Test: Poverty, Planning, Finance And Economic / Social Development - 1 (2019 - 2016)


30 Questions MCQ Test UPSC Topic Wise Previous Year Questions | Test: Poverty, Planning, Finance And Economic / Social Development - 1 (2019 - 2016)


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QUESTION: 1

The money multiplier in an economy increases with which one of the following?

[2019]

Solution:
  • Money Multiplier directly improves with cut in legal reserve ratios (SLR, CRR: so A and D are wrong)
  • Money Multiplier indirectly improves as economy develops, consumption/loan demand increases, banking penetration improves etc.
QUESTION: 2

Which one of the following is not the most likely measure the Government/RBI takes to stop the slide of Indian rupee?

[2019]

Solution:

To control rupee weakening,

  • A: will help by reducing the Current account deficit.
  • B: will help by reducing the demand of dollars in loan-repayment.
  • C: will help by increasing the inflow of dollars and other currencies.
  • D: will backfire, because rupee currency supply will increase without corresponding increase in the supply of dollars and as a result: dollar will strengthen, Indian Rupee will weaken further.
QUESTION: 3

Considering the following statements: 
1. Purchasing Power Parity (PPP) exchange rates are calculated by the prices of the same basket of goods and services in different countries.
2. In terms of PPP dollars, India is the sixth largest economy in the world.
Which of the statements given above is/ are correct?

[2019]

Solution:
  • PPP: Hypothetical concept that tries to compare two currencies’ exchange rate through their  purchasing power in respective countries. So, #1 is right.
  • 2014-April, Economic Times: India displaces Japan to become third-largest world economy in terms of PPP: World Bank. So #2 is wrong, we are left with answer A: 1 only.
QUESTION: 4

Which of the following statements is/are correct regarding the Maternity Benefit (Amendment) Act, 2017?
1. Pregnant women are entitled for three months predelivery and three months post-delivery paid leave
2. Enterprises with creches must allow the mother minimum six creche visits daily
3. Women with two children get reduced en titlements.

Select the correct answer using the code given below

[2019]

Solution:

As per the bare act:

  • In case of a woman who has two or more children, the maternity benefit will continue to be 12 weeks. If less than two children then she’ll get 26 weeks paid leave.
  • Every establishment with 50 or more employees to provide crèche facilities within a prescribed distance.
    The woman will be allowed four visits to the crèche in a day. So #2 is wrong. We are left with Answer C: only 3.
QUESTION: 5

With reference to India’s Five Year Plans, which of the following statements is/are correct?
1. From the Second Five-Year Plan, there was a determined thrust towards substitution of basic and capital good industries.
2. The Fourth Five-Year Plan adopted the objective of correcting the earlier trend of increased concentration of wealth and economic power.
3. In the Fifth Five-Year Plan, for the first time, the financial sector was included as an integral part of the Plan.

Select the correct answer using the code given below

[2019]

Solution:
  • 2nd FYP: rapid industrialization with particular emphasis on the development of basic and heavy industries so Statement1 is correct. This eliminates B and C. The correct answer could be A or D. In both these options, second statement is common so we should accept statement #2 to be correct without checking its validity.
  • 5th FYP: Fifth Plan (1974-79) was formulated against the backdrop of severe inflationary pressures. objectives of the plan were to achieve self-reliance and adopt measures for raising the consumption standard of people living below the poverty line. This Plan also gave high priority to bring inflation under control and to achieve stability in the economic situation. It targeted an annual growth rate of 5.5 percent in the national income. There is no mention of Financial Sector here, so #3 is wrong. We are left with Answer A: only 1 and 2.
QUESTION: 6

In a given year in India, official poverty lines are higher in some states than in other because

[2019]

Solution:
  • Page 19, Asian Development Bank documen t on Understanding poverty in India.
  • Poverty lines are estimated using th e origina l statespecific poverty lines identified by the Expert Group and updating them to 2004–2005 prices using the Consumer Price Index of Agricultural Laborers (CPIAL) for rural poverty lines and Consumer Price Index for Industrial Workers (CPIIW) for urban poverty lines.
  • So, B: price levels is the most appropriate choice.
QUESTION: 7

Atal innovation mission is set up under the

[2019]

Solution:

The Atal Innovation Mission (AIM) is a flagship initiative of the Prime Minister, set up by NITI Aayog to promote innovation and entrepreneurship across the length and breadth of the country.

