UPSC IAS Prelims 2015 General Studies: Economy Questions


UPSC IAS Prelims 2015 General Studies: Economy Questions
23-AUG-2015   AJIT  KUMAR                                           WISDOM IAS
1. 'BioCarbon Fund Initiative for Sustain- able Forest Landscapes' is managed by the -
(a) Asian Development Bank
 (b) International Monetary Fund
 (c) United Nations Environment Programme 
(d) World Bank
Explanation: The BioCarbon Fund Initiative for Sustainable Forest Landscapes (ISFL) is a new multilateral facility, supported by donor governments and managed by the World Bank.
The ISFL seeks to promote reduced greenhouse gas emissions from the land sector, from deforestation and forest degradation in developing countries (REDD+) and from sustainable agriculture, as well as smarter land-use planning, policies and practices. The initiative will deploy results-based finance to incentivize changes at the landscape level.
The initiative recognizes the important role that the private sector plays in spurring innovation, leveraging cutting-edge expertise and knowledge, and mobilizing the capital necessary to scale up successful land-use practices and accelerate the greening of supply chains.
2. In India, the steel production industry requires the import of
(a) saltpetre 
(b) rock phosphate 
(c) coking coal 
(d) All of the above
Explanation: Indian steel makers mostly used imported coking coal for use in the blast furnace and the annual volume goes up beyond 35 million tonnes (MT). This is due to subdued and stagnant supply from state-run Coal India Ltd. (PTI Jul 10, 2014)
3. Consider the following statements:
1. The Accelerated Irrigation Benefits Programme was launched during 1996-97 to provide loan assistance to poor farmers. 
2. The Command Area Development Programme was launched in 1974-75 for the development of water-use efficiency. 
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
Explanation: The Accelerated Irrigation Benefits Programme (AIBP) was launched during 1996-97 to give loan assistance to the States to help them complete some of the incomplete major/medium irrigation projects, which were in advanced stages of completion.
 The Government of India initiated a Centrally Sponsored Command Area Development Programme (CADP) in December 1974 to improve irrigation potential utilisation and optimise agricultural production from irrigated land through integrated and coordinated approach of efficient water management.  
4. 'Basel III Accord' or simply 'Basel III', often seen in the news, seeks to -
(a) develop national strategies for the conservation and sustainable use of biological diversity 
(b) improve banking sector's ability to deal with financial and economic stress and improve risk management
(c) reduce the greenhouse gas emissions but places a heavier burden on developed countries 
(d) transfer technology from developed Countries to poor countries to enable them to replace the use of chlorofluorocarbons in refrigeration with harmless chemicals
Explanation: "Basel III" is a comprehensive set of reform measures, developed by the Basel Committee on Banking Supervision, to strengthen the regulation, supervision and risk management of the banking sector. These measures aim to: (i) improve the banking sector's ability to absorb shocks arising from financial and economic stress, whatever the source; (ii) improve risk management and governance; and (iii) strengthen banks' transparency and disclosures.
5. With reference to Indian economy, consider the following statements:
1. The rate of growth of Real Gross Domestic Product has steadily increased in the last decade.
2. The Gross Domestic Product at  market prices (in rupees) has steadily increased in the last decade.
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 
India's Real GDP Growth Rates (Factor Cost)
2000-1 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
4.15 5.39 3.88 7.97 7.05 9.48 9.57 9.32 6.72 8.59 8.91
(Planning Commission)
6. With reference to Indian economy, consider the following
1. Bank rate
2. Open market operations
3. Public debt
4. Public revenue
Which of the above is/are component/ components of Monetary Policy?
(a) 1 only
(b) 2, 3 and 4 
(c) 1 and 2 
(d) 1, 3 and 4 
Explanation: Components of Monetary Policy are CRR, SLR, Bank Rate, and Open Market Operation by RBI.
7. With reference to inflation in India, which of the following statements is correct?
(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
Explanation: When money circulation is decreased the demand gets decreased leading to reduction in prices.
8. The substitution of steel for wooden ploughs in agricultural production is an example of
(a) labour-augmenting  technological progress
(b) capital-augmenting technological progress
(c) capital-reducing technological progress
(d) None of the above 
Explanation: Labour-augmenting technical progress: Technical progress that increases the effective labour input, if production involves the use of labour.
9. The problem of international liquidity is related to the non-availability of
(a) goods and services
(b) gold and silver
(c) dollars and other hard currencies
(d) exportable surplus 
Explanation: A major source of worry in maintaining international economic relations is the quantitative aspect of the problem of international reserves.
10. Which one of the following best describes the main objective of 'Seed Village Concept?
(a) Encouraging the farmers to use their own farm seeds and discouraging them to buy the seeds from others
(b) Involving the farmers for training  in quality seed production and thereby to make available quality seeds to others at appropriate time and affordable cost
(c) Earmarking  some villages exclusively for the production of certified seeds 
(d) Identifying the entrepreneurs in village and providing them technology and finance to set up seed companies
Explanation: A village, wherein trained group of farmers are involved in production 'of seeds of various crops and cater to the needs of themselves, fellow farmers of the village and faemers of neighboring villages in appropriate time and at affordable cost is called "a seed village".
11. 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.
