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Generate QuizEconomics – Medium Level – GK Questions
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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.
Article ___ of the Indian Constitution mandates that the President shall cause to be laid before Parliament the 'Annual Financial Statement', commonly known as the Union Budget.
- PT
- short
- 112
- rivalrous (or unregulated common)
Answer: 112
Article 112 forms the constitutional basis of the Union Budget, requiring the government to present a detailed statement of its estimated receipts and expenditures for the upcoming financial year. It distinguishes between revenue and capital accounts to ensure fiscal transparency.
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.
Certificates of Deposit (CDs) are issued by ___ and financial institutions to raise bulk funds from the market.
- banks
- InvITs (or Infrastructure Investment Trusts)
- John Maynard Keynes
- IDA
Answer: banks
Unlike Commercial Papers issued by corporates, Certificates of Deposit are negotiable term deposits issued specifically by commercial banks and select financial institutions. They are issued at a discount to face value and are subject to the RBI's monetary policy directives.
Commercial Papers (CPs) are unsecured, short-term debt instruments issued primarily by the Government of India.
- True
- False
Answer: False
Commercial Papers are issued by large, highly-rated corporate entities, primary dealers, and financial institutions to meet their short-term working capital needs. The government issues Treasury Bills (T-bills), not CPs, for its short-term borrowing requirements.
The RBI's regulatory framework for identifying and supervising weak banks is commonly known as the ___ framework.
- first
- PCA (or Prompt Corrective Action)
- 40
- Green
Answer: PCA (or Prompt Corrective Action)
The Prompt Corrective Action (PCA) framework is triggered when banks breach certain regulatory thresholds like high NPAs, low capital adequacy, or negative return on assets. It imposes mandatory and non-mandatory restrictions on the bank to restore its financial health.
The SARFAESI Act, 2002 allows banks to auction secured assets without the intervention of a court to recover non-performing assets (NPAs).
- True
- False
Answer: True
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act empowers banks and financial institutions to enforce their security interest directly. This bypasses the lengthy judicial process, enabling faster recovery of bad loans from defaulting borrowers.
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.
According to ___ Law, as a family's income increases, the proportion of its income spent on food decreases, even if the absolute expenditure on food rises.
- bracket creep (or fiscal drag)
- Engel's
- Vote on Account
- not (or never)
Answer: Engel's
Engel's Law is an observation in economics stating that the proportion of income spent on food is inversely related to income levels. This implies that lower-income families spend a much larger fraction of their earnings on basic sustenance compared to wealthier families.
If the Lorenz curve is perfectly straight and diagonal, it indicates high income inequality in the economy.
- True
- False
Answer: False
The line of perfect equality is a 45-degree diagonal line on the Lorenz curve graph. If the actual Lorenz curve perfectly overlaps this diagonal line, it means income is distributed absolutely equally among the population. The further the curve bows away from the diagonal, the higher the inequality.
The Global Multidimensional Poverty Index (MPI) is published jointly by the UNDP and the ___.
- anticommons
- Veblen
- OPHI
- India Debt Resolution Company Ltd (IDRCL)
Answer: OPHI
The Oxford Poverty and Human Development Initiative (OPHI) collaborates with the UNDP to release the MPI. Unlike traditional income-based measures, the MPI evaluates deprivation across three dimensions: health, education, and standard of living.
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.
Structural unemployment is primarily caused by a mismatch between the skills workers possess and the skills demanded by employers.
- True
- False
Answer: True
Structural unemployment arises due to fundamental shifts in the economy, such as technological advancements or changes in consumer demand, which render certain skills obsolete. It is a long-term issue that often requires retraining and education to resolve.
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.
Ayushman Bharat - Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) provides a health insurance cover of up to Rs. ___ per family per year for secondary and tertiary care hospitalization.
- Okun's
- 5 lakh
- decrease (or reduce / lower)
- less
Answer: 5 lakh
AB-PMJAY is the world's largest fully government-funded health assurance scheme. It provides a cover of Rs. 5 lakh per family per year on a family floater basis, targeting the bottom 40% of the Indian population identified through the SECC 2011 database.
The Food Corporation of India (FCI) was established in the year ___ under the Food Corporations Act, 1964.
- 1965
- countervailing
- Mobile
- Engel's
Answer: 1965
FCI was set up in 1965 with the primary objective of safeguarding food security and ensuring price stability in the country. It is responsible for the procurement, maintenance, and distribution of food grains across India through the Public Distribution System (PDS).
Minimum Support Price (MSP) is a legally enforceable constitutional right for farmers in India.
- True
- False
Answer: False
MSP is an administrative policy decision taken by the Government of India based on the recommendations of the CACP. It does not have statutory or constitutional backing, meaning farmers cannot legally force the government or private buyers to purchase their produce at the announced MSP.
Under the MGNREGA scheme, what is the minimum mandated percentage of workdays that must be generated for women?
- 25%
- 33%
- 50%
- No specific reservation
Answer: 33%
The Mahatma Gandhi National Rural Employment Guarantee Act legally mandates that at least one-third (33%) of the total beneficiaries or person-days generated under the scheme must be women. This provision is designed to ensure female participation in the rural workforce and promote grassroots economic empowerment.
Quota is a ___ restriction on trade.
- tangent
- quantitative
- Washington
- National Income
Answer: quantitative
Imposes a strict physical limit on the quantity imported.