Test: Poverty, Planning, Finance And Economic / Social Development - 2 (2016 - 2011)


30 Questions MCQ Test UPSC Topic Wise Previous Year Questions | Test: Poverty, Planning, Finance And Economic / Social Development - 2 (2016 - 2011)


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QUESTION: 1

With reference to ‘Financial Stability and Development Council’, consider the following statements:
1. It is an organ of NITI Aayog.
2. It is headed by the Union Finance Minister.
3. It monitors macroprudential supervision of the economy.

Which of the statements given above is/are correct?

[2016]

Solution:

(i) Financial Stability and Development Council is an apex-level body constituted by the government of India. The idea to create such a super regulatory body was first mooted by the Raghuram Rajan Committee in 2008. Finally in 2010, the then Finance Minister of India, Pranab Mukherjee, decided to set up such an autonomous body dealing with macro prudential and financial regularities in the entire financial sector of India.
(ii) It falls under Dep. Of economic affairs and FM is the chairman. So, 1 is wrong and 2 is right. By elimination, we are left with answer “c”.

QUESTION: 2

The Government of India has established NITI Aayog to replace the

[2015]

Solution:

The Government of India has established NITI Aayog to replace the Planning Commission. The Union Government of India announced formation of NITI Aayog on 1 January 2015 and the first meeting of NITI Aayog was held on 8 February 2015.

QUESTION: 3

Convertibility of rupee implies

[2015]

Solution:

Convertibility of rupee implies freely permitting the conversion of rupee to other currencies and vice versa. Currency Convertibility is the ease with which a country's currency can be converted into gold or another currency.

QUESTION: 4

With reference to the Fourteenth Finance Commission, which of the following statements is/ are correct?
1. It has increased the share of States in the central divisible pool from 32 percent to 42 percent.
2. It has made recommendations concerning sectors pecific grants.

Select the correct answer using the code given below.

[2015]

Solution:

Union Government accepted the 14 th Finance Commission's recommendation to devolve an unprecedented 42 per cent of the divisible pool to states during 20015-16 to 2019-20, against 32 per cent suggested by the previous commission.

QUESTION: 5

'Pradhan Mantri Jan-Dhan Yojana' has been launched for

[2015]

Solution:

Pradhan Mantri Jan-Dhan Yojana (PMJDY) is National Mission for Financial Inclusion to ensure access to financial services, namely, Banking/ Savings & Deposit Accounts, Remittance, Credit, Insurance, Pension in an affordable manner.

QUESTION: 6

The Fair and Remunerative Price (FRP) of sugarcane is approved by the

[2015]

Solution:

The Fair and Remunerative Price (FRP) of sugarcane is approved by Cabinet Committee on Economic Affairs.

QUESTION: 7

There has been a persistent deficit budget year after year.
Which of the following actions can be taken by the government to reduce the deficit?
1. Reducing revenue expenditure
2. Introducing new welfare schemes
3. Rationalizing subsidies
4. Expanding industries

Select the correct answer using the code given below.

[2015]

Solution:

To reduce the budget deficit, the government has to increase income and reduce Expenditure. Introducing new welfare schemes and Expanding industries will increase the government expenditure.

QUESTION: 8

With reference to inflation in India, which of the following statements is correct?

[2015]

Solution:

When inflation becomes very high, the RBI decreases supply of money (to check inflation) by adopting tight monetary policy. Decreasing the money circulation decreases the demand of goods and services, which helps in controlling the inflation. It is mainly effective in case of demand pull inflation.

QUESTION: 9

With reference to 'Indian Ocean Rim Association for Regional Cooperation (IOR-ARC)', consider the following statements:
1. It was established very recently in response to incidents of piracy and accidents of oil spills.
2. It is an alliance meant for maritime security only.
Which of the statements given above is / are correct?

[2015]

Solution:

IOR-ARC is a regional cooperation initiative of the Indian Ocean Rim countries which  was established in Mauritius in March 1997 with the aim of promoting economic and technical cooperation. IOR-ARC is the only pan-Indian ocean grouping. It brings together countries from three continents having different sizes, economic strengths, and a wide diversity of languages, cultures. It aims to create a platform for trade, socio-economic and cultural cooperation in the Indian Ocean rim area, which constitutes a population of about two billion people. Presently it has 19 members- Australia, Bangladesh, India, Indonesia, Iran, Kenya, Malaysia, Madagascar, Mauritius, Mozambique, Oman, Seychelles, Singapore, South Africa, Sri Lanka, Tanzania, Thailand, UAE and Yemen.
Six priority areas were identified to take forward the cooperation under IOR-ARC:
(i) Maritime Safety and Security;
(ii) Trade and Investment Facilitation;
(iii) Fisheries Management;
(iv) Disaster Risk Reduction;
(v) Academic and S&T Cooperation; and
(vi) Tourism Promotion and Cultural Exchanges.

