MCQs on Economics -39

1. Decrease in cash reserve ratio might lead to
1. Increase in credit creation
2. Decrease in M3
3. Increase in M3/ M0
4. Increase in interest rate
(a) 1, 2, 3
(b) 2, 3, 4
(c) 1, 3
(d) 1, 2, 4

2. Consider the following statements:
1. The proposed AIIB is different from BRICS bank
2. Contingency Reserve Arrangement between BRICS nations is to forestall short term Balance of payment pressures
3. Only BRICS nations can be part of New Development bank
4. The former chairman of HDFC is appointed as president of New Development
(a) 1, 2 correct
(b) 1, 2, 4 correct
(c) 1, 3, 4 correct
(d) All the above

3. Consider the following statements:
1. Amber box subsidies include those that impact on market prices
2. As of now there is no limit on Blue Box subsidies
3. Only product patent can be issued for pharmaceuticals in India
4. GI can be granted to a single person
(a) 1, 2, 3 correct
(b) 2, 3, 4 correct
(c) 1, 3, 4 correct
(d) All the above
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4. Consider the following statements:
1. Ponzi scheme has become very famous recently due to its healthy returns and ethical investments
2. IDRs are issued by Non-Indian companies to Indian Investors
3. Shariah Index was introduced by BSE to attract Shariah funds from Arab countries
4. India has power exchanges for electricity market.
(a) 1, 2, 3 correct
(b) 2, 3, 4 correct
(c) 1, 3, 4 correct
(d) All the above

5. What is Levy-Sugar?
(a) The portion of sugar production of the country meant for export
(b) The sugar which is imported by the Government and allotted to Public Distribution System at a cost lower than that incurred by the Government
(c) The portion of sugar production that the Government takes away from sugar mills at lower than market rates for supplying to the Public Distribution System
(d) The portion of sugar production that the State Governments supply to the Union Government at less than market rates

6. Consider the following statements:
1. Depreciation of rupee boosts imports
2. J curve effect shows depreciation in short run can worsen the overall balance of payments
3. REER is an inflation adjusted exchange rate
4. Interest rates in domestic market effect exchange rates
(a) 1, 2, 4 correct
(b) 2, 3, 4 correct
(c) 1, 3, 4 correct
(d) 2, 3 correct

7. Consider the following statements:
1. Insider trading is a healthy practice of stock trade in India
2. Nikkei is a market Index of South Korea
3. Price per share multiplied by total number of shares is the market capitalization of a company
4. Optionally convertible debentures are allowed in India
(a) Only 1 true
(b) Only 1, 2 true
(c) Only 3 true
(d) Only 3, 4 true

8. Consider the following statements:
1. Pigovian tax is a tax on all spot conversions of one currency into another
2. Tobin tax is a tax on negative externalities
3. Withholding tax is a tax levied on holding companies
Which of the statements given above is/are correct?
(a) 1, 2
(b) 2, 3
(c) 1, 3
(d) None of the above

9. Consider the following statements:
1. Current account deficit is financed by capital account surplus
2. Increase in current account deficit might lead to inflation
3. Trade deficit is a part of capital account
4. An increasing trade deficit may be a symptom of long term deindustrialization
(a) 2, 3, 4 correct
(b) 1, 3, 4 correct
(c) 1, 2, 4 correct
(d) 1, 2, 3 correct

10. Sales from Domestic Tariff Area (DTA) to SEZs are to be treated as which among the following?
(a) Imports
(b) Domestic sales
(c) Exports
(d) Domestic procurement

11. Select the correct situation which defines ‘welfare trap?
(a) When population in an economy continues to remain poor even after increase in nominal income
(b) When rise in the incomes of poor is neutralized by inflation.
(c) When unemployment increases along with inflation.
(d) When people getting unemployment allowance does not want to work anymore

12. Zero Based Budgeting (ZBB) lays emphasis on:
1. Unlimited deficit financing.
2. New budget right from the scratch.
3. The budget neglecting the expenditure.
Choose the correct code:
(a) 1, 2 and 3
(b) 2 and 3
(c) Only 2
 (d) Only 3

13. The price at which the Government purchases food grains for maintaining the public distribution system and for building up buffer stocks are known as
(a) Minimum Support Prices
(b) Procurement Prices
(c) Issue Prices
(d) Ceiling Prices

14. Which one of the following is emerged as a major instrument of Monetary Policy in the Indian Economy?
(a) Liquidity Adjustment Facility
(b) Commercial Papers
(c) Treasury Bills IAS INSTITUTE  The Right Choice of Achievers. P a g e | 12
(d) None of the above

15. Which one among the following Agricultural Sectors is covered under the Market Intervention Scheme (MIS) of the Indian Government?
(a) Forestry
(b) Irrigation
(c) Horticulture
(d)Animal Husbandry



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