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

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."

According to the passage, "The RBI’s bond purchase calendar will give confidence to bond market participants that huge supply of government borrowings will not drive up yields too much."......"The central bank, however, announced a bond-buying calendar which will ensure that borrowers reap the benefits of a low-interest rate regime."

The RBI's bond purchase calendar will give confidence to bond market participants because it will ensure that borrowers reap the benefits of a low-interest rate regime.

So, statement (I) is the cause, and statement (II) is the effect.

The correct answer is 1 and 2.

Key Points

• The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations.
• The bulk of the WTO’s current work comes from the 1986–94 negotiations called the Uruguay Round and earlier negotiations under the General Agreement on Tariffs and Trade (GATT).
• The WTO is currently the host to new negotiations, under the ‘Doha Development Agenda’ launched in 2001.
• WTO is not responsible for the Balance of Payment Crisis. IMF (International Monetary Fund) deals with the BoP crisis. Hence, Statement 2 is incorrect.
• Ministerial Conference
  • The topmost decision-making body of the WTO is the Ministerial Conference, which usually meets every two years. Hence, Statement 1 is incorrect.
  • The Ministerial Conference can take decisions on all matters under any of the multilateral trade agreements.
• General Council
  • The General Council is the WTO’s highest-level decision-making body located in Geneva, meeting regularly to carry out the functions of the WTO.
  • It has representatives (usually ambassadors or equivalent) from all member governments and has the authority to act on behalf of the ministerial conference which only meets about every two years.

• Functions of WTO

  • negotiating the reduction or elimination of obstacles to trade (import tariffs, other trade barriers) and agreeing on rules governing the conduct of international trade (e.g. anti-dumping, subsidies, product standards, etc.).
  • administering and monitoring the application of the WTO's agreed rules for trade in goods, trade in services, and trade-related intellectual property rights.
  • monitoring and reviewing the trade policies of our members, as well as ensuring transparency of regional and bilateral trade agreements. Hence, Statement 3 is correct.
  • settling disputes among our members regarding the interpretation and application of the agreements.
  • building capacity of developing country government officials in international trade matters.
  • assisting the process of accession of some 30 countries who are not yet members of the organization.
  • conducting economic research and collecting and disseminating trade data in support of the WTO's other main activities.
  • explaining to and educating the public about the WTO, its mission, and its activities.

Financial Institutions make money from buying in the market where the price is low and selling at a profit in markets where the price is higher - this activity is called arbitrage. Not all countries have their own currency e.g. members of the Eurozone and exchange rates are not fixed by the IMF. A collapse in the exchange rate of a currency can cause economic disruption e.g. a large increase in the rate of inflation, and a big increase in the value of debt held in foreign currency as occurred in Iceland in 2008. Such economic disruption does not guarantee benefits to financial institutions.

Lineation function is a process in human resources management that is concerned with providing a conducive work environment to the employees and nurturing them to make them feel committed and attached to the organization.

Right shares issued to existing equity shareholders have the preferential right regarding the payment of retained earnings. A rights issue is an issue of rights to a company's existing shareholders. The benefit of rights offering to shareholders is that shares are generally offered at a discount. Retained earnings are a part of shareholder funds on which right shareholders or equity shareholders have the preferential right.

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.

The basic objective of Export Promotion Councils is to develop and promote the exports of the nation. Each Council is in charge of the promotion of a specific group of projects, products, and services. The council helps in sponsoring the development of export-related industries.

Hence, the correct option (D).

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.

Stakeholders - A stakeholder is a person who has an interest in a business and who has the potential to affect or be impacted by it. The main parties involved in a traditional business are its creditors, employees, customers, and suppliers.

Important PointsCorporate social responsibility -

• Corporate social responsibility (CSR) is a self-policing corporate strategy that enables an organization to be socially accountable to its customers, employees, and stakeholders.
• Corporate social responsibility (CSR) is a company's ongoing commitment to act morally, promote economic growth, and enhance the lives of its employees, their families, the local community, and society as a whole.
• It must fulfil its economic, legal, ethical, and discretionary obligations as a responsible corporate citizen.

The correct option is Contingency approach

Key Points

• There are mainly four approaches available to study the organization's behavior

​1)Human resource approach

2)productivity approach

3)System approach

4) contingency approach

• The contingency approach is stress that there is no single way to manage effectively under all circumstances
• each situation demands different approaches based on the type and nature of the event 
• Depending on the individual and groups the approaches are applied 
• It is the duty of the manager to identify which approach should be undertaken for the particular situation 
• According to circumstances, the approaches may differ from one to another 
• As there is no such single approach that can be followed and it may differ from time to time

Hence the correct answer is Contingency approach.

