Crash Course Test- 1 - UPSC MCQ

At present, the 10-year bond yield is trading around 6 per cent, as the yield curve is steep over five years. The risk premium demanded by investors to buy 10-year over 5-year has increased to 90 basis points. In the past, RBI has been doing open market operations (OMOs) to bring down the long end of the yield lower.

The Ring of Fire, also referred to as the Circum-Pacific Belt, is a path along the Pacific Ocean characterized by active volcanoes and frequent earthquakes. The majority of Earth's volcanoes and earthquakes take place along the Ring of Fire.

The correct answer is D. Sources of information about the interior include both direct and indirect sources. The direct sources include rock materials and molten magma from volcanic eruptions. The indirect sources include seismic activity, meteors arriving at earth, magnetic field and gravity. For instance, seismic activity help in identifying the different layers where as the sources like magnetic field and gravity helps in determining the presence of Iron and also factors like density and mass.
 

The Monetary Policy Committee (MPC) of the Reserve Bank of India is expected to keep its policy stance accommodative when it announces the decisions of the panel on Thursday. A majority of the respondents polled by Mint, however, expect RBI to do a total of 50 basis points rate cut before the end of the financial year.

The correct option is C.
The government had in 2014 constituted a committee under Professor BN Goldar to devise a PPI after the Reserve Bank of India began considering consumer price inflation as a better gauge of inflation than WPI.
The Producer Price Index (PPI) measures the average change in prices U.S. producers receive for the sale of their products. Since tariffs and taxes are not retained by producers as revenue, they are explicitly excluded from the PPI.

The correct answer is D as all the statements given  s can be considered as evidence(s) to support the theory of “Continental Drift

Statement Analysis:

• Lapolith: This is defined as a saucer-shaped intrusive body formed by the solidification of lava within the earth's crust.
• Sills: These are horizontal layers of intrusive igneous rocks that form between existing rock layers.
• Phacolith: This refers to a wavy mass of intrusive rocks, typically located at the base of synclines or atop anticlines.

All three statements are correct:

• The description of a Lapolith accurately reflects its characteristics.
• Sills are indeed horizontal deposits and are correctly described.
• The explanation of a Phacolith as a wavy mass of intrusive rock in the specified locations is also true.

Thus, the correct conclusion is that all statements are accurate.

Igneous rocks form when magma (molten rock) cools and crystallizes, either at volcanoes on the surface of the Earth or while the melted rock is still inside the crust. All magma develops underground, in the lower crust or upper mantle, because of the intense heat there.
Metamorphic rocks form from heat and pressure changing the original or parent rock into a completely new rock.
Lithification, complex process whereby freshly deposited loose grains of sediment are converted into rock.

The correct option is B.
 As statement 2 is wrong. Primary waves (P-waves) are compressional waves that are longitudinal in nature. P-waves are pressure waves that travel faster than other waves through the earth to arrive at seismograph stations first, hence the name "Primary". These waves can travel through any type of material, including fluids, and can travel nearly 1.7 times faster than the S-waves. In air, they take the form of sound waves, hence they travel at the speed of sound. Typical speeds are 330 m/s in air, 1450 m/s in water and about 5000 m/s in granite.

Gross Domestic Product (GDP) estimation includes various components to measure the economic activity of a country. One such component is:

• Residential Construction: This includes the building of new homes and is a part of GDP as it reflects economic activity within the construction industry.

However, certain financial activities are not included in GDP:

• Rise in SENSEX: Changes in stock market indices like SENSEX do not directly reflect production or economic activity and are thus excluded from GDP calculations.
• Government Bonds: Trading of government bonds is a financial transaction and does not represent the production of goods or services.

Therefore, Correct Answer - Option A

Domestic - Systemically Important Banks (D-SIBs) are a crucial aspect of the banking system, as they are deemed to have a significant impact on the economy. Here's what you need to know about them:

• The Reserve Bank of India (RBI) is responsible for identifying these banks based on specific criteria.
• Banks classified under bucket 3 must maintain a minimum of 0.6% of their Risk Weighted Assets (RWA) in Common Equity Tier 1 (CET1) capital.

Both statements regarding D-SIBs are accurate:

• The RBI does identify these banks.
• Banks in bucket 3 are indeed required to hold 0.6% of RWA in CET1 capital.

Thus, both statements are correct.

