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Non-Banking Financial Companies (NBFCs) are allowed to accept demand deposits (savings/current accounts) from the public just like commercial banks.
- True
- False
Answer: False
NBFCs primarily engage in lending and investment activities but cannot accept demand deposits from the public. Furthermore, they are not part of the payment and settlement system and cannot issue cheques drawn on themselves, distinguishing them fundamentally from commercial banks.
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 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.
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.
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.
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.
Tariff is a tax on imports.
- True
- False
Answer: True
Used primarily to protect domestic industries from foreign competition.
Current account includes FDI.
- True
- False
Answer: False
FDI and FII flows are recorded in the Capital account.
IMF provides long-term development loans.
- True
- False
Answer: False
IMF provides short/medium term Balance of Payments support.
HDI includes life expectancy.
- True
- False
Answer: True
Components are Health (life expectancy), Education, and Standard of living.
Green revolution was for food grains.
- True
- False
Answer: True
Primarily focused on high-yielding varieties of wheat and rice.
Five Year Plans started in 1951.
- True
- False
Answer: True
The First Five Year Plan covered the period 1951-1956.
Primary deficit = Fiscal deficit - Interest payments.
- True
- False
Answer: True
Shows the borrowing requirement excluding past interest obligations.
Corporation tax is a direct tax.
- True
- False
Answer: True
It is directly levied on the net profits of corporations.
Direct tax burden can be shifted.
- True
- False
Answer: False
The incidence and impact fall on the exact same person.
OMO involves buying/selling govt securities.
- True
- False
Answer: True
Open Market Operations are used to manage system liquidity.
Reverse repo is higher than repo rate.
- True
- False
Answer: False
Reverse repo rate is always kept lower than the repo rate.
RBI nationalized in 1949.
- True
- False
Answer: True
Nationalized on January 1, 1949.
Cost-push inflation is due to supply shocks.
- True
- False
Answer: True
Rising input costs like wages and raw materials push prices up.
Barter system requires double coincidence of wants.
- True
- False
Answer: True
Both parties must desire exactly what the other has to offer.