SOLVED PAPER 2024 (CDS) (II) (General Knowledge)

Total Questions: 120

91. Consider the following statements.

1. A rupee Vostro account is an account that an Indian bank holds for a foreign bank in the domestic currency (rupee) to enable domestic banks to provide international banking services.
2. Insurance density, i.e., average insurance premium per capita does not fully capture the financing gap in the event of a premature death because most of the insurance products sold in India are savings-linked with a small component of protection.
Which of the statements given above is/are correct?

Correct Answer: (c) Both 1 and 2
Solution:Both Statements (1) and (2) are correct.

A rupee Vostro account is an account held by an Indian bank on behalf of a foreign bank, denominated in Indian rupees. It allows the foreign bank to make and receive payments in Indian rupees and facilitates international banking services such as trade transactions in the domestic currency.

Insurance density measures the average insurance premium per capita but does not accurately reflect the actual level of financial protection available in the event of a premature death.

In India, many insurance products are savings-oriented, with a smaller proportion allocated to life protection, which means they may not provide adequate coverage against financial loss due to death.

92. Consider the following statements.

1. An additional spending by the Government of X is likely to have less impact on income than an additional transfer of X to households.

2. An additional spending by the Government of X is likely to have less impact on income if it is not accompanied by an expansion in money supply.

Which of the statements given above is/are correct?

Correct Answer: (b) Only 2
Solution:Only statement (2) is correct. Government spending on goods and services typically has a greater impact on income compared to an equivalent transfer to households. This is because direct government spending (like infrastructure projects, public sector wages, etc.) creates immediate demand and stimulates economic activity, leading to a multiplier effect.

In contrast, a transfer payment (like cash transfers to households) depends on how much households choose to spend Vs save.

When the government increases spending without a corresponding expansion in the money supply, the impact on income can be constrained. This is because, without additional money in the economy, increased government spending may lead to higher interest rates due to greater competition for available funds.

93. Long-Term Low Emissions Development Strategy envisions

1. a transition from fossil fuels in a just, smooth, sustainable manner
2. increased use of biofuels
3. climate resistant urban development
4. financing of sustainable development through Green Bonds
Select the answer using the codes given below.

Correct Answer: (b) 1, 2 and 3
Solution:A transition from fossil fuels in a just, smooth, sustainable manner is a key component of the Long-Term Low Emissions Development Strategy (LT-LEDS). It emphasises transitioning from fossil fuels to cleaner energy sources in a way that is socially and economically just, minimises disruptions and ensures a sustainable energy future.

Increased use of biofuels includes promoting the use of biofuels, such as ethanol and biodiesel, to reduce dependence on fossil fuels and lower greenhouse gas emissions.

Making urban development climate-resilient by incorporating measures such as green infrastructure, sustainable urban planning and climate-adaptive buildings, is important to reduce vulnerabilities to climate change impacts, like extreme weather events, in urban areas.

94. Which one among the following was the focus of the Twelfth Five-Year Plan?

Correct Answer: (a) Sustainable and Inclusive Growth
Solution:The Twelfth Five-Year Plan (FYP) of India, which ran from 2012 to 2017, focused on sustainable and inclusive growth.

The plan's main theme was 'Faster, More Inclusive and Sustainable Growth'. The plan aimed for an average annual GDP growth rate of 8% during the plan period.

It emphasised accelerating economic growth to ensure that India remained one of the fastest-growing major economies globally.

95. Which of the following is not included in the Capital Account of the Balance of Payments of a country?

Correct Answer: (c) Invisibles
Solution:Invisibles refer to transactions that do not involve the physical transfer of goods or services. They are recorded in the Current Account of the Balance of Payments, not the Capital Account.

The Capital Account includes transactions related to the transfer of financial assets and liabilities, such as:

Foreign Direct Investment (FDI) Investments made by foreign entities in a country's economy.

Commercial Borrowing Loans obtained by a country from foreign sources.

External Assistance Financial aid provided to a country by foreign governments or international organisations.

96. The Atmanirbhar Bharat Scheme announced by the Government helps in

1. enhancing India's manufacturing capabilities and exports across the industries
2. incentivising foreign investments for domestic production
Select the answer using the codes given below.

Correct Answer: (c) Both 1 and 2
Solution:Both statements (1) and (2) statements are correct.

The Atmanirbhar Bharat Scheme aims to make India self-reliant and reduce its dependence on foreign goods and services. It does this by

Enhancing India's manufacturing capabilities and exports across the industries: This involves providing incentives and support to domestic manufacturers to improve their competitiveness and increase exports.

Incentivising foreign investments for domestic production: This involves creating a favourable environment for foreign investors to set up manufacturing facilities in India, which can boost domestic production and create jobs.

97. Which one of the following statements for a firm's equilibrium in Perfect Competition is not correct?

Correct Answer: (d) The marginal cost decreases at the equilibrium output.
Solution:In Perfect Competition, the correct statements about a firm's equilibrium are.

The market price must be greater than or equal to Average Variable Cost (AVC) in the short run.

If the price falls below AVC, the firm would shut down in the short run. The market price must be equal to Marginal Cost (MC) at equilibrium. This ensures that the firm is maximising profit or minimising loss.

The market price must be equal to Average Cost (AC) in the long run. This is because, in the long run, firms enter or exit the market until economic profits are zero.

The Marginal Cost (MC) does not necessarily decrease at the equilibrium output. The MC curve can be upward sloping and the firm reaches equilibrium where MC equals the market price, which does not imply that MC is decreasing at that output.

98. Which one of the following taxes is not included in the Central Pool to be shared with the States according recommendations of Finance Commission of to the India?

Correct Answer: (c) Surcharge and Cess
Solution:Both 'surcharge' and 'cess' are considered additional taxes levied on top of existing taxes, and crucially, they are not part of the 'divisible pool' which means the Central Government keeps the revenue generated from them entirely, not sharing it with State Governments.

99. Which one of the following dimensions is not included in Human Development Index?

Correct Answer: (d) Mortality rate
Solution:Mortality rate is not directly included in the HDI, but it is a factor that contributes to life expectancy at birth, which is one of key dimensions of the ina

The Human Development Index (HDI). is a composite index measuring a country's achievements in three basic dimensions of human development.

A long and healthy life (life expectancy at birth)

Access to knowledge (mean years of schooling and expected years of schooling)

A decent standard of living (Gross National Income per capita)

100. Suppose there are only two normal goods in the economy, X and Y. If price of good X increases, which would be the correct statement from below?

Correct Answer: (a) Demand for good X decreases and demand for Y is indeterminate.
Solution:Demand for good X decreases: When the price of a good increases, the law of demand states that the quantity demanded of that good will decrease, all else being equal. So, as the price of good X increases, the demand for good X will decrease.

Demand for Y is indeterminate: The effect on the demand for good Y is indeterminate. This is because there are two opposing effects at play

Substitution effect: As good X becomes more expensive, consumers may substitute it with good Y. This would increase the demand for good Y.

Income effect: If the consumer's income remains the same, the increase in the price of good X will reduce their purchasing power. This can lead to a decrease in the demand for both goods X and Y.