Kerala SET Paper 2 Mock Test - 1 (Commerce) - KTET MCQ

The correct answer is 3.5%.

Key PointsReal rate of interest:

The real rate of interest is the interest rate adjusted for inflation. It represents the rate at which the purchasing power of an investment increases. In other words, it is the rate of return on an investment after accounting for the impact of inflation.

The formula for calculating the real rate of interest is as follows:

Real rate of interest = Nominal rate of interest - Inflation rate

For example, if the nominal interest rate on a savings account is 4%, and the inflation rate is 2%, the real rate of interest would be:

Real rate of interest = 4% - 2% = 2%

This means that the investor is earning a real rate of return of 2% on their investment after accounting for inflation 

The real rate of interest is the nominal rate of interest minus the inflation rate.

Therefore, the real rate of interest in this scenario would be:

Real rate of interest = Nominal rate of interest - Inflation rate
Real rate of interest = 6.5% - 3.0%
Real rate of interest = 3.5%

So the real rate of interest in this scenario is 3.5%.

The correct option is the Demonetization drive of 2016.

Key Points As per the passage "The demonetization drive of 2016 acted as a catalyst, prompting a large segment of the population to pivot to digital transactions almost overnight."

(a) - (iii), (b) - (iv), (c) - (ii), (d) - (i) is correct.

• Treasury bills: Treasury bills are risk-free, as individuals are backed by the highest authority in the country, and have to be paid even during the economic crisis.
• Beta: Beta is used in the capital asset pricing model which describes the relationship between systematic risk and expected return for assets.
• Capital budgeting: The time value of money is important in capital budgeting decisions because it allows small-business owners to adjust cash flows for the passage of time.
• Working capital: Working capital is also called circulating capital or revolving capital i.e. the money which circulates in various forms of current assets in a continuous manner. The amount always keeps on circulating or revolving from cash to current assets and back again to cash. Thus, it is known as the Operating cycle. 

Road blocking advertisement refers to advertising a product on multiple TV channels at the same time.

Road Blocking Advertisement is the practice of placing an advertisement on each available media within a market, to appear at exactly (or as near as possible) the same time.

Road blocking is most often used as a means of building high reach levels within a short period of time.

Proactive planning involves designing a desired future and then inventing ways to create that future state. Not only is the future a preferred state, but the organization can actively control the outcome. Planners actively shape the future, rather than just trying to get ahead of events outside of their control.

The rate of consumer price inflation is 5.2% for the first half of the current fiscal year.

According to the passage, "It also raised its projection for consumer price inflation a bit to 5.2 percent for the first half of the current fiscal year."

The central bank extends the refinance facilities for the SIDBI  to help the MSMEs.

According to the passage, "The central bank also extended measures to improve credit flow to the economy, some of which were introduced last year to fight the pandemic. It extended its long-term repo operations (lending money to banks), extended refinance facilities for NABARD and SIDBI to help MSMEs."

The correct answer is an Unauthorized way to mine for cryptocurrency.

• Cryptojacking has become an increasingly popular way for fraudsters and criminals to extract money from their targets in the form of cryptocurrency.
• One widely publicized hack, the WannaCry worm hack, affected systems on several continents in May 2017.
• In this instance of cryptojacking, fraudsters encrypted victims' files and demanded cryptocurrency ransoms in the form of Bitcoin in order to decrypt them.

Important Points 

• Cryptojacking is a type of cyberattack in which a hacker co-opts a target's computing power to illicitly mine cryptocurrency on the hacker's behalf.
• Cryptojacking can target individual consumers, massive institutions, and even industrial control systems.
• Cryptojacking has become an increasingly popular way for fraudsters and criminals to extract money from their targets in the form of cryptocurrency.
• The lines between cryptojacking and the "legitimate" practice of browser mining are not always clear.

The correct answer is TATA Group.

Key Points

•  The philosophy of "Good Thoughts, Good Words, Good Deeds" is the motto of the Indian business house Tata Group. It is a Zoroastrian maxim that emphasizes the importance of positive thinking, speech, and action. The Tata Group has adopted this motto as a guiding principle for its business practices and its commitment to social responsibility.
• The Tata Group is one of the largest conglomerates in India. It was founded in 1868 by Jamsetji Tata, a Zoroastrian. Tata believed that businesses should not only make profits, but also contribute to society. He adopted the motto of "Good Thoughts, Good Words, Good Deeds" to reflect this belief.
• The Tata Group has a long history of social responsibility. It has donated billions of rupees to charitable causes, and it has set up several educational institutions and hospitals. The group has also been a pioneer in corporate social responsibility initiatives, such as the Tata Business Excellence Model (TBEM) and the Tata Sustainability Index (TSI).
• The Tata Group's commitment to "Good Thoughts, Good Words, Good Deeds" has made it a role model for other businesses in India. It is an example of how businesses can be profitable and socially responsible at the same time.