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.

In India, the companies Act made audit of company accounts compulsory with the increase in the size of the companies and the volume of transactions. The main objective of audit shifted to ascertaining whether the accounts were true and fair rather than true and correct. So, the emphasis was not on arithmetical accuracy but on a fair representation of the financial efforts.

Customer Portfolio Management is a tool that aims to enhance the performance of an organization's business through various ways, such as promoting sales growth and increasing customer profitability.

• A customer portfolio is a segmented list of the various groups that do business with you.
• Think of it as a financial portfolio. An individual might have a grouping of all their financial assets, broken down into various categories such as stocks, bonds, student loans, mortgages, and car payments. This portfolio helps them to get the big picture about their financial situation.
• Similarly, a customer portfolio can help a business get the big picture about its customer base.
• For example, a dry cleaning business might have a customer portfolio with the following groups: Individuals and walk-in customers, Big corporations, Public schools, Restaurants, Hotels, etc.
• The Coca-Cola brand, for instance, details some of its customer portfolios on its website, referring to its partnerships with ''large international chains of retailers and restaurants and small independent businesses.'' By understanding who its customers are, Coca-Cola is able to do just about everything better: marketing, support services, improving sales, anticipating needs, and creating business solutions.
• Customer portfolio management helps businesses understand the behavior of their customer needs and demands and accordingly, are able to make categorizations. By segmenting customers into portfolios, a business can better understand the relative importance, each customer represents relative to the total sales and profits. Such an understanding assists businesses not only in retaining valuable customers but also in creating additional value with these customers through relationship development.

• Most of the capital market reforms were introduced during 1996- 97, including primary and secondary markets, equity and debt, and foreign institutional investment.
• Primary market reforms aimed at imparting greater flexibility in the issue process and strengthening the criteria for accessing the securities market.
• Reforms in the secondary market aimed at improving market transparency, integrity and trading infrastructure.

Reason (R): Globalization integrates the domestic economy with the world economy

• Globalization is the process of interaction and integration among people, companies, and governments worldwide.
• The goal of globalization is to boost economies around the world by making markets more efficient.
• It is believed that global trade will lead to more competition, which will spread wealth more equally.

Correct match:

Authoritarian or autocratic - the leader tells his or her employees what to do and how to do it, without getting their advice. the leader allows the employees to make the decisions, however, the leader is still responsible for the decisions that are made.

The democratic/participative leadership style places significant responsibility on leaders and their staff. This is true for all organizations — from private enterprises and government agencies to educational institutions and nonprofit entities.

Democratic leadership, also known as participative leadership or shared leadership, is a type of leadership style in which members of the group take a more participative role in the decision-making process.

The correct answer 1, 2, and 3.

Key Points

• The term Urban Co-operative Banks (UCBs) refers to primary cooperative banks located in urban and semi-urban areas. These banks, till 1996, were allowed to lend money only for non-agricultural purposes. This distinction does not hold today.
• The following regulatory measures have been taken concerning UCBs:
• Revision in the target for priority sector lending: To promote financial inclusion, the overall priority sector lending target for Urban Co-operative Banks has been increased from the present level of 40 per cent of adjusted net bank credit (ANBC) to 75 per cent of ANBC by March 31, 2024. Hence, statement 1 is correct.
• All co-operative banks have been advised of their inclusion as Eligible Lending Institutions under the 'Interest Subvention Scheme (ISS) for MSMEs 2018' of the Government.
• Urban Cooperative Banks (UCBs) with assets of `500 crore and above were brought under the CRILC reporting framework. UCBs shall report credit information on all borrowers having aggregate exposures of `5 crores and above with them to CRILC.
• The Banking Regulation Act has been amended by the Banking Regulation (Amendment) Act, 2020. The key changes are
• The Reserve Bank has been given powers over the management of the UCBs, including approval for appointment and removal of Chairman/MD/CEO. Hence, statement 2 is correct.
• Provisions of the revised Act will enable UCBs to raise capital by issue of equity/ preference/special shares and debentures/bonds/like securities subject to such conditions as the Reserve Bank may specify. Hence, statement 3 is correct.
• The Reserve Bank has been empowered to supersede the Board of Directors of a UCB.

Assertion (A): Purchase decisions are not based on how customers perceive prices but on the marketer’s stated price.