QUESTION: 8

Increase in absolute and per capita real GNP do not connote a higher level of economic development, if

[2018]

Solution:

Economic development includes not only economic growth but also various other economic changes that improve the quality of life or standard of living of people in a country. If with economic growth, a country experiences various economic changes such as reduction in poverty and unemployment, reduction in income and wealth inequality, increase in literacy rate, improvement in health and hygiene, etc, that improve the quality of life then that is economic development.

QUESTION: 9

If a commodity is provided free to the public by the Government, then:

[2018]

Solution:

From the finite money available, Government could build a street light or a water tap. So, opportunity cost is involved in pursuing either one of the activity. Experts were divided over C or D-some interpreting that opportunity cost is borne by the Decision Maker, while others saying opportunity cost is borne by the person who eventually pays for it. UPSC has kept 'C' as the official answer.

QUESTION: 10

Consider the following statements: 
1. The Reserve Bank of India manages and services Government of India Securities but not any State Government Securities.
2. Treasury bills are issued by the Government of India and there are no treasury bills issued by the State Governments.
3. Treasury bills offer are issued at a discount from the par value.

Which of the statements given above is/are correct?

[2018]

Solution:
  • RBI is public debt manager for both state and union Governments, so #1 is wrong.
  • According to Dept of Economic Affairs, Short-term debt of the Central Government on residual maturity basis includes 14-day intermediate treasury bills, regular treasury bills, dated securities maturing in the ensuing one year and external debt with remaining maturity of less than one year.
  • Short-term debt of State Governments comprises internal debt that includes market loans maturing within next one year, and repayment of loans to Centre. Therefore, #2 is right.
  • T-bills are sold at discount and re-purchased at par value (face value). So, #3 is right.
QUESTION: 11

What is the purpose of Vidyanjali Yojana'?
1. To enable the famous foreign educational institutions to open their campuses in India.
2. To increase the quality of education provided in government schools by taking help from the private sector and the community.
3. To encourage voluntary monetary contributions from private individuals and organizations so as to improve the infrastructure facilities for primary and secondary schools.

Select the correct answer using the code given below:

[2017]

Solution:
  • Indian express June 2016: HRD Ministry has launched an initiative called 'Vidyanjali' to encourage youngsters to volunteer their services at any neighborhood government school. So accordingly "A" is the most appropriate choice.
  • What about statement "3"? While the mygov.in portal guidelines mention that Vidyanjali will cover initiatives under CSR, PPP, PSU. But mobilization of voluntary monetary contribution is not the primary and explicit 'purpose' of the scheme.
  • And the scheme is targeted at primary (Class 1 to 5) and upper primary classes (Class 6 to 8) so 'secondary schools' infrastructure facilities' are beyond its scope of work. HRD ministry's other schemes specifically count class 9 onwards as 'secondary education'
    Hence 3 is wrong. Therefore, Answer is "A".
QUESTION: 12

Which of the following are the objectives of 'National Nutrition Mission'?
1. To create awareness relating to malnutrition among pregnant women and lactating mothers.
2. To reduce the incidence of anemia among young children, adolescent girls and women.
3. To promote the consumption of millets, coarse cereals and unpolished rice.
4. To promote the consumption of poultry eggs.

Select the correct answer using the code given below:

[2017]

Solution:

While this mission will certainly increase consumption of millets, coarse cereals and eggs once people become aware of their nutritional benefits, but promoting their 'consumption' is not the explicit objective of this mission.
Explicitly stated objectives are only 1 and 2. So, experts were divided between A and B and C- because in the 2016's UN-REDD+ question, UPSC official even kept 'indirect benefit' of poverty removal as one of the objective.
But in official answer key of 2017, they have gone only by literal interpretation of explicitly mentioned 'direct benefits, and they chose 'A' as the official answer.

QUESTION: 13

With reference to 'National Investment and Infrastructure Fund', which of the following statements is/are correct?
1. It is an organ of NITI Aayog.
2. It has a corpus of ₹ 4, 00,000 crore at present.