QUESTION: 10

What does venture capital mean?

[2014]

Solution:

Venture capital (VC) is a long term financial capital provided to early-stage, high-potential, growth startup companies or new companies.

QUESTION: 11

The sales tax you pay while purchasing a toothpaste is a

[2014]

Solution:

Taxes on toothpaste come under GST which is administered by State government.Sales tax is paid to sales tax authority in the state from where the goods are moved.

QUESTION: 12

With reference to Union Budget, which of the following is/are covered under Non-Plan Expenditure?
1. Defence expenditure
2. Interest payments
3. Salaries and pensions
4. Subsidies

Select the correct answer using the code given below.

[2014]

Solution:

Non-plan expenditure covers interest payments, subsidies (mainly on food and fertilisers), wage and salary payments to government employees, grants to States and Union Territories governments, pensions, police, economic services in various sectors, defence, loans to public enterprises, loans to States, Union Territories and foreign governments.

QUESTION: 13

If the interest rate is decreased in an economy, it will

[2014]

Solution:

When interest rates decreases then investment expenditure by businesses on capital goods like factories and equipment will increase in an economy.

QUESTION: 14

Economic growth in country X will necessarily have to occur if

[2013]

Solution:

A country’s economic growth is reflected through capital formation, which in turn encourages private enterprises in enhancing the growth of a country’s economy.

QUESTION: 15

Supply of money remaining the same when there is an increase in demand for money, there will be

[2013]

Solution:

Supply of money remaining the same when there is an increase in demand for money, there will be an increase in the rate of interest and vice-versa.

QUESTION: 16

Which one of the following is likely to be the most inflationary in its effect?

[2013]

Solution:

Extremely high rates of inflation are generally associated with high rates of money growth. It is often the result of financing large deficits by printing money.

QUESTION: 17

A rise in general level of prices may be caused by
1. an increase in the money supply
2. a decrease in the aggregate level of output
3. an increase in the effective demand

Select the correct answer using the codes given below.

[2013]

Solution:

General Price rise may be caused by an increase in the money supply as the real value of the money reduces. The higher aggregate price level will reduce the purchasing power subsequently reducing the consumer spending. Effective demand also increases when there is less purchasing power due to inflation.

QUESTION: 18

To obtain full benefits of demographic dividend, what should India do?

[2013]

Solution:

To reap the benefits of demographic dividend, skills have to be developed because a relatively larger portion of population fall under the category of productive labour force when there is a demographic dividend.

QUESTION: 19

Who among the following constitute the National Development Council?
1. The Prime Minister
2. The Chairman, Finance Commission
3. Ministers of the Union Cabinet
4. Chief Ministers of the States

Select the correct answer using the codes given below.

[2013]

Solution:

The National Development Council includes the Prime Minister, Union ministers, Chief ministers of all states, administrative heads of the Union Territories and members of the planning commission.

QUESTION: 20

Which of the following would include Foreign Direct Investment in India?
1. Subsidiaries of foreign companies in India
2. Majority foreign equity holding in Indian companies
3. Companies exclusively financed by foreign companies
4. Portfolio investment

Select the correct answer using the codes given below:

[2012]

Solution:

A Foreign direct investment (FDI ) involves establishing a direct business interest in a foreign country, such as buying or establishing a manufacturing business, while foreign Portfolio Investment (FPI) refers to investing in financial assets such as stocks or bords in a foreign country. Hence, FDI does not involve portfolio Investment.

QUESTION: 21

Which of the following measures would result in an increase in the money supply in the economy?
1. Purchase of government securities from the public by the Central Bank
2. Deposit of currency in commercial banks by the public
3. Borrowing by the government from the Central Bank
4. Sale of government securities to the public by the Central Bank

Select the correct answer using the codes given below:

[2012]

Solution:

1. Purchase of government securities from the public by the Central Bank
2. Borrowing by the government from the Central Bank

QUESTION: 22

Under which of the following circumstances may ‘capital gains’ arise?
1. When there is an increase in the sales of a product
2. When there is a natural increase in the value of the property owned
3. When you purchase a painting and there is a growth in its value due to increase in its popularity

Select the correct answer using the codes given below:

[2012]

Solution:

Capital gain is an increase in the value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price. The gain is the difference between a higher selling price and a lower purchase price. The increase in the sales of a product does not mean increase the selling price of the product.

