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INDIAN ECONOMY BASICS

ANSWERS
1.

countrys residents and its nonresidents

involving goods, services and income;
financial claims on and liabilities to the rest
of the world; and transfers such as gifts.
Despite its name, the balance of
payments data is not concerned with
actual payments made and received by an
economy, but rather with transactions.

(c)

2.

OR
E

Exp.: They are used by Foreign Institutional

Investors (FIIs) who are NOT registered
with SEBI.
(c)

9.

(a)

3.

(c)

10.

(d)

4.

(d)

5.

(a)

SC

Exp.: At least 75% of only male working

population engaged in nonagricultural
pursuits.

6.

(c)

7.

(a)

GS

Exp.: Fiscal policy is said to be tight or

contractionary when revenue is higher
than spending (i.e., the government budget
is in surplus).

Exp.: Frictional unemployment is the time period

between jobs when a worker is searching
for, or transitioning from one job to
another. It is sometimes called search
unemployment and can be voluntarily
based on the circumstances of the
unemployed individual. Structural
unemployment occurs when a labour
market is unable to provide jobs for
everyone who wants one because there is a
mismatch between the skills of workers and
skills needed for jobs.
8.

(c)

Exp.: The balance of payments, also known as

balance of international payments,
encompasses all transactions between a

Exp.: As the government draws its income from

much of the population, government debt
is an indirect debt of the taxpayers.
Government debt can be categorized as
internal debt (owed to lenders within the
country) and external debt (owed to foreign
lenders).
11.

(a)

Exp.: Unlike a fixed exchange rate system, the

government or central bank does not
actively interfere in the foreign exchange
market by controlling supply and demand
of the currency in order to influence the
exchange rate.
12.

(c)

Exp.: When a governments total expenditures

exceed the revenue that it generates
(excluding money from borrowings). Deficit
differs from debt, which is an accumulation
of yearly deficits. In milder forms high
inflation and a large fiscal deficit lead to a
weaker national currency (imports become
expensive)
and
reduce
the
creditworthiness of the country.
13.

(d)
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14.

(d)

15.

(a)

16.

(c)

17.

(a)

18.

(d)

19.

(a)

20.

(d)

21.

(c)

22.

(d)

23.

(d)

24.

(a)

SC

(d)

(c)

GS

Exp.: The definitions are interchanged.

26.

Exp.: In India, FDI is preferred over portfolio

flows as the FDI flows tend to be more stable
than portfolio and other forms of capital
flows.
27.

(d)

Exp.: Bharat Bill Payment System (BBPS)

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BBPS shall act as the final dispute resolution

escalation point. The first point of contact
for dispute resolution shall always be the
operating unit.

It will also set up a single website on behalf

of the brand for online payment of bills
pertaining to all billers onboarded by the
BBPOUs.

The entity would be a notforprofit

organization registered under the
Companies Act 1956, like NPCI or similar
entity. The BBPS shall have a Steering
Group comprising of representatives from
the participating BBPOUs and other stake
holders.

28.

Exp.: It is not backed by any currency or precious

metal, and is used only among governments
and IMF for balance of payments
settlements.
25.

This entity will be responsible for carrying

out payment, clearing and settlement of the
transactions carried out at various
BBPOUs.

OR
E

Exp.: An open market operation (also known as

OMO) is an activity by a central bank to
buy or sell government bonds in the open
market.

This entity will be responsible for setting

standards (a) Business standards, rules
and processes for on boarding the BBPOUs
(b) Process standards, rules and processes
for various use cases including management
of dispute resolution (c) Information
exchange standards.
The entity would be responsible for
marketing and brand positioning of the pan
India Bharat Bill payments system, the
oversight and certification for conduct of
operations of the BBPOUs

(a)

Exp.: Bridge loans are normally more costly than

normal financing, to pay off for the extra
risk. The lender also may demand cross
collateralization and a lower loantovalue
ratio. On the other hand Bridge Loans are
generally arranged rapidly with
comparatively little documentation.
29.

(b)

30.

