Poverty, Planning, Finance & Economic - Solved Questions (2011- 2015)

Question 1: With reference to the Fourteenth Finance Commission, which of the following statements is/ are correct?   [2015-I]
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 sector specific grants.
Select the correct answer using the code given below.
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Question 2: Convertibility of rupee implies    [2015-I]
(a) being able to convert rupee notes into gold
(b) allowing the value of rupee to be fixed by market forces
(c) freely permitting the conversion of rupee to other currencies and vice versa
(d) developing an international market for currencies in India

Question 3: The Government of India has established NITI Aayog to replace the    [2015-I]
(a) Human Rights Commission
(b) Finance Commission
(c) Law Commission
(d) Planning Commission

Question 4:  With reference to 'Indian Ocean Rim Association for Regional Cooperation (IOR-ARC)', consider the following statements:   [2015-I]
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?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Question 5: statements is correct? [2015-I]
(a) Controlling the inflation in India is the responsibility of the Government of India only
(b) The Reserve Bank of India has no role in controlling the inflation
(c) Decreased money circulation helps in controlling the inflation
(d) Increased money circulation helps in controlling the inflation

Question 6: 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?   [2015-I]
1. Reducing revenue expenditure
2. Introducing new welfare schemes
3. Rationalizing subsidies
4. Expanding industries
Select the correct answer using the code given below.
(a) 1 and 3 only
(b) 2 and 3 only
(c) 1 only
(d) 1, 2, 3 and 4

Question 7: The Fair and Remunerative Price (FRP) of sugarcane is approved by the    [2015-I]
(a) Cabinet Committee on Economic Affairs
(b) Commission for Agricultural Costs and Prices
(c) Directorate of Marketing and Inspection, Ministry of Agriculture
(d) Agricultural Produce Market Committee

Question 8: 'Pradhan Mantri Jan-Dhan Yojana' has been launched for   [2015-I]
(a) providing housing loan to poor people at cheaper interest rates
(b) promoting women's Self-Help Groups in backward areas
(c) promoting financial inclusion in the country
(d) providing financial help to the marginalized communities

Question 9: If the interest rate is decreased in an economy, it will   [2014 - I]
(a) decrease the consumption expenditure in the economy
(b) increase the tax collection of the Government
(c) increase the investment expenditure in the economy
(d) increase the total savings in the economy

Question 10: With reference to Union Budget, which of the following is/are covered under Non-Plan Expenditure?    [2014 - I]
1. Defence expenditure
2. Interest payments
3. Salaries and pensions
4. Subsidies
Select the correct answer using the code given below.
(a) 1 only
(b) 2 and 3 only
(c) 1, 2, 3 and 4
(d) None

Question 11: The sales tax you pay while purchasing a toothpaste is a

   [2014 - I]
(a) tax imposed by the Central Government
(b) tax imposed by the Central Government but collected by the State Government
(c) tax imposed by the State Government but collected by the Central Government
(d) tax imposed and collected by the State Government

Question 12: What does venture capital mean?   [2014 - I]
(a) A short-term capital provided to industries
(b) A long-term start-up capital provided to new entrepreneurs
(c) Funds provided to industries at times of incurring losses
(d) Funds provided for replacement and renovation of industries

Question 13: Who among the following constitute the National Development Council?    [2013 - I]
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.
(a) 1, 2 and 3 only
(b) 1, 3 and 4 only
(c) 2 and 4 only
(d) 1, 2, 3 and 4

Question 14: To obtain full benefits of demographic dividend, what should India do?   [2013 - I]
(a) Promoting skill development
(b) Introducing more social security schemes
(c) Reducing infant mortality rate
(d) Privatization of higher education

Question 15: A rise in general level of prices may be caused by    [2013 - I]
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.
(a) 1 only
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1, 2 and 3

Question 16: Which one of the following is likely to be the most inflationary in its effect?    [2013 - I]
(a) Repayment of public debt
(b) Borrowing from the public to finance a budget deficit
(c) Borrowing from banks to finance a budget deficit
(d) Creating new money to finance a budget deficit

Question 17: Supply of money remaining the same when there is an increase in demand for money, there will be    [2013 - I]
(a) a fall in the level of prices
(b) an increase in the rate of interest
(c) a decrease in the rate of interest
(d) an increase in the level of income and employment

Question 18: Economic growth in country X will necessarily have to occur if   [2013 - I]
(a) there is technical progress in the world economy
(b) there is population growth in X
(c) there is capital formation of X
(d) the volume of trade grows in the world economy

Question 19:  How do District Rural Development Agencies (DRDAs) help in the reduction of rural poverty in India?   [2012 - I]
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?
(a) 1, 2 and 3 only
(b) 3 and 4 only
(c) 4 only
(d) 1, 2, 3 and 4

Question 20:  The Multi-dimensional Poverty Index developed by Oxford Poverty and Human Development Initiative with UNDP support covers which of the following?    [2012 - I]
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:
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

Question 21: Which of the following is /are among the noticeable features of the recommendations of the Thirteenth Finance Commission?   [2012 - I]
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:
(a) 1 only
(b) 2 and 3 only

(c) 1 and 3 only
(d) 1, 2 and 3

Question 22: Consider the following specific stages of demographic transition associated with economic development:    [2012 - I]
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:
(a) 1, 2, 3
(b) 2, 1, 3
(c) 2, 3, 1
(d) 3, 2, 1