QUESTION: 23

Consider the following specific stages of demographic transition associated with economic development :
1. Low birthrate with low death rate
2. High birthrate with high death rate
3. High birthrate with low death rate

Select the correct order of the above stages using the codes given below:

[2012]

Solution:

Demographic Transition is the transition from high birth and death rates to lower birth and death rates as a country or region develops from a pre-industrial to an industrialized economic System.

QUESTION: 24

Which of the following is /are among the noticeable features of the recommendations of the Thirteenth Finance Commission?
1. A design for the Goods and Services Tax, and a compensation package linked to adherence to the proposed design
2. A design for the creation of lakhs of jobs in the next ten years in consonance with India’s demographic dividend
3. Devolution of a specified share of central taxes to local bodies as grants

Select the correct answer using the codes given below:

[2012]

Solution:

The 13th finance commission has an elaborate design for the GST. Statement 1 is correct. Statement 2 is incorrect. Report basically discusses the improved implementation of the existing schemes. The third statement is correct. The report in its para 10.44 mentions: “Taking into account the demand of local bodies that they be allowed to benefit from the buoyancy of central taxes and the constitutional design of supplementing the resources of Panchayats and municipalities through grants-in-aid, we recommend that local bodies be transferred a percentage of the divisible pool of taxes cover and above the share of the states, as stipulated by us, after converting this share to grant-in-aid under Article 275.”

QUESTION: 25

The Multi-dimensional Poverty Index developed by Oxford Poverty and Human Development Initiative with UNDP support covers which of the following?
1. Deprivation of education, health, assets and services at household level
2. Purchasing power parity at national level
3. Extent of budget deficit and GDP growth rate at national level

Select the correct answer using the codes given below:

[2012]

Solution:

Deprivation of education, health, assets and services at household level

QUESTION: 26

How do District Rural Development Agencies (DRDAs) help in the reduction of rural poverty in India?
1. DRDAs act as Panchayati Raj Institutions in certain specified backward regions of the country.
2. DRDAs undertake area-specific scientific study of the causes of poverty and malnutrition and prepare detailed remedial measures.
3. DRDAs secure inter-sectoral and inter-departmental coordination and cooperation for effective implementation of anti-poverty programmes.
4. DRDAs watch over and ensure effective utilization of the funds intended for anti-poverty programmes.

Which of the statements given above is/are correct?

[2012]

Solution:

DRDA has traditionally been the principal organ at the district level to oversee the implementation of anti-poverty programmes of the Ministry of Rural Development. It does not acts as Panchayati Raj Institutions.

QUESTION: 27

The lowering of Bank Rate by the Reserve Bank of India leads to

[2011]

Solution:

Bank rate refers to the official interest rate at which RBI will provide loans to the banking system which includes commercial/cooperative banks, development banks etc. when RBI lowers the bank rate, the cost of borrowing for banks decreases and the credit volume gets increased leading to increase in money and more liquidity in the market.

QUESTION: 28

Economic growth is usually coupled with

[2011]

Solution:

Inflation and economic growth are parallel lines and can never meet. Inflation reduces the value of money and makes it difficult for the common people. Inflation and economic growth are incompatible because the former affects all sectors as indicated by CPI or Consumer Price Index.

QUESTION: 29

Why is the Government of India disinvesting its equity in the Central Public Sector Enterprises (CPSEs)?
1. The Government intends to use the revenue earned from the disinvestment mainly to pay back the external debt.
2. The Government no longer intends to retain the management control of the CPSEs

Which the correct statements given above is/are correct?

[2011]

Solution:

When we say “Mainly” the money is to be used to pay the external debt, it is not correct to say so. Government though “may intend” to retain the management control, but there are fiscal constraints, that induce the government to go for disinvestment. Both statements are NOT correct.

QUESTION: 30

Which of the following can aid in furthering the Government’s objective of inclusive growth ?
1. Promoting Self-Help Groups.
2. Promoting Micro Small and Medium Enterprises.
3. Implementing the Right to Education Act.

Select the correct answer using the codes given below:

[2011]

Solution:

The concept of the inclusive growth is based on both economic and social empowerment of ordinary and under privileged individuals. Thus all the statement are correct.