- Statement 1: Incorrect. Earthquakes originate in the lithosphere, not the asthenosphere. The lithosphere consists of the Earth's crust and the uppermost part of the mantle.
- Statement 2: Incorrect. While body waves (P-waves and S-waves) do travel faster and arrive first, surface waves (Love waves and Rayleigh waves) are typically more damaging due to their high amplitude and longer duration.
- Statement 3: Correct. The inability of S-waves to travel through the outer core indicates it is liquid.
- Statement 4: Correct. P-waves are longitudinal, while S-waves are transverse.

The liquidity crisis in NBFCs can be attributed to several factors:

• Short-term liabilities: NBFCs often face an asset-liability mismatch, where they borrow short-term but lend long-term.
• Interconnectedness: Many NBFCs are interconnected, which means financial issues in one can quickly spread to others.
• Long-term asset exposure: A significant portion of their investments are in long-term assets, which can be difficult to convert to cash quickly if needed.

These factors combined contribute to the liquidity challenges they face.

The correct option is D.

• Household Investment is not a standard term typically used as a component of GDP in India.
• GDP is generally calculated based on components such as Private Final Consumption Expenditure, Gross Fixed Capital Formation, Government Expenditure, and Net Exports.
• Investments by households are included under broader categories like Gross Fixed Capital Formation

all other economic variables which have time dimension, i.e., whose magnitude can be measured over a period of time are called flow variables. ... Likewise, investment (i.e., addition to the stock of capital) is a flow as it pertains to a period of time.

The correct option is A.

1. The Reserve Bank manages public debt on behalf of the Central and the State Governments. It involves issue of new rupee loans, payment of interest and repayment of these loans and other operational matters such as debt certificates and their registration.
2. The general superintendence and direction of the RBI is entrusted with the 21-member central board of directors: the governor; four deputy governors; two finance ministry representatives (usually the Economic Affairs Secretary and the Financial Services Secretary).
3. "The Central Government may from time to time give such directions to the Bank as it may, after consultation with the Governor of the Bank, consider necessary in the public interest," says Section 7(1) of the RBI Act, 1934.

• Jovian planets, or gas giants, were formed far from the parent star, where it was cool enough for gases to condense.
• Terrestrial planets formed closer to the star, where it was too warm for gases, so they are rocky and smaller.
• Terrestrial planets are generally smaller compared to Jovian planets.
• Therefore, both statements given are incorrect.

Hence, the correct answer - Option D

Alfred Wegener's Continental Drift Theory explains how continents have moved over geological time. Here are the key points regarding the statements about this theory:

• Pangea: Wegener named the super-continent Pangea, which translates to "all Earth". This statement is correct.
• Continental Division: After existing as Pangea, the super-continent did not break into three large masses. Instead, it split into two main landmasses: Laurasia in the northern hemisphere and Gondwanaland in the southern hemisphere. The term Panthalassa refers to the vast ocean surrounding these continents, not a separate landmass.

To summarise:

• Statement 1 is correct.
• Statement 2 is incorrect as it misrepresents the division of Pangea.

Statement 1 is incorrect as the continental crust is actually less dense than the oceanic crust.
Statement 2 is incorrect because the continental crust is primarily granitic in composition, not basaltic. Basalt is characteristic of the oceanic crust.
Statement 3 is correct; during tectonic collisions, the denser oceanic crust indeed subducts beneath the less dense continental crust.

Therefore, Correct Answer - Option C

The correct answer is D as neither 1 nor 2 is a correct statement both are false regarding the convectional theory.

(1) The convectional current theory are generated due to radioactive elements causing thermal differences in the mantle portion.

(2) Holmes argued that there exists a system of such currents in the entire mantle portion. This was an attempt to provide an explanation to the issue of force, on the basis of which contemporary scientists discarded the continental drift theory.

When discussing the concept of sea floor spreading, several key factors are considered:

• Volcanic activity occurs along mid-ocean ridges, contributing to the formation of new oceanic crust.
• Rocks on the ocean floor show magnetic stripes that reveal normal and reverse magnetic fields, indicating periods of magnetic reversal.
• The age of rocks can be measured, providing insights into the rate of sea floor spreading.

However, one aspect often overlooked is the distribution of fossils across different continents. While this can provide evidence for continental drift, it is not directly related to the mechanisms of sea floor spreading.

Monetary policy transmission has faced challenges recently. This has led to concerns about its effectiveness in influencing the economy.

The Reserve Bank of India (RBI) has taken steps to enhance this transmission through:

• Introducing external benchmarking of interest rates. This means that interest rates are now linked to external measures, making them more responsive to economic changes.
• Improving transparency and predictability in how interest rates are set.

