11-insight 2016 prelims test series

8/19/2019 11-Insight 2016 Prelims Test Series

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User Name : chandan paswan

Total Marks : 200

Mark Scored : -2

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1 How can two nations with the same money supply have different Gross Domestic

Product (GDP)?

Circulation of the same money supply happens differently in both economies.1.

Labour productivity can be different in the two economies.2.

Which of the above is/are correct?

1 onlyA.

2 onlyB.

Both 1 and 2C.

NoneD.

User Answer : C

Correct Answer : C

Answer Justification :

Justification:Statement 1: Suppose money is ideally sitting in an economy and does

not changes hands. It does not generate any output then! A nation that circulates

money more, i.e. where money changes more hands will have greater economic

activity, and where it is lesser will have lesser economic activity and lesser GDP.

So, 1 is correct.

The concept is called velocity of money.

Statement 2: Even if circulation of money becomes the same, how much the same

unity of labour produces in the two economies can be different. A low skilledeconomy will not generate higher outputs, whereas a high skill base will generate

more output with the same money wages. So, 2 is also correct.

Q Source: Improvisation: Page 10: Chapter 2: 12th Macroeconomics NCERT

2 As per Classical Economic thought, if the buyers and sellers in each market take their

decisions following only their own self-interest, then which of these follow?

Market will inevitably failA.

Markets will need to be corrected by government intervention.B.

There will be need of an effective regulator.C.Markets will function well.D.

User Answer : C

Correct Answer : D


Justification: Classical thought is also known as the non-interventionist school.

As per them, markets function best without government interference. So, (b) is

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wrong.

Similarly, (c) will also be wrong.

Classical economists observe that markets generally regulate themselves, when free

of coercion. Adam Smith referred to this as a metaphorical "invisible hand," which

moves markets toward their natural equilibrium. So, (d) is correct and (a) incorrect.

Learning:In contrast to classical economics, Keynesian economics supports policies

such as government intervention, deficit spending, control of the money supply, and

a progressive income tax to counter recession and income inequality.

Most classical economists reject these ideas. They assert that state intervention

makes situations of economic slowdown worse.

Q Source:Page 5: Chapter 1: 12th Macroeconomics NCERT

3 Which of the following statements is correct about how Francois Bernier describes India?

A bleak situation in comparison to developments in Europe.A.

A land of high spiritual and scientific intelligenceB.

A land of astounding beauty and natural resourcesC.

A highly affluent society integrated with the worldD.

User Answer : ACorrect Answer : A


Learning:Francois Bernier, a Frenchman, was a doctor, political philosopher and

historian. Like many others, he came to the Mughal Empire in search of

opportunities.

Bernier often travelled with the army.

In virtually every instance Bernier described what he saw in India as a bleak

situation in comparison to developments in Europe.

Q Source:Page 122: Chapter 5: Themes in Indian History- II: 12th NCERT

4 It is theorized that over the long run exchange rates between any two national currencies

adjust to reflect differences in the price levels in the two countries. The theory would

become invalid when



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There are barriers to trade and investment.1.

There is difference in productivity of labour and capital between nations.2.


1 onlyA.

2 onlyB.

Both 1 and 2C.

NoneD.

User Answer :

Correct Answer : C


Justification: When trade happens without barriers, market forces start operatingacross national borders.

People would import only the cheapest commodities (assuming quality is same

everywhere), and only that nation will export which produces it cheapest. Exports

from all other nations will come to zero.

Gradually all nations will export the commodities of their comparative advantage

(e.g. Gems and Jewelleries from India) and import those of their least comparative

advantage (e.g. handicrafts imported by USA).

Slowly the exchange rates start converging, and reflect only the difference in pricesbetween nations, as hypothesized by the Purchasing Power Parity (PPP) theory.

Q Source: Page 82: Chapter 6: 12th Macroeconomics NCERT

5 GDP deflator is a measure of

Level of prices in the economyA.

International competitiveness of the domestic sectorB.