Hence, the correct answer is TATA Group

The first step in the Customer Experience Management Process is to develop ​customer experiences that lead to lasting relationships and referrals.

• Customer experience is defined as your customers’ perceptions – both conscious and subconscious – of their relationship with your brand resulting from all their interactions with your brand during the customer life cycle.
• Customer experience management is the practice of designing and reacting to customer interactions to meet or exceed customer expectations and, thus, increase customer satisfaction, loyalty, and advocacy.
• Customer experience management is about more than serving your customers.
• It’s about more than knowing where customers shop and what brand of dog food they buy.
• It's about knowing your customers so completely that you can create and deliver personalized experiences that will entice them to not only remain loyal to you but also to evangelize to others about you – and that’s the most valuable form of advertising there is.
• The crux of having a customer experience management process involved in business activity is to give customers such experiences that lead to lasting relationships and referrals.

The correct answer is 1 and 3 only.

Key Points

• GST Compensation:
  • According to the 101st Constitutional Amendment Act, 2016 –The Parliament shall, by law, on the recommendation of the Goods and Services Tax Council, provide for compensation to the states for the loss of revenue arising on account of implementation of the Goods and Services Tax (GST) for a period of five years. The Parliament enacted the Goods and Services Tax (Compensation to States) Act, 2017. Hence 1 statement is correct.
• The Preamble to the Act reads as follows:
  • The Parliament shall, by law, on the recommendation of the Goods and Services Tax Council, provide compensation to the states for the loss of revenue arising on account of implementation of the Goods and Services Tax (GST) for a period of five years.
  • The compensation is to be paid out of the non-lapsable GST Compensation Fund.
  • As per Section 10(1), the inflows to the Fund are from the GST Compensation Cess, levied under Section 8 of the Act and ―such other amounts as may be recommended by the Council.
  • There is no provision for any amount other than Cess to be credited, except based on the recommendations of the Council.
  • Section 10(2) provides that all compensation payable under Section 7 ―shall be paid out of the Fund. Thus, the centre is not obligated to provide compensation from the Consolidated Fund of India.  Hence, statement 2 is incorrect.
  • The compensation is provided assuming a 14% compound growth rate on the revenue of 2015-16 to the states. Hence, statement 3 is correct.

Non-programmed decisions are used for new, unique, unstructured and badly defined problems which are non-recurring in nature. The top-level of management makes these decisions. There is no pre-established policy to take non-programmed decisions. Therefore, in non-programmed decisions, conditions are highly uncertain because they deal with unusual problems. In this, situations are poorly structured and decisions being made are non-routine and complex.

Selling concept -

• One of the elements of marketing, along with the holistic concept, product concept, and production concept, among others, is the selling concept.
• Selling Concept is utilized for goods and services that consumers do not often purchase and for unintended goods like insurance plans. Such products are sold by selecting the strategy of locating the buyer segment and promoting the products based on the advantages offered by the same.
• The company's primary and ultimate goal is persuading the consumer to buy the product and to increase sales revenue and profits.
• The Selling Concept's primary goal and objective is to place a strong emphasis on selling the company's goods and services while ignoring or underestimating the needs of the market, as well as to increase sales and profits for the company rather than forming and maintaining relationships with customers.
• Examples of products that fall under the sale concept category include blood donations and insurance policies, where the marketer thinks their work is finished once the sale is made.
• The goal of selling is to increase product sales for the company through extensive marketing and promotional efforts. Whether they meet client wants or not is irrelevant. The sale concept is a particularly risky tactic since it is founded on the flimsy premise that the corporation should sell everything it is producing rather than satisfying customer needs.
• In this approach, the goal of management is to complete the sale; once they promote their product, they consider their work to be complete. As a result, the consumer would return rather than creating and building a long-term relationship with them.

Additional Information

• Societal marketing concept - The marketers need to incorporate ethics into their marketing practices.
• Marketing Concept- The offering of the organisation should be better than its competitors in terms of its creation, delivery and communication to the customer.
• Production Concept - Consumers prefer the products that are widely available and inexpensive.
• Product Concept - The consumer is attracted towards the features of a product in terms of its quality and performance.