Explanation:

1. The purchase decision is the thought process that leads a consumer from identifying a need, generating options, and choosing a specific product and brand.
2. Before making a purchase decision, a consumer evaluates various factors such as the price of the product, quality of the product, service, etc., and then takes a decision which is best suited to him.
3. Thus, a purchase decision is a consumer-centric aspect and is based on the customer's perception of the price.
4. A marketer might set any amount but it's up to the customer to decide whether the purchase decision is suitable with his budget.

Thus, the assertion is incorrect.

Reason (R): Customers may have a lower price threshold, below which prices signal inferior or unacceptable quality and an upper price threshold where the product appears not worth the money.

Explanation:

1. For instance, a consumer is planning to buy a television set.
2. Now assuming that the average price of a suitable quality television set ranges between Rs.25,000 to Rs.30,000.
3. This notion usually gets fixed in the consumer's mind and affects him at a psychological level.
4. Thus, if a television set is priced below this average, he thinks that the product is inferior, and if the television set is priced above this range, he thinks that there is unnecessary window-dressing involved and it is not worth the money.
5. Thus, customers may have a lower price threshold, below which prices signal inferior or unacceptable quality and an upper price threshold where the product appears not worth the money.

Thus, the assertion is incorrect but the reason is correct.

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.

Goods and Services Tax (GST) is a proposed system of indirect taxation in India merging most of the existing taxes into a single system of taxation. It was introduced The Constitution (One Hundred and First Amendment) Act 2016. GST would be a comprehensive indirect tax on the manufacture, sale, and consumption of goods and services throughout India, to replace taxes levied by the central and state governments. Goods and Services Tax would be levied and collected at each stage of sale or purchase of goods or services based on the input tax credit method.

Key Points

For the pricing of home loans by a commercial bank.

1 Credit check - a credit check is a procedure used by the lender to determine your ability to repay the loan

2 MCLR - Marginal Cost of Funds-Based Landing Rate

3 Spread specification - final interest rate after adding a few % to the prime rate.

4 Price determination - Loan price is the interest rate that borrowers have to pay to the bank and the amount borrowed (principal).

5 Quoting to the prospective borrower - lenders offer quotes to prospective borrowers that reflect prevailing interest rates at the time of the offer, rather than at the time of settlement. The quoted rate will also include a lender’s margin.

A commercial bank is a financial institution that provides services to its customers such as loans, certificates of deposit, savings accounts, overdrafts, etc. Examples of commercial banks are PNB, Allahabad Bank, etc.

Additional Information

The MCLR is a reference rate or internal benchmark for the financial institution. The marginal cost-based lending rate defines the procedure for determining the minimum interest rate for home loans.

The MCLR method was introduced in the Indian financial system by the Reserve Bank of India in 2016.

Prospective borrower means any person who seeks to borrow money to finance the acquisition, construction, repair, or maintenance of real property.

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.

The correct answer is Trading and Equity.

Key Points The objective of operation management is to efficiently and effectively use resources to create goods and services that meet the needs of customers. The four objectives you mentioned are all important for operation management, but trading and equity is not.

• Improve product quality is important because it can help to increase customer satisfaction and loyalty.
• Reduce cost of production is important because it can help to increase profits.
• Material cost of control is important because it can help to reduce waste and inefficiency.
• Trading and equity is not an objective of operation management because it is not directly related to the production of goods and services. Trading and equity are more related to the financial aspects of a business.

Here are some other objectives of operation management:

• Meet customer demand
• Ensure compliance with regulations
• Minimize environmental impact
• Improve safety
• Increase employee satisfaction

Overall, the objective of operation management is to create value for customers and the organization by efficiently and effectively using resources.

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.

The correct answer is 5.

​Key Points

• International Monetary Fund(IMF) publishes the Regional Economic Outlook.
• Regional Economic Outlook divides the world into five regions as
  • Asia and Pacific Region
  • Europe
  • Middle East and Central Asia
  • Sub-Saharan African
  • Western Hemisphere Region
• Regional Economic Outlook publishes the economic data and status of these five regions in detail.

Important Points 

• IMF(International Monetary Fund) established in 1945 and headquartered in Washington.
• IMF Managing Director is Kristalina Georgieva.
• Presently IMF has 190 member countries.
• They address regional policy developments and challenges, and provide country-specific data and analysis, including through analytical pieces on issues of interest to a particular region.
• There are five regions (Asia and Pacific, Middle East and Central Asia, Sub-Saharan Africa, Western Hemisphere and Europe).

The assertion is correct. International business has grown in more recent years at a faster pace than global production. The reason is given that growth through trade has increased, but growth through foreign direct investment has not is incorrect. The increasing inflow of FDI in recent years has also brought growth in the economy.