These measures aim to ensure that changes in monetary policy are reflected more quickly and effectively in the economy. By using external benchmarks, the RBI hopes to create a clearer connection between its policy decisions and the rates consumers and businesses pay on loans.

In summary, both statements regarding monetary policy transmission and RBI's initiatives are accurate, indicating a recognition of the challenges and a proactive approach to address them.

WHO calculates WPI.

WPI basket does not cover services. In India WPI is also known as the headline inflation rate . In India, Office of Economic Advisor (OEA), Department of Industrial Policy and Promotion, Ministry of Commerce and Industry calculates the WPI.1

The correct option is D.
India’s nominal GDP is inclining as in the US dollar.
GDP Growth Rate in India is expected to be 3.40 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. ... In the long-term, the India GDP Growth Rate is projected to trend around 2.20 percent in 2021 and 1.00 percent in 2022, according to our econometric models.

The correct answer is A: Increased Money supply.

Cost-push inflation occurs when the cost of production increases, leading to higher prices. This can be caused by rising wages (C), increased rates of GST (B), and disruptions in supply due to a natural disaster (D).

However, increased money supply (A) is typically associated with demand-pull inflation, which happens when demand for goods and services exceeds supply, driving up prices. Therefore, it is not a cost-push factor.

The correct option is Option D.
A convergent boundary, or destructive boundary, is where two plates are moving towards each other and colliding. The pressure and friction is great enough at these boundaries that the material in the Earth's mantle can melt, and both earthquakes and volcanoes happen nearby.
A tectonic boundary where two plates are moving away from each other and new crust forms from magma that rises to the Earth's surface between the two plates. The middle of the Red Sea and the mid-ocean ridge (running the length of the Atlantic Ocean) are divergent plate boundaries.
The Ring of Fire, also referred to as the Circum-Pacific Belt, is a path along the Pacific Ocean characterized by active volcanoes and frequent earthquakes. The majority of Earth’s volcanoes and earthquakes take place along the Ring of Fire.
 

• Sandstone does not transform into Schist. It typically becomes Quartzite.
• Limestone metamorphoses into Marble.
• Granite transforms into Gneiss.
• Shale changes into Slate.

Therefore, Correct Answer- Option C

1. Statement 1 is incorrect – The continental crust has a lower density (~2.7 g/cm³) compared to the oceanic crust (~3.0 g/cm³). The oceanic crust is denser because it is primarily composed of basalt, whereas the continental crust is mostly granite, which is less dense.

2. Statement 2 is incorrect – The Gutenberg Discontinuity exists between the mantle and the outer core, not between the crust and the mantle. The boundary between the crust and the mantle is called the Mohorovičić Discontinuity (Moho).

Thus, neither of the statements is correct. Hence, Option D is the right answer

1. Tsunamis are only generated by undersea earthquakes and volcanic eruptions.

   • This statement is incorrect. While tsunamis are commonly generated by undersea earthquakes and volcanic eruptions, they can also be caused by other events such as underwater landslides and meteorite impacts.

2. As it approaches the shore, its velocity increases.

   • This statement is incorrect. As a tsunami approaches the shore, its velocity actually decreases due to the shallowing of the water. However, the wave height increases as the wave energy is compressed.

3. The 2004 Tsunami was caused by an undersea earthquake off the coast of Sumatra.

   • This statement is correct. The 2004 Indian Ocean Tsunami was indeed caused by a massive undersea earthquake off the coast of Sumatra.

Based on the analysis:

• Statement (1) is incorrect.
• Statement (2) is incorrect.
• Statement (3) is correct.

Thus, the correct answer is:

Statement (3) only

• "Destructive plate boundary is one in which continuous upwelling of molten material i.e. lava takes place."
  This statement is incorrect. A destructive plate boundary (also called a convergent boundary) is where one tectonic plate is forced under another (subduction), leading to the destruction of the oceanic crust. Upwelling of magma typically occurs at constructive (divergent) boundaries, not destructive ones.

• "Divergent plate boundary is one which two plates slide past one another thus neither creating nor destroying continental landmass."
  This statement is incorrect. A divergent plate boundary is where two plates move apart, leading to the formation of new crust (e.g., mid-ocean ridges). The description given in the statement actually matches a transform boundary, not a divergent one.

• "Convergent plate boundary is one in which one plate overrides the other plate."
  This statement is correct. At a convergent boundary, one plate is forced under another (subduction), which can lead to the formation of mountain ranges, trenches, and volcanic activity.

Therefore, Correct Answer - Option C