Industrial activity in the economyC.

Depreciation of production assetsD.

User Answer : B

Correct Answer : A


Justification: It is the ratio of the value of goods and services an economy produces

in a particular year at current prices to that at prices prevailing during any other

reference (base) year.

This ratio basically shows to what extent an increase in GDP or gross value added



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(GVA) in an economy has happened on account of higher prices, rather than

increased output.

Since the deflator covers the entire range of goods and services produced in the

economy - as against the limited commodity baskets for the wholesale or consumer

price indices - it is seen as a more comprehensive measure of inflation.

Option (b): While level of inflation in an economy may show its international

competitiveness, this is not why GDP deflator is used. Moreover, the ration of real

and nominal GDP does not make much sense for international players as much the

actual price level does. Inflation may be high in an economy, yet it may be highly

competitive internationally due to low base prices of goods. So, (b) will be wrong.


6 A country will necessarily be economically developed if

It has large reserves of natural resources.1.

It has a large base of working age population.2.


1 onlyA.

2 onlyB.

Both 1 and 2C.

NoneD.

User Answer : C

Correct Answer : D


Justification: Statement 1: The resource rich Africa and Latin America have some

of the poorest countries in the world, whereas many prosperous countries have

scarcely any natural wealth.

The economic wealth, or well-being, of a country thus does not necessarily depend

on the mere possession of resources; it is how these resources are used in generating

a flow of production and how, as a consequence, income and wealth are generated

from that process.

So, 1 will be incorrect.

Statement 2: It is called as demographic dividend, but its fruition depends on how

skilled, healthy and well-managed is the labour force. India is a well known case.



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7 Lingayats do not practise funerary rites prescribed in the Dharmashastras because they

believed

Funerary rites lead to environmental pollution.A.

After death a devotee will not return to this world.B.

Funerary rites are not needed as the soul will take another birth soon.C.

It was a Brahmanical practice and they opposed its domination.D.

User Answer : D

Correct Answer : B


Justification: Lingayats believe that on death the devotee will be united with Shiva

and will not return to this world. Therefore they do not practise funerary rites such

as cremation, prescribed in the Dharmashastras. Instead, they ceremonially bury

their dead.

Learning: The twelfth century witnessed the emergence of a new movement in

Karnataka, led by a Brahmana named Basavanna (1106-68) who was initially a

Jaina and a minister in the court of a Chalukya king. His followers were known as

Virashaivas (heroes of Shiva) or Lingayats (wearers of the linga).

The Lingayats challenged the idea of caste and the "pollution" attributed to certain

groups by Brahmanas. They also questioned the theory of rebirth

Q Source: Page 147: Chapter 6: Themes in Indian History - II: 12th NCERT

8 An economy generally sacrifices consumption goods in order to produce more capital

goods. Why is it done?

To generate long-term growth1.

To avoid inflationary situations2.


1 onlyA.

2 onlyB.

Both 1 and 2C.

NoneD.

User Answer :

Correct Answer : C




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This system of guarantee assures individual account-holders that their banks will be

able to pay their money back in case of a crisis and there is no need to panic thus

avoiding bank runs.

This role of the monetary authority is known as the lender of last resort.


10 Which of the following reduce accumulation of capital stock in the economy?

Depreciation of assets1.

Spending on infrastructure rather than capacity building of financial institutions2.

Which of the above is/are correct?1 onlyA.

2 onlyB.

Both 1 and 2C.

NoneD.

User Answer :

Correct Answer : A


Justification: Statement 1: Depreciation is the gradual decrease in the economic

value of the capital stock of a firm, nation or other entity.

It can happen either by physical depreciation like wear and tear or obsolescence or

by changes in the demand for the services of the capital in question. So, 1 is correct.

Statement 2: Capital stock is anything that adds to the productive capacity of the

economy. Spending on infrastructure actually increase the capital stock of the

nation. So, 2 is wrong.


11 "The lotus which blooms without flower" or the "Fire raging in the ocean" were termsused by the Kabir to describe

Socio-economic status of IndiaA.

