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Generate QuizEconomics – MCQ – GK Questions
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Special Drawing Rights (SDRs), an international reserve asset created by the IMF, are also colloquially known as:
- Paper Gold
- Digital Euro
- Shadow Currency
- Fiat Reserves
Answer: Paper Gold
Created in 1969 to supplement member countries' official reserves, SDRs are not a currency themselves but a potential claim on the freely usable currencies of IMF members. They were termed 'Paper Gold' because they were initially intended to serve as a substitute for gold in international settlements.
A deficit in the Current Account of the Balance of Payments (BOP) implies that:
- Foreign exchange reserves are increasing
- The country's exports of goods and services exceed its imports
- The country's imports of goods and services exceed its exports
- FDI inflows are higher than FDI outflows
Answer: The country's imports of goods and services exceed its exports
The Current Account records trade in goods and services, plus transfer payments. A deficit means the nation is spending more foreign currency on imports and remittances than it is earning through exports. This deficit must be financed by a surplus in the Capital/Financial Account (e.g., borrowing or FDI).
Okun's Law establishes an empirical relationship between which two macroeconomic variables?
- Inflation and Interest Rates
- Tax Rates and Tax Revenue
- GDP Growth and Unemployment
- Money Supply and Price Level
Answer: GDP Growth and Unemployment
Proposed by Arthur Okun, this law states that for every 1% increase in the unemployment rate, a country's GDP will be roughly 2% lower than its potential GDP. It highlights the severe economic cost of joblessness in terms of lost national output.
In the Consumer Price Index (CPI) for Rural Labourers, which category holds the highest weightage?
- Housing
- Fuel and Light
- Food and Beverages
- Clothing and Footwear
Answer: Food and Beverages
In India's CPI indices, particularly for rural areas, the 'Food and Beverages' category holds the highest weightage (over 54% in CPI-Rural). This reflects the Engel's Law principle, where lower-income rural households spend a disproportionately large share of their income on basic sustenance.
What does the term 'Skewflation' refer to in economics?
- Continuous hyperinflation across all sectors
- Simultaneous inflation in some sectors and deflation in others
- Deflation accompanied by high unemployment
- Inflation caused solely by currency printing
Answer: Simultaneous inflation in some sectors and deflation in others
Skewflation describes a scenario where prices rise persistently in specific sectors (like food or energy) while remaining stable or even falling in others. This makes monetary policy challenging, as raising interest rates to curb sector-specific inflation might hurt the broader, non-inflating economy.
What does the 'TI' in NITI Aayog stand for?
- Technology and Innovation
- Transforming India
- Trade and Industry
- Total Integration
Answer: Transforming India
NITI Aayog stands for National Institution for Transforming India. It was established in 2015 to replace the Planning Commission, acting as the premier policy think tank of the Government of India and fostering cooperative federalism through a bottom-up approach.
The concept of 'Effective Revenue Deficit' was introduced in the Union Budget of which year to highlight the quality of government borrowing?
- 2008-09
- 2011-12
- 2015-16
- 2018-19
Answer: 2011-12
Introduced in 2011-12, the Effective Revenue Deficit excludes the revenue expenditure that goes towards the creation of durable assets (like rural roads or housing). It provides a more accurate picture of the government's unproductive borrowing, which is used merely to finance current consumption.
What is the fundamental difference between a 'Cess' and a 'Surcharge' in the Indian tax system?
- Cess is direct, Surcharge is indirect
- Cess is levied for a specific purpose, Surcharge is a general tax on tax
- Cess is shared with states, Surcharge is not
- Both B and C
Answer: Both B and C
A cess is earmarked for a specific developmental purpose (like education or health) and ceases when the purpose is fulfilled. A surcharge is an additional tax on the existing tax of high-income earners. Crucially, the proceeds of both cess and surcharge are retained exclusively by the Centre and are not shared with states via the Finance Commission.
Which of the following expenditures is 'charged' on the Consolidated Fund of India and is not subject to a vote by Parliament?
- Subsidies on food and fertilizers
- Salary and allowances of the President of India
- Defense procurement
- Funding for MGNREGA
Answer: Salary and allowances of the President of India
Charged expenditures, which include the salaries of the President, Supreme Court/High Court judges, and the CAG, as well as debt servicing, are automatically met from the Consolidated Fund. They can be discussed by Parliament but cannot be voted upon to ensure the independence of constitutional authorities.
Which regulatory body oversees the pension sector and the National Pension System (NPS) in India?
