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002 Economy Previous Year Questions

Economy Previous Year Questions

Q1. If the interest rate is decreased in an economy, it will
(a) decrease the consumption expenditure in the economy
(b) increase the tax collection of the Government
(c) increase the investment expenditure in the economy
(d) increase the total savings in the economy
Ans: (c)

Q2. The Laffer curve is the graphical representation of:
(a) The relationship between tax rates and absolute revenue these rates generate for the government.
(b) The inverse relationship between the rate of unemployment and the rate of inflation in an economy.
(c) The inequality in income distribution.
(d) The relationship between environmental quality and economic development.
Ans: (a)

Q3. Which factors provided impetus to the impressive fiscal performance by the states?
1. Passing of Fiscal responsibility legislations
2. Acceleration of GDP growth
3. Decline in interest payments
4. increased transfers from the Centre and central CSS expenditure Identify the incorrect statements:
Codes:
(a) 1 & 2 only (b) 2 & 3 only
(c) All (d) None
Ans: (d)

Q4. With regard to ‘non-plan expenditure’, consider the following:
1. Expenditure on proposed annual plan projects
2. Loans to public enterprises
3. Salary payments to government employees
4. Grants to foreign governments
Which of the above is/are NOT a part of ‘non-plan expenditure’?
(a) 1 only (b) 1, 2 and 4
(c) 2 and 4 only (d) 3 and 4 only
Ans: (a)

Q5. “Fiscal Drag” expresses the impact of Inflation on which of the following?
(a) Fiscal deficit
(b) Tax revenues and GDP
(c) Black money
(d) Investment
Ans: (b)

Q6. Devaluation of currency will be more beneficial if prices of
(a) domestic goods remain constant
(b) exports become cheaper to importers
(c) imports remain constant
(d) exports rise proportionately
Ans: (a)

Q7. Consider the following objectives of the Budget proposals :
1. Encouraging the use of indigenous intermediate products
2. Reducing the incidence of indirect taxes
3. Simplifying the procedure for collecting indirect taxes
4. Integrating all indirect taxes in one coordinated tax MODVAT was introduced to achieve
(a) 2, 3 and 4
(b) 1, 2 and 3
(c) 2 and 3
(d) 1 and 2
Ans: (b)

Q8. The term ‘Core Banking Solution’ is sometimes in the news. Which of the following statements best describes/describe this term?
1. It is a networking of a bank’s branches which enables customers to operate their accounts from any branch of the bank on its network regardless of where they open their accounts.
2. It is an effort to increase RBI’s control over commercial banks through computerization.
3. It is a detailed procedure by which a bank with huge non-performing assets is taken over by another bank.
Select the correct answer using the code given below:
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
Ans: (a)

Q9. Consider the following statements:
1. High growth will lead to inflation.
2. High growth will lead to deflation.
Which of the statements given above is/are correct?
(a) Only 1 (b) Only 2
(c) Both 1 and 2 (d) Neither 1 nor 2
Ans: (a)

Q10. Which is the role of the International Monetary Fund
(IMF)?
(a) To implement and advance global trade agreements
(b) To settle industrial and trade disputes between members
(c) To help poorer countries with their economic development
(d) To maintain international financial stability in global financial markets
Ans: (d)

Q11. Consider the following statements about Public Distribution System (PDS) in India:
1. According to Wadhwa committee monitoring the functioning of PDS operations through the use of information and communication technology should be given the highest priority.
2. Tamil Nadu is the only State which has already commenced the actual implementation of computerization of PDS operations.
Which of the statement(s) given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Ans: (a)

Q12. Consider the following statements regarding the World Trade Organization (WTO):
1. Its multilateral rules are applicable to trade in commodities and services only.
2. India is a founder-member of the World Trade Organization.
3. It’s highest decision making body is the Ministerial conference.
Which of the statements given above are correct?
(a) 1 and 2 only (b) 2 and 3 only
(c) 1 and 3 only (d) 1, 2 and 3
Ans: (b)

Q13. India possesses more than half the total number of the world’s
(a) Cattle
(b) Buffaloes
(c) Goats
(d) Sheep
Ans: (a)