Efforts towards religious reforms in IndiaB.

Nature of the Ultimate RealityC.

Poetical nature of Bhakti literature produced in IndiaD.

User Answer : D

Correct Answer : C



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Learning: Some of Kabir's poems are known as ulatbansi (upside-down sayings),

are written in a form in which everyday meanings are inverted.

These hint at the difficulties of capturing the nature of the Ultimate Reality in

words: expressions such as "the lotus which blooms without flower" or the "fire

raging in the ocean" convey a sense of Kabir's mystical experiences.

He also used terms drawn from Vedantic traditions, alakh (the unseen), nirakar

(formless), Brahman, Atman, etc. Other terms with mystical connotations such as

shabda (sound) or shunya (emptiness) were drawn from yogic traditions.

Q Source: Page 161: Chapter 6: Themes in Indian History- II: 12th NCERT

12 The term 'Base Effect' is often used while discussing inflationary trends in the Indian

economy. It refers to

Segment wise inflation trendsA.

Cost push inflationB.

Demand pull inflationC.

None of the aboveD.

User Answer :

Correct Answer : D


Learning: The base effect refers to the impact of the rise in price level (i.e. last

year's inflation) in the previous year over the corresponding rise in price levels in the

current year (i.e., current inflation): if the price index had risen at a high rate in the

corresponding period of the previous year leading to a high inflation rate, some of

the potential rise is already factored in, therefore a similar absolute increase in the

Price index in the current year will lead to a relatively lower inflation rates.

On the other hand, if the inflation rate was too low in the corresponding period of

the previous year, even a relatively smaller rise in the Price Index will arithmetically

give a high rate of current inflation.

Q Source: Often appears in Business news and Economic Surveys

13 Why do policymakers stress on high savings rate in the Indian economy?

Investments are financed by savings.1.



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Saving discourages inflation causing consumption expenditure.2.


1 onlyA.

2 onlyB.

Both 1 and 2C.

NoneD.

User Answer : A

Correct Answer : C


Justification: The basic macroeconomic identity that one should know is:

C+S+T = C+I+G.... (i)

Here C is consumption, S is savings, T is taxes, I is investment and G is government

spending.

So, S+T=I+G..... (ii)

Any increase in investments can either be financed by high savings or high taxes.

So, 1 is correct.

Also, in equation (i), total income = C+S+T. When S increases C will decrease also

controlling inflationary trends in the economy.

Q Source: Improvisation: Page 25: Chapter 2: 12th Macroeconomics NCERT

14 Revenue expenditure consists of all those expenditures of the government which

Generally do not result in creation of physical or financial assetsA.

Generally are withdrawn from the Public Accounts Fund of IndiaB.

Tackle special contingencies and exigencies of the government departmentsC.

Help in implementation of new projects of the GovernmentD.

User Answer :

Correct Answer : A


Learning: Revenue expenditure consists of all those expenditures of the

government which do not result in creation of physical or financial assets.

It relates to those expenses incurred for the normal functioning of the government

departments and various services, interest payments on debt incurred by the



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government, and grants given to state governments and other parties (even though

some of the grants may be meant for creation of assets).


15 The amara-nayaka system was a major political innovation of the Vijayanagara Empire.

The amara-nayakas were

Military commanders who were given territories to governA.

Chiefs of major municipalitiesB.

Peasants who were made independent cultivators in order to encourageC.

greater loyalty to the crown

Independent spy advisors to the KingD.

User Answer :

Correct Answer : A


Learning: Amara-nayakas collected taxes and other dues from peasants,

craftspersons and traders in the area.

They retained part of the revenue for personal use and for maintaining a stipulated

contingent of horses and elephants.

These contingents provided the Vijayanagara kings with an effective fighting force

with which they brought the entire southern peninsula under their control.

The amara-nayakas sent tribute to the king annually and personally appeared in the

royal court with gifts to express their loyalty.


