4

Jan 23, 2015 12:25 IST

    Economy is one of the largest section of IAS Prelims Syllabus. The candidate should understand Economic Principles and the Indian Economy to understand the economic perspective which exist in each of the phenomenon of life. The candidaets should understand the intertwinned socio-economic principles which is the basic bedrock to understand and serve the Indian Society.

    The IAS Prelims Economics Multiple Choice Questions as follows

    1.    Which of the following factor forms the invisible account of the Balance of Payments of a country?

    (a)    International trade in services.
    (b)    Income associated with non resident assets and liabilities.
    (c)    Remittance of worker income.
    (d)    All the above.

    Answer: (d)

    Explanation: Balance of payment broadly comprises of current and capital accounts. Current account records export and import of goods (visible items),   export and import of services (invisible items) and unilateral transfers from one country to another.

    2.    Which of the following is part of capital account of a country?

    (a)    Export and import of goods.
    (b)    Export and import of services.
    (c)    Unilateral transfers from one country to another.
    (d)    NRI deposits.

    Answer: (d)

    Explanation: Capital account of a country includes foreign direct investment, portfolio investment, external commercial borrowings, NRI deposits among others.

    3.    What is Greenfield investment?

    (a)    A form of foreign direct investment where a parent company starts a new venture in a foreign country by constructing new operational facilities.
    (b)    A form of foreign direct investment where a company purchases or leases existing production facilities to launch a new production activity.
    (c)    Investment by non resident Indians.
    (d)    Investment in shares and debts.

    Answer: (a)

    Explanation: A form of foreign direct investment where a parent company starts a new venture in a foreign country by constructing new operational facilities is called Greenfield Investment. A form of foreign direct investment where a company purchases or leases an existing production facility to launch a new production activity is called Brownfield Investment.

    4.    Which of the following is not a feature of Pradhan Mantri Jan Dhan Yojana?

    (a)    Providing universal access to banking facilities.
    (b)    Providing Basic Banking Accounts with overdraft facility of Rs.5000 after six months and RuPay Debit card with inbuilt accident insurance cover of Rs. 1 lakh and RuPay Kisan Card
    (c)      Financial Literacy Programme
    (d)    Issuance of credit cards.

    Answer: (d)

    Explanation: The PMJDY has been conceived as a national mission on financial inclusion with the objective of covering all households in the country with banking facilities and having a bank account for each household. Financial inclusion or inclusive financing is the delivery of financial services at affordable costs to sections of disadvantaged and low-income segments of society.
    Phase I (15th August ,2014-14th August,2015)-
     
    •    Universal access to banking facilities
    •    Providing Basic Banking Accounts with overdraft facility of Rs.5000 after six months and RuPay Debit card with inbuilt accident insurance cover of Rs. 1 lakh and RuPay Kisan Card.
    •    Financial Literacy Programme
    Phase II (15th August 2015-15th August,2018)-
    •    Creation of Credit  Guarantee Fund   for coverage of defaults in overdraft  A/Cs   
    •    Micro Insurance     
    •    Unorganized sector Pension schemes like  Swavlamban

    5.    Which of the following is not a function of Reserve Bank of India?

    (a)    Regulation of credit.
    (b)    Regulation of foreign exchange.
    (c)    Management of fiscal deficit.
    (d)    Banker to the government and commercial banks.

    Answer: (c)

    Explanation: Set up in 1935, RBI’s main functions include regulation of credit, regulation of foreign exchange, banker to the government and commercial banks, issue of notes and coins and lender of last resort.

    6.    Which of the following is a qualitative credit control tool used by RBI?

    (a)    Moral suasion.
    (b)    Open market operations.
    (c)    Repo rate.
    (d)    Cash reserve requirement.
     
    Answer: (a)

    Explanation: Moral suasion is application of pressure but not force to get members to adhere to a policy or advice that RBI gives. Other qualitative credit control tool includes margin requirements, consumer credit regulations, RBI guidelines, rationing of credit.

    7.    Consider the following statements.

    1.    Bharat Bill payment System is a proposed centralized bill payments infrastructure which will enable customers to pay a variety of bills anytime anywhere.
    2.    It has been proposed by RBI.
    3.    The National Payments Corporation of India (NPCI) has been designated as the authorized Bharat Bill Payment Central Unit.

    Which of the above statements are correct?

    (a)    1 and 2.
    (b)    1 and3.
    (c)    2 and 3.
    (d)    1, 2 and 3.

    Answer: (d)

    Explanation:
    The Reserve Bank of India (RBI) proposes to set up anytime anywhere bill payment system under Bharat Bill Payment System (BBPS). The BBPS is designed to function as a tiered structure for operating the bill payment system in the country with a single brand image providing convenience of ‘anytime anywhere’ bill payment to customers. The National Payments Corporation of India (NPCI) has been designated as the authorized Bharat Bill Payment Central Unit (BBPCU) to set the standards for BBPS processes which need to be adhered to by all authorized operating units under the system.

    8.    Consider the following statements about ‘Swachh Bharat Kosh’.

    1. Funds will be used for improving cleanliness levels in rural and urban areas, including in schools.
    2. It will be under the Ministry of Tourism.
    3. Its functioning will be monitored on quarterly basis by the Finance Minister and by the Prime Minister from time-to-time.
    4. Projects under it will be implemented and carried out by the existing institutions at the state, district, and sub district level and no new institutions would be created.
     
    Which of the above statements are correct?

    (a)    1, 2, 3 and 4.
    (b)    1, 2 and 3.
    (c)    1, 3 and 4.
    (d)    2, 3 and 4.

    Answer: (c)

    Explanation:  Government recently launched a fund Swachh Bharat kosh that will be used be used for improving cleanliness levels in rural and urban areas, including in schools. As a top priority, funds will be used to bring out innovative projects and girl toilets. It will be under the Ministry of Finance and will be managed by a Governing Council headed by Expenditure Secretary. Its functioning will be monitored on quarterly basis by the Finance Minister and by the Prime Minister from time-to-time. Projects under it will be implemented and carried out by the existing institutions at the state, district, and sub district level and no new institutions would be created. These funds will finance activities such as construction of new toilets as well as repair and renovation of dysfunctional toilets in rural areas, urban areas, elementary, secondary and senior secondary government schools, aanganwaadis. It will be also used for constructing water lines to the toilets, training and skill development to maintain hygiene in the toilets as well as other activities to improve sanitation.

    9.    What is the full form of NITI Aayog?

    (a)    National Institute to Transform India.
    (b)    National Institute for Transforming India.
    (c)    National Institution to Transform India.
    (d)    National Institution for Transforming India.

    Answer: (d)

    10.    Swabhiman is a:

    (a)    Financial inclusion initiative.
    (b)    Pension initiative for BPL families.
    (c)    Insurance policy for women.
    (d)    Rural infrastructure project.

    Answer:  (a)

    Explanation:  Swabhiman aims at providing branchless banking through the services of banking correspondents (Bank Sathi).

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