Fill in the Blank – GK Questions

Underemployment is a severe issue in developing economies like India, often manifesting visibly in the gig economy or invisibly in agriculture (disguised unemployment). It means the economy is not generating enough full-time, productive jobs, leading to lower aggregate wages, reduced purchasing power, and wasted human capital potential.

Payments Banks are designed to provide safe, secure, and widespread payment and remittance services to migrant laborers and low-income households. While they can accept deposits (up to a specified limit) and issue debit cards, they cannot issue credit cards or lend money directly. They must invest their mobilized deposits in safe government securities and SLR-eligible bonds.

MUDRA stands for Micro Units Development and Refinance Agency. Its core mandate is to 'Fund the Unfunded' by providing institutional credit to millions of small entrepreneurs, street vendors, and artisans who traditionally fall outside the purview of formal banking channels and rely on exorbitant informal moneylenders.

This fundamental law explains why demand curves slope downward. As a person consumes more units of a specific commodity (like glasses of water on a hot day), the urgency and satisfaction derived from each successive unit fall, eventually reaching zero (satiety) or even becoming negative if overconsumption occurs.

The Neoclassical Solow-Swan growth model demonstrates that merely adding more capital and labor will eventually lead to diminishing returns. It concludes that sustained, long-term increases in living standards and per capita income can only be achieved through continuous, exogenous technological advancements that improve total factor productivity.

The JAM (Jan Dhan-Aadhaar-Mobile) number trinity links the beneficiary's bank account (Jan Dhan) with their unique biometric identity (Aadhaar) and their registered mobile number. This technological architecture ensures that government subsidies are transferred directly to the intended beneficiary's account, eliminating ghost beneficiaries and middlemen.

The SDR was created in 1969 during the Bretton Woods fixed exchange rate system when gold and the US dollar were the primary reserve assets. Because it was intended to act as a synthetic substitute for gold in international settlements, despite existing only as a bookkeeping entry, it earned the nickname 'Paper Gold'.

The BOP follows the double-entry bookkeeping system. Therefore, the sum of the Current Account, the Capital Account, and the Financial Account, along with changes in official foreign exchange reserves, must mathematically equal zero. A deficit in the current account must be perfectly offset by a surplus in the capital/financial accounts or by drawing down forex reserves.

Following the recommendations of the R.N. Malhotra Committee, the IRDA was constituted in 1999 and later given statutory status through the IRDA Act, 1999. Its mandate includes issuing licenses to private and foreign insurers, protecting policyholder interests, and ensuring the orderly growth of the insurance sector in India.

The inter-bank money market is highly segmented by maturity. 'Call money' refers to overnight borrowing (1 day) to meet immediate reserve requirements. 'Notice money' covers short-term borrowing from 2 to 14 days, where the borrower must give a short 'notice' before repaying the funds.

Prior to the IBC, defaulting promoters retained control of their companies while restructuring debts, often leading to endless delays. The IBC empowers the Committee of Creditors (CoC) to take control of the defaulting entity, allowing them to either approve a resolution plan to revive the company or liquidate its assets within a strict 330-day timeline.

When the RBI purchases government bonds from the open market, it pays for them by crediting the reserves of commercial banks. This infusion of permanent cash increases the banks' lendable resources, expands the money supply, and drives down bond yields, thereby lowering long-term borrowing costs for the economy.

GST is a destination-based consumption tax, meaning the tax revenue accrues to the state where the goods or services are ultimately consumed, rather than the state where they are manufactured. This shift from an origin-based tax system fundamentally altered the fiscal dynamics between manufacturing-heavy states and consumption-heavy states in India.

The Fiscal Deficit represents the total borrowing needs of the government. However, a large portion of this borrowing is often just to pay the interest on accumulated past debts. By subtracting interest payments, the Primary Deficit reveals how much the government is borrowing purely to fund its current fiscal year's expenditures.

Arthur Okun's empirical law highlights the severe macroeconomic cost of unemployment. It quantifies the loss in national output resulting from idle labor resources, demonstrating that high unemployment not only causes social distress but also creates a massive negative output gap relative to the economy's full-employment potential.

Skewflation poses a unique challenge for central banks because standard monetary tightening (raising interest rates) might successfully curb general demand but fail to address supply-side bottlenecks in specific sectors like agriculture. This can lead to a situation where raising rates unnecessarily stifles overall economic growth without solving the targeted inflation.

The GDP Deflator reflects the price changes of all domestically produced goods and services, making it a broader and more comprehensive measure of inflation than the CPI or WPI. By dividing Nominal GDP (calculated at current year prices) by Real GDP (calculated at base year prices), it isolates the exact impact of inflation on economic growth.

While GDP measures the value of goods and services produced within a country's geographical boundaries regardless of nationality, GNP measures the total value produced by the residents of a country, both domestically and abroad. Therefore, GNP = GDP + (Factor income earned by domestic residents abroad - Factor income earned by foreign residents domestically).

The base year for the IIP was updated from 2004-05 to 2011-12 in May 2017 to align it with the base years of other major macroeconomic indicators like the GDP and WPI. This update also revised the item basket to better reflect the current structure of the Indian manufacturing and industrial sectors.

The NFSA, 2013, marks a paradigm shift from a welfare approach to a rights-based approach to food security. It mandates coverage of up to 75% of the rural population and 50% of the urban population (averaging about 67% of India's total population), providing them with 5 kg of food grains per person per month at heavily subsidized prices.