16 The term 'factor cost' is often used in the estimation of national income. It is

Final market price of goods and servicesA.

Total Subsidies and taxes levied on factorsB.Total concessions given to units of productionC.

None of the aboveD.

User Answer :

Correct Answer : D


Learning: Factor Cost or Factor Income are the incomes received by the owners of



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the production (the households) for rendering their factor services to the producers.

It is a measure of national income or output based on the cost of factors of

production, instead of market prices.

This allows the effect of any subsidy or indirect tax to be removed from the final

measure.


17 If Gross Domestic Product (GDP) at market prices is growing at 5% every year, what

does it necessarily imply?Manufacturing activity must be growing nearly 5% annually.1.

Total volume of goods and services produced must be growing at 5% annually.2.


1 onlyA.

2 onlyB.

Both 1 and 2C.

NoneD.

User Answer : B

Correct Answer : D


Justification: GDP at market prices calculates total value of goods and services

produced within a year at market prices, and not at their actual cost of production.

So, even if only prices increased by 5% for all final goods and services produced,

GDP will increase by 5% without any 'real' increase in production

So, both 1 and 2 are incorrect.


18 If both the Consumer Price Index (CPI) and Wholesale Price Index (WPI) increased by

more than 10% within an year then

Prices of all goods and services musts have increased by more than 10% within a1.

year.

Labour wages must have increased by more than 10% within a year.2.


1 onlyA.



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2 onlyB.

Both 1 and 2C.

NoneD.

User Answer : A

Correct Answer : D


Justification:CPI and WPI do not capture increase in prices of all goods and

services in the economy.

So, 1 will be wrong as prices of only sample (representative goods) may have

increase leaving the prices of other goods and services constant.

GDP deflator takes into account all such goods and services.

CPI and WPI do not capture growth in labour wages. Even the CPI for workers

captures inflation in items consumed by the working class and not wages per se. So,

2 would be wrong.

Q Source: Page 28-29: Chapter 2: 12th Macroeconomics NCERT

19 The Mansabdari system was introduced by Akbar. What did 'Mansab' of an officer

imply in the system?Salary of the officer1.

Land granted to the Officer2.

Number of soldiers maintained by the officer3.

Select the correct answer using the codes below.

1 and 2 onlyA.

1 and 3 onlyB.

3 onlyC.

1, 2 and 3D.

User Answer : C

Correct Answer : B


Learning: The word mansab is of Arabic origin meaning rank or position. The

system, hence, determined the rank of a government official.

Every civil and military officer was given a 'mansab' and different numbers which

could be divided by ten were used for ranking officers.It was also meant for fixing

the salaries and allowances of officers.



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It was a system whereby nobles were granted the rights to hold a jagir, which meant

revenue assignments (not land itself) for services rendered by them but the authority

bestowed upon them was not unbridled but with the direct control of these nobles in

the hands of the king. So, 2 would be wrong.


20 In economics, the term 'Social Marginal Cost (SMC)' stands for

Cost incurred in use of an additional unit of physical capitalA.

Total social productivity of skilled labourB.

Costs that occur to the society in addition to the producerC.

All of the aboveD.

User Answer :

Correct Answer : C


Learning: Externalities refer to the benefits (or harms) a firm or an individual

causes to another for which they are not paid (or penalised).

Firms have a private marginal cost and a social marginal cost.

The total cost to society as a whole for producing one further unit, or taking one

further action, in an economy is called as social cost.

This total cost of producing one extra unit of something is not simply the direct cost

borne by the producer, but also must include the costs to the external environment

and other stakeholders.

The idea of SMC is taken into account in evaluating investment projects.

Q Source: Improvisation on concept of marginal cost asked in Previous UPSC

papers: Chapter 2 (Point on Externalities): 12th Macroeconomics NCERT

21 Net factor income from abroad includes

Remittances1.

Foreign investment2.


1 onlyA.

2 onlyB.

Both 1 and 2C.



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NoneD.