Select the correct answer using the code given below:

[2017]

Solution:

NIIF is under Department of Economic Affairs. So first statement is wrong. It was setup in Budget 2015, with Rs.40k crores, but even if counting the recent allotments till Budget 2017, the 4 lakh amount is unrealistic. So, second statement is also wrong.

QUESTION: 14

What is the aim of the programme 'Unnat Bharat Abhiyan'?

[2017]

Solution:

Answer is "b" as per the Press Information Bureau.

QUESTION: 15

Consider the following statements:
1. Tax revenue as a per cent of GDP of India has steadily increased in the last decade.
2. Fiscal deficit as a per cent of GDP of India has steadily increased in the last decade.

Which of the statements given above is/are correct?

[2017]

Solution:

From the official Economic Survey 2014-15, we get following data

If we go only by the strict interpretation of above graph then answer should be "D"

QUESTION: 16

With reference to the 'Prohibition of Benami Property Transactions Act, 1988 (PBPT Act)', consider the following statements:
1. A property transaction is not treated as a benami transaction if the owner of the property is not aware of the transaction.
2. Properties held benami are liable for confiscation by the Government.
3. The Act provides for three author ities for investigations but does not provide for any appellate mechanism.

Which of the statements given above is/are correct?

[2017]

Solution:

Act provides is an appellate tribunal, and they're required to finish case within one year. So #3 is wrong, by elimination, we are left with A and B. So, B is most appropriate because IT dept (=therefore Government) can seize the benami properties.

QUESTION: 17

What is/are the most likely advantages of implementing 'Goods and Services Tax (GST)'?
1. It will replace multiple taxes collected by multiple authorities and will thus create a single market in India.
2. It will drastically reduce the 'Current Account Deficit' of India and will enable it to increase its foreign exchange reserves.
3. It will enormously increase the growth and size of economy of India and will enable it to overtake China in the near future.

Select the correct answer using the code given below:

[2017]

Solution:

Exports will become ZERO RATED under GST, so statements 2 and 3 would have been correct If examiner had used moderate words "GST will help". But he has used 'extreme' words. GST is unlikely to 'drastically' reduce CAD Because of crude oil import and OPEC cartel that manipulates its prices. Similarly, GST is unlikely to enormously increase size of oureconomy (IMF projection ~1-1.5% addition in growth rate.) and we can't overtake China in near future, because unlike China we are keeping our currency undervalued against dollar. Hence statement 2 and 3 are wrong. We are left with Answer A.

QUESTION: 18

Who among the following can join the National Pension System (NPS)?

[2017]

Solution:

NPS was compulsory for new central govt recruits (except armed forces) WEF 1/1/2004. so "D" is wrong.
Any Indian between 18 to 55 can join NPS. So "B" is wrong. NRIs are allowed to open NPS account as per PFRDA norms.
So we are left with answer "C".

QUESTION: 19

What is the purpose of setting up of Small Finance Banks (SFBs) in India?
1. To supply credit to small business units
2. To supply credit to small and marginal farmers
3. To encourage young entrepreneurs to set up business particularly in rural areas.
Select the correct answer using the code given below:

[2017]

Solution:

While directly or indirectly all three will be encouraged because of Small Finance banks. But when RBI invited applications, the specific purpose were 1 and 2 only.

QUESTION: 20

Which of the following statements is/are correct regarding the Monetary Policy Committee (MPC)?
1. It decides the RBI's benchmark interest rates.
2. It is a 12-member body including the Governor of RBI and is reconstituted every year.
3. It functions under the chairmanship of the Union Finance Minister.

Select the correct answer using the code given below:

[2017]

Solution:

MPC has 6 members, not 12; and it's headed by RBI governor and not Finance Minister. So statement 2 and 3 are wrong, hence by elimination, we reach answer (A) only 1 correct.

QUESTION: 21

Which of the following is a most likely consequence of implementing the 'Unified Payments Interface (UPI)'?

[2017]

Solution:

"A" is the most appropriate choice. Mobile wallets will not be necessary, because your mobile number is directly linked with the bank account using bank's 'customized app' which is built on the UPI platform.

QUESTION: 22

Consider the following statements:
1. National Payments Corporation of India (NPCI) helps in promoting the financial inclusion in the country.
2. NPCI has launched RuPay, a card payment scheme.

Which of the statements given above is/are correct?

