GKToday

Quiz 590: GK Questions of Indian Economy for Civil Services & RBI Management Grade Exams

1. Which among the following is the correct description of Nagara , Dravida and Vesara?
[A] The three main racial groups
[B] Three Linguistic Divisions
[C] Three main styles of Indian temple architecture
[D] Musical Gharanas

Show Answer

Correct Answer: C [Three main styles of Indian temple architecture]
2. In context with Banking in India, what is the difference between liquidity adjustment facility-repo rate and marginal standing facility rate ?
  1. Under Repo rate banks can borrow above SLR Requirements, under MSF, Banks can borrow within SLR requirements
  2. Under Repo, banks can borrow up to 5% of net demand and time liabilities, under MSF, they can borrow up to no limit

Choose the correct option:

[A] Only 1 is correct
[B] Only 2 is correct
[C] Both 1 & 2 are correct
[D] Neither 1 nor 2 is correct

Show Answer

Correct Answer: A [Only 1 is correct]
3. Which among the following in India can use “Repo Bonds” to raise short term money from markets?
  1. Commercial Banks
  2. Corporate
  3. Governments

Choose the correct option:

[A] Only 1
[B] 1 & 2
[C] 1, 2 & 3
[D] Only 1 & 3

Show Answer

Correct Answer: B [1 & 2]
Notes:
Please note that Government don`t raise money for short term using Repo Bonds. The Banks, corporate and primary dealers pledge corporate bonds with each other to raise short-term money. It is similar to banks pledging government securities (gsec) with RBI to raise short-term money. Unlike pledging of g-secs, here the borrower who pledges corporate bonds does not receive the entire value of the bond. RBI guidelines on repo in corporate debt securities came into effect on March 1, 2010.These guidelines were amended in December 2010 as the market participants demanded a reduction in hair-cut margins. It was reduced from a flat rate of 25% to a band of 10-15%, depending on the rating of the corporate bond. According to the amended guidelines, the settlements had to be made within two days of the deal.
4. A company making a public issue of securities has to file a Draft Red Herring Prospectus with SEBI through an eligible merchant banker prior to filing a prospectus with the Registrar of Companies. What information does this Draft Red Herring Prospectus provide
  1. Financial Details about the company
  2. Objects of raising money
  3. Price and size of offerings

Choose the correct option:

[A] 1 & 2
[B] 2 & 3
[C] 1, 2 & 3
[D] Only 1

Show Answer

Correct Answer: A [1 & 2]
Notes:
DRHP provides all the necessary information an investor ought to know about the company in order to make an informed decision. It contains details about the company, its promoters, the project, financial details, objects of raising the money, terms of the issue, risks involved with investing, use of proceeds from the offering, among others. However, the document does not provide information about the price or size of the offering
5. Consider the following statements:
  1. Government of India has set up a Price Monitoring Cell (PMC) in the Department of Agriculture to monitor and analyze price data and trends of availability of essential commodities.
  2. Price Monitoring Cell (PMC) monitors 21 essential Commodities

Which among the above statements is/ are correct?

[A] Only 1 is correct
[B] Only 2 is correct
[C] Both 1 & 2 are correct
[D] Both 1 & 2 are incorrect

Show Answer

Correct Answer: B [Only 2 is correct]
Notes:
Price Monitoring Cell (PMC) is in the Department of Consumer Affairs. The 21 commodities are Rice, Wheat, Atta, Gram Dal, Tur ( Arhar ) Dal, Urad Dal , Moong Dal, Masur Dal, Sugar, Gur, Groundnut Oil, Mustard Oil, vanaspati,Sunflower Oil, Soya Oil, Palm Oil,Tea, Milk, Potato,Onion and Salt.Information on Retail and wholesale Prices is received on daily basis from 50 centers of the country
6. One of the economic laws says that as incomes increase, the proportion of starchy staples in the food basket declines relative to the share of more expensive sources of calories. What this hypothesis is known as ?
[A] Engel’s Law
[B] Bennet’s Law
[C] Campbell’s law
[D] Gresham’s law

Show Answer

Correct Answer: B [Bennet’s Law]
7. Consider the following statements about the Infrastructure Debt Fund (IDF) in India:
  1. Infrastructure Debt Fund can be established as a trust in India, but not as a company
  2. Infrastructure Debt Fund are regulated by SEBI

Which among the above statements is/ are correct?

[A] Only 1 is correct
[B] Only 2 is correct
[C] Both 1 & 2 are correct
[D] Both 1 & 2 are incorrect

Show Answer

Correct Answer: D [Both 1 & 2 are incorrect]
8. In context with India’s Oil and Gas fields consider the following:
  1. Only Oil Fields
  2. Only Gas Fields
  3. Both Oil and Gas Fields

Which among the following options gives the correct decreasing order of numbers of the fields classified as above?

[A] 3, 2, 1
[B] 1, 2, 3
[C] 2, 1, 3,
[D] 3, 1, 2

Show Answer

Correct Answer: A [3, 2, 1]
9. It has been generally viewed that when an economy grows beyond its potential growth rate, it causes inflation. How does growing faster than the potential rate cause inflation?
[A] Fast growth causes quick resource utilization to fulfill the higher demand
[B] Fast growth causes more employment opportunities which leads to rise in prices
[C] Fast growth causes more productivity which leads to higher supply and cost push inflation
[D] All of above mentioned reasons

Show Answer

Correct Answer: A [Fast growth causes quick resource utilization to fulfill the higher demand]
Notes:
There are two major determinants of the potential rate at which an economy can grow in the long run. One is the rate of increase in key inputs such as labour and capital, while the other is the rise in productivity. Within the two key inputs, labour has a bigger say in determining the potential growth rate. The increase in labour supply – through an increase in number of workers or the numbers of hours put by a given number of workers – and an increase in labour productivity will result in an increase in the long-term potential growth rate. Anything that aids productivity increases can help boost potential growth rate. Infrastructure investments and skilling of labour can raise India’s potential growth rate because the country has ample labour supply. The overall demand in the economy picks up due to fast growth and more resources are used to meet higher demand. After a point, the economy may not find enough inputs to meet the demand, leading to an increase in prices. If there is surplus capacity in the economy then it can grow above the potential rate for a while. But for an economy already working at full capacity, excessive demand results in increase in the price level.
10.  Consider the following statements in context with India’s planning experience:
  1. A planning in the sense of formal projections on the basis of the certain sets of assumptions started only in the Second Fiver Year Plan in India
  2. The Theoretical assumptions in the second Fiver year plan were provided by Mahalanobis Model of growth
  3. The Mahalanobis Model of growth incorporates the possibilities opened up by the Foreign Trade

Which among the above statements is / are correct ?

[A] Only 1 is correct
[B] Only 1 & 2 are correct
[C] Only 2 & 3 are correct
[D] All are correct

Show Answer

Correct Answer: B [Only 1 & 2 are correct]
Notes:
The third statement in this question, which says that Mahalanobis Model of growth incorporates the possibilities opened up by the Foreign Trade is incorrect. In simple words this model was based upon a 4 sector plan frame, which represents an alternative approach to planning that focuses on the bottleneck created by shortage of the capital goods rather than on the shortage of the aggregate savings as a previous model given by Harrod-Dobar. The Mahalanobis model has ignored the foreign trade and also engineered the behavioral pattern of the income earners.