User Answer :

Correct Answer : C


Learning: The difference between a nation's gross national product (GNP) and

gross domestic product (GDP) is called NFIA.

Net foreign factor income or NFIA is the difference between the aggregate amount

that a country's citizens and companies earn abroad, and the aggregate amount that

foreign citizens and overseas companies earn in that country.

The NFIA level is generally not substantial in most nations, since factor payments

earned by their citizens and those paid to foreigners more or less offset each other.

However, the NFAI's impact may be significant in smaller nations with substantial

foreign investment in relation to their economy and few assets overseas, since their

GDP will be quite high compared to GNP.


22 Public finance aims at which of the following objectives?

Allocating resources1.Redistributing resources2.

Stabilising national income and employment3.


1 and 2 onlyA.

1 onlyB.

2 and 3 onlyC.

1, 2 and 3D.

User Answer :

Correct Answer : D


Justification & Learning: First, certain goods, referred to as public goods (such as

national defence, roads, government administration), as distinct from private goods

(like clothes, cars, food items), cannot be provided through the market mechanism,

i.e. by transactions between individual consumers and producers and must be

provided by the government. This is the allocation function.

Second, through its tax and expenditure policy, the government attempts to bring



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about a distribution of income that is considered 'fair' by society. The government

affects the personal disposable income of households by making transfer payments

and collecting taxes and, therefore, can alter the income distribution. This is the

distribution function.

Third, the economy tends to be subject to substantial fluctuations and may suffer

from prolonged periods of unemployment or inflation. The overall level of

employment and prices in the economy depends upon the level of aggregate demand

which is a function of the spending decisions of millions of private economic agents

apart from the government.


23 During a situation of low demand, what role monetary policy can play?

It can boost aggregate demand by printing more currency.1.

It can Increase liquidity in the market by selling bonds to the public.2.


1 onlyA.

2 onlyB.

Both 1 and 2C.

NoneD.

User Answer :

Correct Answer : D


Justification: Printing currency does not come under monetary policy. It is a part of

fiscal policy when the government desires to borrow freshly printed money from

RBI in exchange for government securities. So, 1 is incorrect.

It will however stimulate demand.

Selling bonds to the public will actually reduce the liquidity in the market as public

now invest their savings in bonds and bills. So, 2 would not stimulate aggregate

demand and actually reduce it.

Q Source: Chapter 4: 12th Macroeconomics NCERT

24 Which of the following were the consequences of the Green Revolution in India?

Revival of agricultural growth1.

Self-sufficiency in food grain production2.



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End of exploitative feudal relationships all over India.3.


1 and 2 onlyA.

1 and 3 onlyB.

2 and 3 onlyC.

1, 2 and 3D.

User Answer :

Correct Answer : A


Justification: Statement 1: Agriculture growth, which had stagnated in the 1950s,

revived to more than 3% annually.

Statement 2: India became self-sufficient in food production. Food production

increased to 159 million tonnes in the mid 1980s from meagre 50 mT in the 1950s.

Statement 3: Regions where GR was not introduced lagged behind prosperous GR

regions. These backward regions also witnessed rising inter-caste violence due to

the exploitative feudal relationships. So, it did not end from India. Statement 3 is

incorrect.

Q Source: Page 62: Chapter 4: 12th NCERT: Social Change and Development in

India

25 Consider the following.

Real GDP has increased year after year.1.

Government is continuously running a budget surplus.2.

The above then necessarily imply that

The Government is not spending on infrastructure creation.A.

The economy is suffering with very high inflation.B.

Tax yields are very low in the economy.C.

None of the above can be a correct assessment.D.

User Answer :Correct Answer : D


Justification: Option (a): It is not necessary only a government running a fiscal

deficit focuses on infrastructure financing. If the Indian government radically

increases its tax collections, its can achieve both a surplus and spending on

infrastructure.



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Option (b): We cannot say. Moreover, the government is not spending excess money

and total supply in the economy is increasing.

Option (c): If tax yields were low, then a situation of budget surplus maynot be

achieved. Even if achieved, we cannot surely conclude this is the case.