[2017]

Solution:

NPCI is a not-for-profit company formed by various banks, with primary objective of providing cost-effective payment solutions to the banks. NPCI's solutions such as IMPS, BHIM, RuPay, AEPS etc. have indeed helped in financial inclusion. So first is correct. And second is correct- NPCI launched Rupay card in 2012, as 7th payment gateway in the world.

QUESTION: 23

‘Mission Indradhanush’ launched by the Government of India pertains to

[2016]

Solution:

(i) The Government of India launched Mission Indradhanush in December 2014 with the ultimate goal to ensure that all children under the age of two years and pregnant women are fully immunized with all available vaccines.
(ii) This mission aims to achieve 100% vaccination of children and pregnant women by 2020.

QUESTION: 24

Regarding DigiLocker, sometimes seen in the news, which of the following statements is/are correct?
1. It is a digital locker system offered by the Government under Digital India Programme.
2. It allows you to access your e-documents irrespective of your physical location.

Select the correct answer using the code given below.

[2016]

Solution:

DigiLocker is a “digital locker” service launched by the Government of India in February 2015 to provide a secure dedicated personal electronic space for storing the documents of resident Indian citizens.

QUESTION: 25

‘SWAYAM’, an initiative of the Government of India, aims at

[2016]

Solution:

SWAYAM or Study Webs of Active–Learning for Young Aspiring Minds programme of Ministry of Human Resource Development, Government of India. Professors of centrally funded institutions like IITs, IIMs, central universities will offer online courses to citizens of India. All courses would be offered free of cost under this.

QUESTION: 26

What is/are the purpose/purposes of ‘District Mineral Foundations’ in India?
1. Promoting mineral exploration activities in mineralrich districts
2. Protecting the interests of the persons affected by mining operations
3. Authorizing State Governments to issue licences for mineral exploration

Select the correct answer using the code given below.

[2016]

Solution:

District Mineral Foundation (DMF) is a trust set up as a non-profit body, in those districts affected by the mining works, to work for the interest and benefit of persons and areas affected by mining related operations. It is funded through the contributions from miners. Its manner of operation comes under the jurisdiction of the relevant State Government.

QUESTION: 27

Which one of the following is a purpose of ‘UDAY’, a scheme of the Government?

[2016]

Solution:

Ujwal DISCOM Assurance Yojana (UDAY) is the financial turnaround and revival package for electricity distribution companies of India (DISCOMs) initiated by the Government of India with the intent to find a permanent solution to the financial mess that the power distribution is in.

QUESTION: 28

Pradhan Mantri MUDRA Yojana is aimed at

[2016]

Solution:

Pradhan Mantri Mudra Yojana under the Micro Units Development and Refinance Agency (MUDRA) Bank is a new institution being set up by Government of India for development and refinancing activities relating to micro units.
It was announced by the Finance Minister while presenting the Union Budget for FY 2016. The purpose of MUDRA is to provide funding to the non corporate small business sector.

QUESTION: 29

With reference to ‘Stand up India scheme’, which of the following statement is/are correct?
1. Its purpose is to promote entrepreneurship among SC/ST and women entrepreneurs.
2. It provides for refinance through SIDBI.

Select the correct answer using the code given below.

[2016]

Solution:

(i) Prime Minister launched the ‘Stand up India Scheme’ aimed at promoting entrepreneurship among Scheduled Castes/Scheduled Tribes and women by giving loans in the range of ₹10 lakh to ₹1 crore for setting up a new enterprise. There would be a ₹10,000 crore refinance window through Small Industries Development Bank of India (SIDBI) and the National Credit Guarantee Trustee Company Ltd (NCGTC) will create a corpus of ₹5,000 crore.
(ii) Both statements are correct as per : Press Information Bureau (PIB) Government of India Ministry of Finance/03-April-2016.

QUESTION: 30

Regarding ‘Atal Pension Yojana’, which of the following statements is/are correct?
1. It is a minimum guaranteed pension scheme mainly targeted at unorganized sector workers.
2. Only one member of a family can join the scheme.
3. Same amount of pension is guaranteed for the spouse for life after subscriber’s death.

Select the correct answer using the code given below.

[2016]

Solution:

There is no restriction as such that only one member of a family can join the scheme.