Planning begins with the determination of objectives. It highlights the purposes for which various activities are to be undertaken. In fact, it makes objectives more clear and specific. Planning helps in focusing the attention of employees on the objectives or goals of the enterprise. Planning compels the manager to prepare a blueprint of the courses of action to be followed for the accomplishment of objectives. Therefore, planning brings order and rationality into the organization. Planning minimizes uncertainties. There are risks of various types due to uncertainties. Planning helps in reducing uncertainties of the future as it involves anticipation of future events. Although the future cannot be predicted with cent percent accuracy planning helps management to anticipate the future and prepare for risks by necessary provisions to meet the unexpected turn of events.

The correct answer is Both (A) and (R) are true, but (R) is not a correct explanation of (A).

Key Points Assertion (A) is true and Reason (R) is also true, but Reason (R) does not explain Assertion (A).

• Assertion (A) states that the EXIM policy is liberal, market-oriented, and favours global trade. This is true because the EXIM policy has been gradually liberalized over the years to promote free trade and economic growth. The EXIM policy now allows for a wide range of imports and exports, with few restrictions.
• Reason (R) states that GATT has played a significant role in the liberalization of the economy. This is also true. GATT is a multilateral trade agreement that aims to reduce tariffs and other trade barriers. India is a member of GATT, and the EXIM policy has been aligned with GATT principles.

However, Reason (R) does not explain Assertion (A). The EXIM policy is not liberal, market-oriented, and favourable to global trade simply because of GATT. There are other factors that have contributed to the liberalization of the EXIM policy, such as the government's desire to promote economic growth and attract foreign investment.

In conclusion, Assertion (A) is true and Reason (R) is also true, but Reason (R) does not explain Assertion (A)

The correct answer is Highly inelastic

Key Points

• This means that the demand for necessities (such as food, water, and shelter) does not change significantly, even if there is a change in their price.
• This is because these goods are essential for survival and are typically not optional purchases.
• Consumers will continue to purchase these goods even if their prices increase, although they may reduce their consumption of them slightly.
• On the other hand, the demand for luxury items is usually elastic, meaning that a change in their price will lead to a more significant change in the quantity demanded. 

Hence, the correct answer is Highly Inelastic.

As we know that,

Simple ranking: The Simple Ranking Method using Reference Profiles (or SRMP) is a Multi-Criteria Decision Aiding technique based on the outranking paradigm which allows to rank decision alternatives according to the preferences of a decision maker.

Paired comparison: Paired compariso is the rank comparison rating method is easy and understandable where ratings are to be used as criteria.

360-degree appraisal: Synergita’s holistic 360-degree feedback helps get performance & development feedback from peers, subordinates, superiors, cross-functional managers, customers and other internal & external stakeholders.

Graphic rating: Graphic rating evaluation lists the traits required for the job and asks the source to rate the individual on each attribute such as dependability and creativity. so used for Order of rating from best to worst.

The correct answer is An employee compares his or her job's input-outcomes ratio with that of relevant others and then takes steps to correct any inequity.

Key Points Equity Theory:

• The equity theory proposes that employees compare their job's input-outcomes ratio with that of relevant others and then take steps to correct any perceived inequity.
• The equity theory is a motivation theory that seeks to explain how individuals are motivated to maintain a balance between the inputs they bring to a job (e.g. effort, skill, experience) and the outcomes they receive from that job (e.g. salary, recognition, benefits).
• According to the theory, individuals compare their input-output ratio with that of others who are seen as relevant and use this comparison to evaluate the fairness of their job situation.
• If an employee perceives that their input-output ratio is lower than that of others in similar positions, they may feel under-rewarded and become demotivated. In contrast, if an employee perceives that their input-output ratio is higher than that of others in similar positions, they may feel over-rewarded and become complacent.
• To restore equity, the employee may take steps such as adjusting their inputs (e.g. reducing effort), seeking a change in outcomes (e.g. requesting a raise), or changing the comparison level (e.g. comparing themselves to a different group of employees).
• The equity theory highlights the importance of perceived fairness in the workplace and suggests that employees are motivated not just by the absolute level of rewards, but also by the perceived fairness of those rewards relative to others in similar positions.

Online marketing is associated with the distribution of goods and services electronically. Online marketing is one of the effective strategies used to build the reputation of a company as well as increase its exposure online. This can be done using a number of internet solutions and tools.

