1. Devaluation of currency leads to
(a) Fall in domestic prices
(b) Increase in domestic prices
(c) No impact on domestic prices
(d) Erratic fluctuations in domestic prices


2. The best solution for overcoming the evil effects of small and uneconomic holdings is
(a) Cooperative farming
(b) Using capital intensive technology
(c) Rapid industrialization
(d) Opt for cash crops instead of food crops


3. Increase in policy rate leads to
(a) Fall in investments
(b) Increase in borrowings
(c) Fall in price of goods and services
(d) Decrease in savings


4. Which one of the following is part of Capital Market in Indian Economy?
(a) Gilt edge market
(b) Stock Exchange
(c) Mutual funds
(d) Call money market



5. Consider the following statements:
1. Recapitalization involves providing the bank with new capital by government
2. Recapitalization by GOI is mostly to ensure banks meet Basel norms
3. Purchase of shares of a bank is part of Recapitalization of banks
(a) 1, 2 correct
(b) 1, 3 correct
(c) 2, 3 correct
(d) All the above are correct

 IAS INSTITUTE – The Right Choice of Achievers. P a g e | 15
6. Small-Scale Industries in India are supposed to be
1. Labour intensive
2. Capital intensive
3. Labour light
4. Skill light
Choose your answer from the following codes,
(a) 1 and 4
(b) 2 and 3
(c) 2 and 4
(d) 1 and 3



7. Consider the following statements:
1. The proceeds from IPO goes to company
2. The proceeds from offer for sale by GOI goes to Consolidated Fund of India
3. Offer for sale is a practice of GOI to disinvest its stake in CPSUs
4. Underwriting of securities is done by hedge funds
(a) 1, 2, 4 correct
(b) 1, 3, 4 correct
(c) 1, 2, 3 correct
(d) All the above are correct



8. Consider the following statements:
1. Public debt is nothing but government debt excluding external debt
2. Public debt in India is managed by RBI as per RBI Act of 1934
3. Increasing public debt leads to inflation
4. FIIs are allowed to invest in public debt
(a)1, 2, 3 correct
(b) 1, 2, 4 correct
(c) 2, 3, 4 correct
(d) All the above are correct



9. Consider the following statements:
1. As per latest draft of GOI with respect to Gold Monetisation scheme, jewellery can also be deposited in metal account
2. Interest earned is paid only in the form of currency
3. Gold monetization scheme might lead to decrease in current account deficit
4. Sovereign gold bonds are called as Gilt-edged securities
(a) 1, 2, 3 correct
(b) 1, 3 correct
(c) 2, 4 correct
(d) All the above are correct



10. Inflation may result in
(a) Depreciation of currency
(b) Appreciation of currency
(c) Increase in exports
(d) Decrease in interest rates



11. Increase in domestic rate of interest leads to
(a) Increase in foreign inflows
(b) Decrease in foreign inflows
(c) Depreciation of domestic currency
(d) None of the above



12. Which of the following are true with respect to frictional unemployment?
1. Always exist in an economy
2. It is an outcome of voluntary unemployment
3. Indicates decrease in employment opportunities in the economy
4. Generally it is not considered as unemployment
(a) 2, 3
(b) 1, 3
(c) 1, 2, 4
(d) All the above



13. Millennium Development Goals Report is published by
(a) IMF
(b) WB
(c) WHF
(d) UNDP



14. A country is said to be in a debt trap if
(a) It has to abide by the conditionalities imposed by the International Monetary Fund
(b) It has to borrow to make interest payments on outstanding loans
(c) It has been refused loans or aid by creditors abroad
(d) The World Bank charges a very high rate of interest on outstanding as well as new loans



15. Which of the following are true with respect to foreign investments?
1. FPI includes FIIs and QFIs
2. Foreign Investor with stake of less than 10% in a company is treated as FII and more than 10% as FDI in India
3. Investments by NRIs, PIOs and OCIs are treated as foreign investment
4. FII issues P-notes
(a) 1, 2, 3
(b) 1, 3, 4
(c) 1, 2, 4
(d) All the above