- RBI
- SEBI
- IRDAI
- PFRDA
Answer: PFRDA
The Pension Fund Regulatory and Development Authority (PFRDA) was established by the Government of India in 2003 and later given statutory status in 2013. Its mandate is to regulate pension funds, protect the interests of subscribers, and promote old-age income security.
Treasury Bills (T-bills) in India are issued by:
- SEBI on behalf of corporates
- RBI on behalf of the Central Government
- State Governments directly
- NABARD for rural credit
Answer: RBI on behalf of the Central Government
T-bills are zero-coupon, short-term debt instruments issued by the Reserve Bank of India on behalf of the Government of India to manage short-term liquidity mismatches. They are currently issued in tenures of 91 days, 182 days, and 364 days.
What is the maturity period of instruments traded in the 'Call Money Market'?
- 1 day
- 2 to 14 days
- 15 to 90 days
- 1 year
Answer: 1 day
The call money market deals in extremely short-term, uncollateralized loans between banks to meet their immediate reserve requirements. Funds borrowed for exactly one day are called 'call money', whereas funds borrowed for 2 to 14 days are termed 'notice money'.
The Insolvency and Bankruptcy Code (IBC), which provides a time-bound process for resolving insolvency, was enacted in which year?
- 2014
- 2015
- 2016
- 2018
Answer: 2016
The IBC was passed in 2016 to consolidate and amend the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms, and individuals. It shifted the legal framework from a 'debtor-in-possession' to a 'creditor-in-control' regime.
The Marginal Standing Facility (MSF) rate is generally kept ___ the Repo Rate.
- Equal to
- Lower than
- Higher than
- Unrelated to
Answer: Higher than
The MSF is a penal rate at which banks can borrow overnight funds from the RBI against their SLR portfolio when inter-bank liquidity dries up completely. It is typically kept 25 basis points (0.25%) higher than the Repo Rate to discourage routine borrowing.
A Gini coefficient of '0' indicates:
- Perfect inequality
- Perfect equality
- High inflation
- Zero unemployment
Answer: Perfect equality
The Gini coefficient measures the distribution of income or wealth within a population, ranging from 0 to 1. A value of 0 represents perfect equality (everyone has the exact same income), while a value of 1 represents perfect inequality (one person holds all the income).
According to the Tendulkar Committee report, what was the estimated rural poverty line (per capita per month) for the year 2011-12?
- Rs. 673
- Rs. 816
- Rs. 1000
- Rs. 32
Answer: Rs. 816
The Tendulkar Committee shifted the poverty estimation away from calorie consumption to a broader basket including health and education. For 2011-12, it set the rural poverty line at Rs. 816 per month and the urban poverty line at Rs. 1000 per month.
The Periodic Labour Force Survey (PLFS), which replaced the quinquennial employment surveys, is conducted by which organization?
- NITI Aayog
- National Statistical Office (NSO)
- Reserve Bank of India
- Ministry of Labour and Employment
Answer: National Statistical Office (NSO)
The NSO, operating under the Ministry of Statistics and Programme Implementation (MoSPI), launched the PLFS in 2017. It was designed to provide more frequent and reliable estimates of labor force indicators like unemployment and labor force participation rates in both rural and urban areas.
In the case of 'disguised unemployment', the marginal productivity of labor is:
- Highly positive
- Zero or negative
- Equal to average productivity
- Infinite
Answer: Zero or negative
Disguised unemployment occurs when more people are employed than actually needed for a job, commonly seen in the Indian agricultural sector. If these extra workers are removed, the total output remains unaffected, meaning their marginal productivity is zero.
Under the PM-KISAN scheme, what is the total annual income support provided to eligible farmer families?
- Rs. 2,000
- Rs. 4,000
- Rs. 6,000
- Rs. 10,000
Answer: Rs. 6,000
The Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) provides an annual financial benefit of Rs. 6,000 to small and marginal farmer families. This amount is transferred directly into their bank accounts in three equal installments of Rs. 2,000 every four months.
What is the primary purpose of maintaining a 'Buffer Stock' of food grains by the government?
- To export to foreign countries
- To stabilize market prices and ensure food security
- To provide free food to all citizens
- To generate revenue for the FCI
Answer: To stabilize market prices and ensure food security
Buffer stocks are maintained to intervene in the market during times of shortage or surplus. By releasing stocks during scarcity, the government prevents price spikes, and by procuring during bumper harvests, it prevents price crashes, thereby protecting both consumers and farmers.