The correct answer is World Bank.

Key Points

• James D Wolfensohn who passed away in November 2020 was the former president World Bank.
• James D Wolfensohn was the President of the World Bank from June 1, 1995, to May 31, 2005.
• Under the presidency of James D Wolfensohn World Bank Group sharpened its focus on poverty reduction and redoubled its efforts to combat corruption, give voice to the poor, and magnify the impact of development investments.

​​Important Points

• World Bank founded in 1944 at Bretton Woods Conference is headquartered in Washington.
• At present, the World Bank has 189 member countries.
• President of the World Bank is David Malpass.
• The World Bank Group  consists of five institutions
  • International Bank for Reconstruction and Development(IBRD)
  • International Development Agency(IDA)
  • Multilateral Investment Guarantee Agency(MIGA)
  • International Centre for Settlement of Investment Disputes(ICSID)
  • International Finance Corporation(IFC)

Management skill - Executive needs have certain qualities or skills in order to carry out specific jobs in an organization, and these qualities or talents are referred to as management competencies.

Important PointsThe three fundamental categories of managerial talents, according to American social and organizational psychologist Robert Katz, are as follows: 

Technical Skills: 

• These abilities give the management the knowledge and capability to apply various approaches to accomplish their goals, as implied by the talents' names.
• Technical talents are not only relevant for machines, production tools, or other equipment; they are also necessary for boosting sales, designing various products and services, marketing the goods and services, and other tasks.

Perceptual\conceptual Skills: 

• Conceptual talents demonstrate a manager's understanding or capacity for more abstract thought.
• That implies that he can quickly diagnose various states and analyse the total through doing so.
• They are able to forecast the direction of the company or department as a whole in this way.
• For top managers, conceptual skills are essential. For mid-level managers, they are less important, and for first-level managers, they are not necessary.
• The significance of these talents will increase as we move up the administrative ladder.

Human Skills: 

• A manager's knowledge and interpersonal abilities are demonstrated through their human or interpersonal management skills.
• Working with people is one of the most important management responsibilities.
• There won't be a need for management or managers if there are no humans.

​Thus, Writing Skills is not a recognized key management skill.

In India, the second generation reform started from 1996 to 2007. During this period, 2 five year plans were included.

1. The second generation of economic reforms in the country gave special stress on fiscal reforms, financial reforms, structural reforms, labor law reforms, etc.
2. The second-generation reforms focused on the economic growth of the country by setting targets to achieve growth in foreign direct investment by giving liberty to foreign firms to set up corporations in India.
3. It aimed at exploiting the knowledge-based global economy to enhance advancement in science and technology in India.
4. A clean environment was also one of the aims to be achieved in second-generation reform.
5. At that time, the focus was more on economic growth, and no such measures were taken to control the population.

Thus, option 3 is the correct answer.

Key-Points

SaaS:

• SaaS is an abbreviation of Software-as-a-Service.
• Software-as-a-Service (SaaS) is a software licensing model that allows access to the software on a subscription basis using external servers.
• It is accessed through a web browser with users logging in to the system using a username and password.
• SaaS has many business applications like file sharing, email, calendars, customer retention management, and human resources.
• As the software does not live on the licensing company’s servers, there is less demand for the company to invest in new hardware.
• It is easy to implement, easy to update, and debug, and can be less costly since users pay for SaaS as they go instead of purchasing multiple software licenses for multiple computers.
• Churn rate, also known as attrition rate, is the rate at which customers stop doing business with an entity; it is a measure of the number of individuals or items moving out of a collective group over a period of time. 
• In SaaS, the average churn rate is around 5%, and a good churn rate is considered 3% or less.
• This average rate varies across different industries and businesses, so in reality, there is no such universal average churn rate. 
• It has a number of applications:
  • ​Auditing functions
  • Email services
  • Automating sign-up for products and services
  • Shared company calendars which can be used for scheduling events
  • Managing documents including file sharing and document collaboration.
• Types of software that have migrated to a SaaS model are often focused on enterprise-level services, such as human resources.
• These types of tasks are often collaborative in nature, requiring employees from various departments to share, edit, and publish material while not necessarily in the same office.

Therefore, in SaaS, the average churn rate is around 5%.

Sales and Goods Act was created from the sections of the Indian Contract Act 1872.

