1. Which of the following comes under non-planned expenditure?
(1) Subsidies
(2) Interest payments
(3) Defense expenditure
(4) Salaries of government employees
Codes:
(a) 1 and 2 only
(b) 1 and 3 only
(c) 3 and 4 only
(d) All of these
Answer. b
Explanation : Interest payments and salaries of government employees comes under planned expenditure
2. Which one of the following are objectives of the Commission for Agricultural Costs and Prices (CACP)?
(1) To stabilize agricultural prices
(2) To ensure meaningful real income levels to the farmer
(3) To protect the interest of the consumers by providing essential commodities at reasonable prices.
(4) To ensure maximum price to the farmers
Codes:
(a) 1 and 2 only
(b) 1, 2 and 3 only
(c) 3 and 4 only
(d) All of these
Answer. b
Explanation : CACP works to protect the interests of farmers as well as consumers. So, it recommends a reasonable price after analyzing the input cost.
3. Which of the following statements are correct?
(1) Cash Reserve Ratio is the fraction of liability that the commercial banks need to keep with themselves in cash form.
(2) Statutory Liquidity Rate is the fraction of liability that the commercial banks need to keep with themselves in the form of cash, gold or other government or approved securities.
Codes:
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 Nor 2
Answer. b
Explanation : Cash Reserve Ratio is the fraction of liability that the commercial banks need to keep with the RBI in cash form.
4. Which of the following reduces money supply in the market?
(1) Increase in Repo Rate
(2) Increase in Reverse Repo Rate
(3) Decrease in Reverse Repo Rate
(4) Increase in Bank Rate
Codes
(a) 3 only
(b) 1, 2 and 4 only
(c) 1, 3 and 4 only
(d) All of these
Answer. b
Explanation : Decrease in Reverse Repo Rate will increase the money supply in the market.
5. Phillips Curve indicates relationship between
(a) GDP growth and unemployment rate
(b) GDP growth and inflation rate
(c) Unemployment rate and inflation rate
(d) Industrialization and poverty
Answer. c
Explanation : According to Phillips Curve, there is an inverse relationship between inflation rate and unemployment rate.
6. Uniform Recall Period and Mixed Recall are methods to estimate
(a) Inflation Rate
(b) Poverty Ratio
(c) Unemployment Rate
(d) GDP growth
Answer. b
Explanation : Both the methods are used to calculate poverty ratio in the country.
7. Which of the following statements are correct?
(1) Human Development Index (HDI) is published by World Bank.
(2) Income, health and education are three parameters used to calculate HDI.
Codes:
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 Nor 2
Answer. b
Explanation : United Nations Development Programme (UNDP) publishes HDI and provides ranking to different nations on the basis of various parameters.
8. “Beggar thy neighbour” policy means
(a) Isolating a neighbouring country in international market
(b) Unethical trade practices
(c) Dumping of goods in a neighbouring country
(d) Devaluation of currency
Answer. d
Explanation : Devaluation does not change world output and demand but redistribute it. “Beggar thy neighbour” policy promotes competitive devaluation of currency by other countries.
9. The visit of foreign tourists in India would amount to
(a) Consumption
(b) Export
(c) Import
(d) None of these
Answer. b
Explanation : In terms of economy, it will be export as foreign currency will be received in return of our goods and services.
10. Which of the following may help in reducing Current Account Deficit (CAD)?
(1) Increase in inflow of FDI
(2) Devaluation of currency
(3) Increase in export subsidy
Codes:
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) All of these
Answer. d
Explanation : All these measures will help in reduction of Current Account Deficit (CAD).
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