(a) 1 and 3 only
(b) 2 and 3 only
(c) 1 only
(d) 1,2,3 and 4
Explanation: Subsidy rationalization is a programme where the government will gradually and carefully increase the prices of subsidized items such as energy and food to reduce its spending on subsidies.
12. 'Pradhan Mantri Jan-Dhan Yojana' has been launched for
(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
Explanation: 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.
13. 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 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
Explanation:  The Finance Commission is required to recommend the distribution of the net proceeds of taxes of the Union between the Union and the States (commonly referred to as vertical devolution); and the allocation between the States of the respective shares of such proceeds (commonly known as horizontal devolution).
 With regard to vertical distribution, FFC has recommended by majority decision that the the States’ share in the net proceeds of the Union tax revenues be 42%.
14. A decrease in tax to GDP ratio of a country indicates which of the following?
1. Slowing economic growth rate
 2. Less equitable distribution of national income
Select the correct answer using the code given below.
1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Explanation: This ratio is the total government tax collections divided by the country's GDP.
15. In the 'Index of Eight Core Industries', which one of the following is given the highest weight?
(a) Coal production
(b) Electricity generation
(c) Fertilizer production 
(d) Steel production
Explanation: Coal production (weight: 4.38 %)
Electricity generation (weight: 10.32%)
Fertilizer production (weight: 1.25%)
Steel production (weight: 6.68%)
16. The Fair and Remunerative Price (FRP) of sugarcane is approved by the
(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
Explanation: The central government (Cabinet Committee on Economic Affairs) fixes a minimum price, the FRP that is paid by mills to farmers.  States can also intervene in sugarcane pricing with an SAP to strengthen farmer’s interests.  States such as Uttar Pradesh and Tamil Nadu have set SAPs for the past few years, which have been higher than FRPs.
17. Who of the following was/were economic critic/ critics of colonialism in India?
1. Dadabhai Naoroji 
2. G. Subramania Iyer 
3. R. C. Dutt
Select the correct answer using the code given below.
(a)1 only
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1, 2 and 3
18. Which one of the following issues the 'Global Economic Prospects' report periodically?
(a) The Asian Development Bank
(b) The European Bank     for Reconstruction and Development 
(c) The US Federal Reserve Bank
(d) The World Bank
Explanation: Changes, which in the long-run steady-state, may be good for the global economy, can cause strain and even a slowdown in the short run brought about by the challenges of transition. This is the message that underlies much of the June 2015 issue of the World Bank Group’s Global Economic Prospects.
19. When the Reserve Bank of India reduces the Statutory Liquidity Ratio by 50 basis points, which of the following is likely to happen?
(a) India's GDP growth rate increases drastically
(b) Foreign Institutional Investors may bring more capital into our country
(c) Scheduled Commercial Banks may cut their lending rates
(d) It may drastically reduce the liquidity to the banking system
Explanation: Scheduled Commercial Banks may cut their lending rates as the supply if credit would increase because of more money with bank.
20. In India, markets in agricultural products are regulated under the -
(a) Essential Commodities Act, 1955
(b) Agricultural Produce Market Committee Act enacted by States
(c) Agricultural Produce (Grading and Marking) Act, 1937
(d) Food Products Order, 1956 and Meat and Food Products Order, 1973
Explanation: Agricultural Markets in most parts of the Country are established and regulated under the State APMC Acts.
21. The terms 'Agreement on Agriculture', 'Agreement on the Application of Sanitary and Phytosanitary Measures' and 'Peace Clause' appear in the news frequently in the context of the affairs of the-
(a) Food and Agriculture Organization
(b) United Nations Framework Conference on Climate Change
(c) World Trade Organization
(d) United Nations Environment Programme
Explanation: The Agreement on the Application of Sanitary and Phytosanitary Measures (the "SPS Agreement") entered into force with the establishment of the World Trade Organization on 1 January 1995. It concerns the application of food safety and animal and plant health regulations. 
22. Convertibility of rupee implies
(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
Explanation: Convertibility of a currency implies that a currency can be transferred into another currency without any limitations or any control. A currency is said to be fully convertible, if it can be converted into some other currency at the market price of that currency.
23. The Government of India has established NITI Aayog to replace the
(a) Human Rights Commission
(b) Finance Commission 
(c) Law Commission
(d) Planning Commission
Explanation: The Union Government January1, 2015 established NITI Aayog (National Institution for Transforming India), as replacement for the Planning Commission
24. Which of the following statements regarding 'Green Climate Fund' is/are correct?
1. It is intended to assist the developing countries in adaptation and mitigation practices to counter climate change.
2. It is founded under the aegis of UNEP, OECD, Asian Development Bank and World Bank.
Select the correct answer using the code given beiow.
(a) 1 only
(b) 2 Only
(c) Both 1 and 2 
(d) Neither 1 nor 2
Explanation: The Green Climate Fund (GCF) is a fund within the framework of the UNFCCC founded as a mechanism to redistribute money from the developed to the developing world, in order to assist the developing countries in adaptation and mitigation practices to counter climate change.
The World Bank has been accredited as an implementing entity with intermediary functions to the Green Climate Fund (GCF), which is designed to help developing countries finance clean energy, other mitigation efforts and adaptation to climate change.

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