The Indian Contract Act codifies the way we enter into a contract, execute it and the way we implement its provisions. The act is divided into total 266 sections. Important sections among those are:

• Section 1 to 75 – General Provisions
• Section 76 to 123 – Sales of Goods.
• Section 124 to 147 – Indemnity and Guarantee
• Section 148 to 181 – Bailment and Pledges
• Section 182 to 238 – Agency
• Section 239 to 266 – Partnership

In 1930 and 1932 the government separated some sections from the Indian Contract Act and created separate acts to deal with them. These acts are Sale of Goods Act, 1930 and Indian Partnership Act, 1932.

The functions of RBI includes:

• ​Credit control: RBI controls the credit created by commercial banks in India, using quantitative and qualitative methods.
• Monetary Policy: Under the Reserve Bank of India, Act,1934 RBI is entrusted with the responsibility of conducting monetary policy.
• Issue of Currency Notes: The Reserve Bank is the nation's sole note issuing authority.

​Commercial banks perform the function of credit creation in an economy.  Therefore, the money that is created by commercial banks is known as credit money. This is achieved by the commercial banks in the form of purchasing securities and providing loans.

Thus, Creation of credit is not a function of Reserve Bank of India.

Walter's model is based on the following assumptions:

1. The firm finances all investment through retained earnings (debt or new equity is not issued).

2. The firm's internal rate of return (r) and its cost of capital (k) is constant.

3. All earnings are either distributed as dividend or reinvested internally immediately.

4. Initial earnings and dividends never change.

5. The firm has a very long or infinite life.

Customer touchpoints

• Customer touchpoints are any point of contact between a business and a customer, be it an email, call center, via a company website, etc.
• This doesn't have to be directly instigated by the business. For instance, advertisements or third-party review sites are a form of customer touchpoints.
• Customer touchpoints are where customers interact with your brand, product, service, etc.
• Developing an understanding of each touchpoint means that you can design better user and better customer experiences.
• This understanding can also be used to enhance user and customer journey mapping exercises.
• Five main touchpoints that reach consumers are the brand promise, brand story, innovation, purchase moment, and consumer experience.
• Regardless of the order, they reach the consumer; if the brand does not deliver a consistent message, the consumer will be confused and likely shut out that brand.

Therefore, refers to any direct or indirect interaction customers have with a brand, product, service, etc.

The correct answer is 1, 2 and 4 only.

Key Points

• The Consumer Protection Act, 2019:
  • The Consumer Protection Act, 2019 (CPA-2019), which has replaced the Consumer Protection Act, 1986, aims to be more holistic and stringent in protecting the interest of the consumers and to establish authorities for timely and effective administration and settlement of the consumers' disputes. To achieve the aforesaid purpose, the CPA-2019 establishes the following:
  • The Central Consumer Protection Authority (CCPA), referred to as the Central Authority. Hence, statement 1 is correct.
  • The Central Consumer Protection Council, at the national, state, and district levels, is referred to as the National, State, and District Commissions. Hence, statement 2 is correct.
  • The Consumer Disputes Redressal Commission, at the national, state, and district levels. Hence, statement 4 is correct.
  • The Consumer Mediation Cell, to be attached to each of the District Commissions and the State Commissions. Hence, statement 3 is incorrect.

Coercion- Coercion refers to the use of force or threats to make someone do something against their will.

Example: A threatens to hurt B if he doesn't give his son, C, a large sum of money. B believes the threat and gives C the money. This agreement is believed to be coerced.

Important Points Assertion: A contract made under coercion is voidable at the option of the party whose consent was so obtained.

• Under Section 19 of Indian Contract Act, 1872, if a contract is made under coercion, the party whose consent was obtained by coercion has the option to either affirm the contract or void it.
• In other words, the contract is voidable at the option of the coerced party.
• This means that the coerced party has the right to choose whether to continue with the contract or to cancel it.

Hence, Assertion is true.

Reason: Coercion renders contract void ab initio.

• A contract was void AB Initio, or "void from the beginning," as soon as it was made.
• Due to the fact that such a contract was never legitimate in the first place, it can never be declared invalid.
• The parties are returned to their original locations when a court determines an act to be void ab initio since the agreement essentially never happened and had no binding authority on any of the parties.
• A contract with a minor is an illustration of an AB Initio agreement that is void since the minor is an incompetent party to the contract.

Hence, Reason is incorrect as coercion is not void from beginning but is voidable on the consent of party involved.

Hence, Assertion (A) is True, but Reason (R) is False.