Question 23: Under which of the following circumstances may 'capital gains' arise?   [2012 - I]
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:
(a) 1 only
(b) 2 and 3 only
(c) 2 only
(d) 1, 2 and 3

Question 24: Which of the following measures would result in an increase in the money supply in the economy?    [2012 - I]
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:
(a) 1 only
(b) 2 and 4 only
(c) 1 and 3
(d) 2, 3 and 4

Question 25: Which of the following would include Foreign Direct Investment in India?    [2012 - I]
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:
(a) 1, 2, 3 and 4
(b) 2 and 4 only
(c) 1 and 3 only
(d) 1, 2 and 3 only

Question 26: India has experienced persistent and high food inflation in the recent past. What could be the reasons?
1. Due to a gradual switchover to the cultivation of commercial crops, the area under the cultivation of food grains has steadily decreased in the last five years by about 30%.
2. As a consequence of increasing incomes, the consumption patterns of the people have undergone a significant change.

3. The food supply chain has structural constraints.    [2011 - I]
Which of the statements given above are correct ?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

Question 27: In terms of economy, the visit by foreign nationals to witness the XIX commonwealth games in India amounted to    [2011 - I]
(a) Export
(b) Import
(c) Production
(d) Consumption

Question 28: Which one of the following statements appropriately describes the "fiscal stimulus" ?    [2011 - I]
(a) It is a massive investment by the government in manufacturing sector to ensure the supply of goods to meet the demand surge caused by rapid economic growth.
(b) It is an intense affirmative action of the government to boost economic activity in the country.
(c) It is government's intensive action on financial institutions to ensure disbursement of loans to agriculture and allied sectors to promote greater food production and contain food inflation.
(d) It is an extreme affirmative action by the government to pursue its policy of financial inclusion. 

Question 29: Consider the following actions which the government can take: [2011 - I]
1. Devaluing the domestic currency.
2. Reduction in the export subsidy.
3. Adopting suitable policies which attract greater FDI and more funds from FIIs.
Which of the above action/actions can help in reducing the current account deficit ?
(a) 1 and 2
(b) 2 and 3
(c) 3 only
(d) 1 and 3

Question 30: Both Foreign Direct Investment (FDI) and Foreign Institutional Investor (FII) are related to investment in a country. Which one of the following statements best represents an important difference between the two ?   [2011 - I]
(a) FII helps bring better management skills and technology, while FDI only brings in capital.
(b) FII helps in increasing capital availability in general, while FDI only targets specific sectors.
(c) FDI flows only into the secondary market while FII targets primary market
(d) FII is considered to be more stable than FDI.

Question 31: With reference to "Aam Admi Bima Yojana'', consider the following statements ?
1. The member insured under the scheme must be the head of the family or an earning member of the family in a rural landless house-hold.
2. The member insured must be in the age group of 30 to 65 years.
3. There is a provision for free scholarship for up to two children of the insured who are studying between classes 9 and 12.    [2011 - I]
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

Question 32: Microfinance is the provision of financial services to people of low-income groups. This includes both the consumers  and the self-employed. The service/services rendered under microfinance is/are:   [2011 - I]
1. Credit facilities
2. Savings facilities
3. Insurance facilities
4. Fund Transfer facilities
Select the correct answer using the codes given below the lists ?
(a) 1 only
(b) 1 and 4 only
(c) 2 and 3 only
(d) 1, 2, 3 and 4

Question 33: Among the following who are eligible to benefit from the "Mahatma Gandhi National Rural Employment Guarantee Act"?    [2011 - I]
(a) Adult members of only the scheduled caste and scheduled tribe households
(b) Adult members of below poverty line (BPL) households
(c) Adult members of households of all backward communities
(d) Adult members of any household

Question 34: With reference to the Finance Commission of India, which of the following statements is correct ?   [2011 - I]
(a) It encourages the inflow of foreign capital for infrastructure development
(b) It facilitates the proper distribution of finances among the Public Sector Undertakings
(c) It ensures transparency in financial administration
(d) None of the statements (a), (b) and (c) given above is correct in his context

Question 35:  What is the difference between "vote-on-account" and  interim budget" ?    [2011 - I]
1. The provision of a "vote-on-account'' is used by a regular Government, while an "interim budget'' is a provision used by a caretaker Government
2. A "vote-on-account'' only deals with the expenditure in Government budget, while an "interim budget'' includes both expenditure and receipts
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Question 36: Why is the offering of "teaser loans'' by commercial banks a cause of economic concern ?     [2011 - I]
1. The teaser loans are considered to be an aspect of sub-prime lending and banks may be exposed to the risk of defaulters in future.
2. In India, the teaser loans are mostly given to inexperienced entrepreneurs to set up manufacturing or export units.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Question 37: Which of the following can aid in furthering the Government's objective of inclusive growth ?    [2011 - I]
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:
(a) 1 only
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1,2 and 3 only

Question 38: Why is the Government of India disinvesting its equity in the Central Public Sector Enterprises (CPSEs) ?   [2011 - I]
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 ?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Question 39:  Economic growth is usually coupled with    [2011 - I]
(a) Deflation 
(b) Inflation
(c) Stagflation 
(d) Hyperinflation

Question 40: The lowering of Bank Rate by the Reserve Bank of India leads to    [2011 - I]
(a) more liquidity in the market
(b) less liquidity in the market
(c) no change in the liquidity in the market
(d) mobilization of more deposits by commercial banks