Economics – Hard Level – GK Questions

Indian Bank's domestic CASA ratio increased to 39.73% in June 2026 from 38.97% in the previous year. CASA ratio is an important banking metric indicating the proportion of low-cost deposits, which is crucial for a bank's profitability and is frequently asked in banking exams.

India's foreign exchange reserves crossed $650 billion in early 2026, one of the highest levels ever, providing adequate import cover and a buffer against external shocks.

IMEC was announced at the G20 New Delhi Summit in September 2023. It is a railway and shipping corridor connecting India to Europe via the Middle East, as an alternative to China's BRI.

India-UAE CEPA was signed in February 2022 and came into force in May 2022 — India's first CEPA with a Gulf country, targeting bilateral trade of $100 billion.

India is structurally a current account deficit country due to high import bills (crude oil, gold, electronics). India occasionally posts surpluses during COVID-era import compression.

The IBC 2016 consolidated the insolvency framework in India, providing time-bound resolution of insolvency for companies, partnerships, and individuals.

India's PLI scheme covers 14 key sectors including mobile manufacturing, pharmaceuticals, textiles, food processing, telecom, and specialty steel.

RBI MPC cut the repo rate by 25 basis points to 6.25% in February 2025, the first reduction since May 2020, amid easing inflation.

Despite a decline in the number of fraud cases, the amount involved in these frauds has paradoxically increased for both public and private sector banks. This trend suggests fraudsters are executing larger-value scams, making detection and prevention more critical.

The deficit increased six-fold compared to the previous fiscal year, highlighting a sharp deterioration in India's external account position. This magnitude of increase raised government concerns about sustained dollar outflows from the economy.

Named after Russian economist Nikolai Kondratiev, these super-cycles suggest that capitalist economies experience prolonged, multi-decade periods of rapid expansion followed by equally long periods of stagnation and correction. Each wave is fundamentally anchored to a revolutionary technological breakthrough that completely restructures global production, infrastructure, and labor markets before eventually reaching saturation.

When the price of a good falls, the Substitution Effect always encourages the consumer to buy more of it. However, the price drop also increases the consumer's real purchasing power (Income Effect). For a normal good, both effects work together to increase demand. For a Giffen good (a severe inferior good like potatoes during a famine), the negative Income Effect is so overwhelmingly large that it completely swamps the Substitution Effect, causing demand to perversely fall when the price drops.

Green Bonds are standard fixed-income instruments, but their proceeds are strictly ring-fenced for eco-friendly initiatives like renewable energy, clean transportation, and green buildings. By issuing Sovereign Green Bonds, the government taps into the massive global pool of ESG-focused institutional capital, signaling its commitment to climate goals while funding the expensive transition toward a net-zero economy.

Cut Motions are a vital tool for parliamentary financial control and accountability. MPs can move a Policy Cut (reducing the demand to Re. 1 to signify total disapproval of the policy), an Economy Cut (reducing the amount by a specific sum to enforce financial prudence), or a Token Cut (reducing by Rs. 100 to air a specific grievance). If a Cut Motion passes, it amounts to a no-confidence vote, forcing the government to resign.

Augustin Cournot's foundational model of oligopoly assumes that each firm decides how much to produce based on the assumption that its competitors will not change their current production levels. The market price is then determined by the total aggregate output of all firms. This strategic interdependence leads to a Nash Equilibrium where total output and price fall somewhere between the extremes of perfect competition and pure monopoly.

When the LM curve is horizontal (a liquidity trap), the demand for money is perfectly elastic, meaning the public is willing to hold any amount of cash at the current low interest rate. Consequently, when the government increases spending (shifting the IS curve right), it does not drive up interest rates at all. With no interest rate increase to crowd out private investment, the fiscal multiplier operates at its absolute maximum, yielding the highest possible boost to national income.

Ronald Coase challenged the traditional Pigouvian view that externalities always require government intervention. He argued that if a factory pollutes a river, the factory owner and the downstream fishermen can simply negotiate a mutually beneficial financial settlement, provided the legal rights to the river are clear and the cost of negotiating is negligible. The initial allocation of rights only affects wealth distribution, not the ultimate efficient outcome.

ICOR is a crucial indicator of an economy's structural health and technological progress. A high ICOR indicates inefficiency, poor infrastructure, and bureaucratic delays (meaning massive investments yield little growth). Conversely, a low ICOR signifies high capital productivity, advanced technology, and efficient resource allocation, allowing the economy to grow rapidly without requiring unsustainably high savings rates.

India and other developing nations procure food grains at Minimum Support Prices (MSP) to feed their poor. When the MSP exceeds the fixed external reference price (based on 1986-88 prices), the subsidy breaches the WTO's 10% 'de minimis' Amber Box limit. The Bali Peace Clause temporarily shields these vital food security programs from legal challenges by developed nations, provided the developing country meets strict transparency and anti-diversion conditions.

David Ricardo theorized that forward-looking, rational consumers understand that government borrowing today must be repaid with interest via higher taxes tomorrow. Therefore, they will not treat a debt-financed tax cut as an increase in their permanent wealth. Instead, they will save the extra income to pay those future taxes, completely neutralizing the government's attempt to stimulate aggregate demand through deficit spending.