Q14. Which of the following is definitely a major indication of the state of the economy of a country?
(a) Rate of GDP growth
(b) Rate of inflation
(c) Number of Banks in a country
(d) None of these
Ans: (a)

Q15. Convertibility of rupee implies:
(a) being able to convert rupee notes into gold
(b) allowing the value of rupee to be fixed by market forces
(c) freely permitting the conversion of rupee to other currencies and vice versa
(d) developing an international market for currencies in India
Ans: (c)

Q16. Consider the following statements relating to the World Trade Organization (WTO):
1. The WTO deals with the global rules of trade between nations.
2. The goal of the WTO is to help producers of goods and services, exporters, and importers conduct their business.
3. The WTO, which is a successor body of the General Agreement on Tariffs and Trade, came into being following the Uruguay Round of Negotiations.
4. The WTO distances itself in framing of rules on trad in intellectual property rights.
Which of the statements given above are correct?
(a) l, 2 and 3 (b) 2, 3 and 4
(c) 1, 2 and 4 (d) 1 and 3 only
Ans: (a)

Q17. Consider the following subsidies given by the Indian Government:
1. Rice and Wheat
2. Water
3. Electricity
4. Fertiliser Arrange the subsidies given above from highest to lowest:
(a) 1, 3, 4, 2 (b) 1, 3, 2, 4
(c) 1, 4, 3, 2 (d) 4, 1, 3, 2
Ans: (c)

Q18. Consider the following statements:
1. Devaluation is a term used for the unofficial decrease in the exchange rate in a floating exchange rate system.
2. Altering the face value of a currency without reducing its exchange rate is a redenomination, not a devaluation or revaluation.
Which of the statements given above is/are correct?
(a) 1 Only (b) 2 Only
(c) Both 1 and 2 (d) Neither 1 nor 2
Ans: (b)

Q19. Fiscal deficit in the Union Budget means
(a) The sum of budgetary deficit and net increase in internal and external borrowings
(b) The difference between current expenditure and current revenue
(c) The sum of monetized deficit and budgetary deficit
(d) Net increase in Union Government’s borrowing from the Reserve Bank of India
Ans: (a)

Q20. Consider the following statements :
(1) Higher growth in GDP and population can occur together.
(2) Per capita income always decreases with high population growth.
Which of the statements given above is/are correct?
(a) 1 only (b) 2 only
(c) Both 1 and 2 (d) Neither 1 nor 2
Ans: (c)

Q21. What are the authorities of SEBI?
1. Oversee the working of stock exchanges
2. Regulate merchant banks and mutual funds
3. Register and regulate intermediaries such as stock brokers
Choose the incorrect answer.
(a) 1 only (b) 2 only
(c) 3 only (d) None of the Above
Ans: (d)

Q22. What conditions are correct that came with the medium term loan given by IMF to India for restructuring of the economy?
I. Government expenditure to be cut by 20% per annum
II. Devaluation of rupee by 22%.
III. Excise duty to be increased by 40% .
IV. Custom duty to be cut drastically from the peak of 130% to 30%
(a) II & IV (b) I & II
(c) III & IV (d) Only II
Ans: (a)

Q23. Which of the following is/are the fund/funds to set up at NABARD for Agricultural farmers in India?
1. Long Term Irrigation Fund
2. Dedicated Micro Irrigation Fund
3. Dairy Processing and Infrastructure Development Fund
Select the correct answer using the code given below.
(a) 1 and 2 only (b) 1 only
(c) 3 only (d) 1, 2 and 3
Ans: (d)

Q24. The Malegam panel appointed by the RBI was related to:
(a) Regulation of cooperative banking societies and related financial issues.
(b) Regulation of regional rural banks and their financial structuring.
(c) Regulation of microfinance institutions and related legal framework.
(d) International investment guidelines in rural banking sector.
Ans: (c)

Q25. A redistribution of income in a country can be best brought about through
(a) progressive taxation combined with progressive expenditure
(b) progressive taxation combined with regressive expenditure
(c) regressive taxation combined with regressive expenditure
(d) regressive taxation combined with progressive expenditure
Ans: (b)

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