Structure of the Indian Economy & Demographics (Part-II)

Total Questions: 62

1. Consider the following statements: [2005]

1. Poverty Reduction and Growth Facility (PRGF) has been established by the International Development Association (IDA) to provide further assistance to low income countries facing high level of indebtedness.

2. Singapore regional Training Institute (STI) is one of the institutes that provides training in macroeconomic analysis and policy and related subject as a part of programme of the IMF institute.

Which of the statements given above is/are correct?

(a) 1 only
(b) 2 only
(c) Both 1 & 2
(d) Neither 1 nor 2

Correct Answer: (b) 2 only

Solution:In 1999, the IMF established the Poverty Reduction and Growth Facility (PRGF) to make the objectives of poverty reduction and growth more central to lending operations in its poorest member countries.

The International Monetary Fund aims to reducing global poverty, encouraging international trade, and promoting financial stability and economic growth. The IMF has three main functions: overseeing economic development, lending, and capacity development. Through economie surveillance, the IMF monitors developments that affect member economies as well as the global economy as a whole.

2. Which one of the following statements is correct? Fiscal Responsibility and Budget Management Act (FRBMA) concerns: [2006]

(a) Fiscal Deficit only
(b) Revenue deficit only
(c) Both fiscal deficit and revenue deficit
(d) Neither fiscal deficit nor revenue deficit

Correct Answer: (c) Both fiscal deficit and revenue deficit

Solution:Fiscal responsibility and budget management act aims to bring down Fiscal deficit to 3% by 2008 and the revenue deficit to zero by 2008.

3. Which one of the following is the correct sequence in the decreasing order of contribution of different sectors to the Gross Domestic Product of India? [2007]

(a) Services - Industry Agriculture
(b) Services - Agriculture - Industry
(c) Industry - Services - Agriculture
(d) Industry Agriculture - Services

Correct Answer: (a) Services - Industry Agriculture

Solution:Contribution of different sectors to national income. Services -55.1%, Industry-26.4%, Agriculture-18.5%

4. Participatory Notes (PNs) are associated with which one of the following? [2007]

(a) Consolidated Fund of India
(b) Foreign Institutional Investors
(c) United Nations Development Programme
(d) Kyoto Protocol

Correct Answer: (b) Foreign Institutional Investors

Solution:Participatory Notes (PNs/P-Notes) are instruments used by investors or hedge funds that are not registered with the SEBI (Securities and Exchange Board of India) to invest in Indian securities. Participatory notes are instruments that derive their value from an underlying financial instrument such as an equity share and, hence, the word, 'derivative instruments'. SEBI permitted FIIs to register and participate in the Indian stock market in 1992.

5. Which of the following pairs about India's economic indicator and agricultural production (all in rounded figures) are correctly matched? [2008]

1. GDP per capita (current prices): ₹ 37,000

2. Rice: 180 million tons

3. Wheat: 75 million tons

Select the correct answer using the code given below:

Codes

(a) 1, 2 & 3
(b) 1 & 2 only
(c) 2 & 3 only
(d) 1 & 3 only

Correct Answer: (d) 1 & 3 only

Solution:Rice production was 96.69 Million tonnes in 2007-08.

6. Consider the following statements with reference to Indira Gandhi National Old Age Pension Scheme (IGNOAPS): [2008]

1. All persons of 60 years or above belonging to the households below poverty line in rural areas are eligible.

2. The Central Assistance under this Scheme is at the rate of ₹300 per month per beneficiary. Under the Scheme, States have been urged to give matching amounts.

Which of the statements given above is/are correct?

(a) 1 only
(b) 2 only
(c) Both 1 & 2
(d) Neither 1 nor 2

Correct Answer: (d) Neither 1 nor 2

Solution:Ministry of Rural Development of India has introduced Indira Gandhi National Old Age Pension Scheme (IGNOAPS) under National Social Assistance Programme (NSAP) in the year 2007.

IGNOAPS also called as National Old Age Pension Scheme (NOAPS). The old age pension scheme aims to provide social protection to the eligible beneficiaries. In this article, we look at the Indira Gandhi National Old Age Pension Scheme in detail.

7. Consider the following: [2009]

1. Fringe Benefit Tax

2. Interest Tax

3. Securities Transaction Tax

Which of the above is/are Direct Tax/Taxes?

(a) 1 only
(b) 1 & 3 only
(c) 2 & 3 only
(d) 1, 2 & 3

Correct Answer: (d) 1, 2 & 3

Solution:Fringe Benefits Tax (FBT) was the tax applied to most, although not all, fringe benefits. A new tax was imposed on employers by India's Finance Act 2005 and was introduced for the financial year commencing April 1, 2005.

The Fringe Benefit Tax was abolished in the Finance Bill of 2009. Securities Transaction Tax (STT) is the tax payable on the value of taxable securities transaction. STT was introduced in India by the 2004 budget and is applicable with effect from 1st October 2004. Interest tax is imposed as a special tax on interest accrued in specified cases.

The Interest Tax Act of 1974 governs the tax process associated with the imposition and collection of interest tax. The Act applies to all scheduled Banks that are required to pay tax on the chargeable interest amounts they have on their deposits. The act is no longer applicable with regard to chargeable interest accruing after 31 March 2000.

8. Which one of the following statements is an appropriate description of deflation? [2010]

(a) It is a sudden fall in the value of a currency against other currencies
(b) It is a persistent recession in both the financial and real sectors of economy
(c) It is a persistent fall in the general price level of goods and services
(d) It is a fall in the rate of inflation over a period of time

Correct Answer: (c) It is a persistent fall in the general price level of goods and services

Solution:Deflation is a decrease in the prices of goods and services. It occurs when the annual inflation rate falls below 0% which is a negative inflation rate.

This is different from Disinflation which is a slow-down in the inflation rate. This is a situation when inflation declines to lower levels but prices continue to rise.

9. Which of the following is/are treated as artificial currency? [2010]

(a) ADR
(b) GDR
(c) SDR
(d) Both ADR & SDR

Correct Answer: (c) SDR

Solution:SDR can be thought as an artificial currency used by the IMF and defined as a basket of national currencies.

ADR is an American Depositary Receipt which represents ownership in the shares of a non-US company that trades in U. S. financial markets. GDR is global Depositary Receipt is a bank certificate issued in more than one country for shares in a foreign company. A GDR is very similar to ADR. SDR is special Drawing Rights. It is an international type of monetary reserve currency, created by the IMF in 1969.

10. When the Reserve Bank of India announces an increase of the Cash Reserve Rate, what does it mean? [2010]

(a) The commercial banks will have less money to lend
(b) The Reserve Bank of India will have less money to lend
(c) The Union Government will have less money to lend
(d) The commercial banks will have more money to lend

Correct Answer: (a) The commercial banks will have less money to lend

Solution:CRR or the Cash Reserve Ratio is that ratio of the total deposits held by a bank which it has to keep with the central bank of country.

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