(b)

Exp.: FPIs would also be allowed to invest in

unlisted nonconvertible debentures or
bonds issued by corporate in the
infrastructure sector. Furthermore, FPI can
invest in privately placed bonds if it is listed
within 15 days.
31.

(d)

32.

(c)

33.

(b)

Exp.: In case a person is a whole time director in

a listed company then he can only be on
three boards.
34.

(d)

35.

(d)

36.

(c)

37.

(d)

38.

(b)

Cancun Climate Change Conference held

during NovDec. 2010.
46.

Exp.: Non performing asset (NPA) is a loan or

an advance where Interest and/or
installment of principal remain overdue for
a period of more than 90 days in respect of
a term loan.
39.

(a)

40.

Exp.: AOA is a multilateral trade negotiation of

World Trade Organization (WTO).
47.

(c)

Exp.: M1 includes currency with public and only

demand deposits with bank and not time
deposits. It is known as narrow money.
M3 includes M1 and time deposits with
banks (not post office deposits) and known
as broad money.
48.

(c)

49.

(a)

Exp.: The new banks must meet the criteria of

having 25% of its branches in unbanked
rural areas with population upto 9,999.
50.

(b)

51.

(c)

52.

(c)

53.

(d)

54.

(a)

55.

(b)

56.

(a)

57.

(c)

58.

(d)

59.

(c)

60.

(a)

SC

Exp.: Category I - the lowest risk entities

comprises foreign government and
governmentrelated foreign investors.

GS

Category II - regulated entities such as

university funds, universityrelated
endowments and pension funds, etc.
Category III - other entities viz. Qualified
Foreign Investors (QFIs), etc.
41.

(c)

42.

(b)

Exp.: If gender inequality did not exist, the value

of GDI and HDI would be the same, but if
gender inequality exists, the value of GDI
would be lower than that of HDI. The
greater the difference between HDI and
GDI, the greater is the gender inequality. It
is the developing and under developing
country where gender inequality persists.
43.

(d)

44.

(d)

45.

(a)

(d)

OR
E

Exp.: The RKVY aimed at achieving 4% annual

growth in the agriculture sector during the
XI Plan period by ensuring a holistic
development of Agriculture and allied
sector. One of its objective include to achieve
the goal of reducing the yield gaps in
important crops through focused
interventions.

(b)

Exp.: The primary result of the conference was

the nonbinding document The Future we
want. The fourth statement is related to

Exp.: RBI has directed all the commercial banks

to offer zero balance account with
minimum facilities like cheque book and
ATM to all customers. Nofrill savings
account scheme is provided by both public
and private sector banks.
61.

(a)

Exp.: Deadline for implementation of Basel III in

India is 2019.
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62.

(d)

63.

(d)

64.

(d)

65.

(b)

Exp.: The Consolidated Fund of India has been

established under Article 266 (1) of the
Constitution.

Tax advantages and Government subsidies

given by the Government

Much lower interest rates

Simpler labour laws

Better infrastructure leading to lower cost

of power, transportation and cluster
approach helping specialisation of labour
and engineering skills

66.

(d)

70.

(d)

67.

(d)

71.

(d)

68.

(d)

72.

(a)

Exp.:

OR
E

Exp.: 12th plan recomd Also, in order to leverage

the benefits of IP:
Build awareness about IP through
education and training.

Providing access to risk capital

Setting up of standards for the industry

Create national IP mission to continually

evolve the IP strategy of the nation.

Improving Industry/research institute/

academia interaction, mostly in clusters

Encourage joint IP filings by industry/

academia/research institutes.

Encourage the formation of companies

specializing in IPs (through tax incentives).

Stimulating demand/providing scale

through preferential treatment in
government purchases.

Modular industrial estates/laboratories

near premier technical institutions with the
required plug and play facilities.

73.

(c)

74.

(c)

75.

(c)

SC

Exempt income tax for the income

generated from domestic IPs.

69.

(b)

GS

Exp.: The major factors responsible for increasing

Chinese competitiveness are:

Artificially depreciated Chinese currency

Exp.: RTE Act is applicable for only elementary

education.

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