Q Source: Chapter 5: 12th NCERT Macroeconomics

26 Plan expenditure includes those kinds of expenditure which

Fall under Revenue expenditureA.

Create assets for the nationB.

Involve printing of currencyC.Generate tax expenditureD.

User Answer :

Correct Answer : B


Learning: The following may not apply to the present situation when Planning

Commission has been abolished.

For stepping up the rate of economic development five-year plans were formulated.

The expenditure incurred on the items relating to five year plans is termed as plan

expenditure. Such expenditure is incurred by the Central Government.

A provision is made for such expenditure in the budget of the Central Government.

Assistance given by the Central Government to the State Governments and Union

Territories for plan purposes also forms part of the plan expenditure.

Q Source: Chapter 5: 12th NCERT Macroeconomics

27 Which of these bodies/agencies help augment human capital in India?

National Council of Educational Research and Training (NCERT)1.

All India Council of Technical Education (AICTE)2.Indian Council for Medical Research (ICMR)3.

University Grants Commission (UGC)4.


1 and 3 onlyA.

1, 2 and 4 onlyB.

2 and 4 onlyC.

1, 2, 3 and 4D.



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User Answer :

Correct Answer : D


Justification: The concept of human capital recognizes that not all labor is equal

and that the quality of employees can be improved by investing in them. The

education, experience and abilities of an employee have an economic value for

employers and for the economy as a whole.

Education or health provided/facilitated by these bodies can significantly increase

human capital. So, all 1, 2, 3 and 4 are correct.

Q Source: Revision: 12th NCERT: Human Geography

28 Why is paper money accepted as a unit of exchange?

It has intrinsic value.A.

It is authorized by the Central Bank as a legal tender.B.

It derives its legitimacy from conventions.C.

International Monetary Fund (IMF) authorizes the use of paper money in allD.

nations.

User Answer :

Correct Answer : B


Justification: The value of the currency notes and coins is derived from the

guarantee provided by the issuing authority of these items.

Every currency note bears on its face a promise from the Governor of RBI that if

someone produces the note to RBI, or any other commercial bank, RBI will be

responsible for giving the person purchasing power equal to the value printed on the

note.

The same is also true of coins. Currency notes and coins are therefore called fiat

money. They do not have intrinsic value like a gold or silver coin. They are also

called legal tenders as they cannot be refused by any citizen of the country for

settlement of any kind of transaction.


29 What is speculative demand of money?



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Money that people require for immediate purchasesA.

Money that is invested in long-term capital market instrumentsB.

Money that is saved with the households in anticipation of a crisisC.

Money which is used to buy and sell short-term market instrumentsD.

User Answer :

Correct Answer : D


Learning: This is a Keynesian term. Option (a) is called transactions demand of

money.

Option (b) is not speculative demand of money as long-term investments are in

nature of savings, not speculation.

Option (c) is precautionary demand of money, again a Keynesian term.

Learning: An individual may hold her wealth in the form of landed property,

bullion, bonds, money etc.

When they invest in bonds, different people have different expectations regarding

the future movements in the market rate of interest based on their private

information regarding the economy.

When the interest rate is very high everyone expects it to fall in future and hence

anticipates capital gains from bond-holding. Hence people convert their money into

bonds. Thus, speculative demand for money is low.

The reverse condition is true also.


30 Consider the following statements about Kashmir Stag.

It is the State Animal of Jammu and Kashmir.1.

Its only habitat is dense riverine forests.2.

It is listed as critically endangered by the IUCN.3.


1 and 2 onlyA.

1 onlyB.

2 and 3 onlyC.

1 and 3 onlyD.

User Answer :



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Correct Answer : D


Justification: It lives in dense riverine forests, high valleys, and mountains of the

Kashmir valley and northern Chamba in Himachal Pradesh. So, 2 is wrong.

Due to habitat destruction, over-grazing by domestic livestock, and poaching they

are at threat.

Hangul, the only Asiatic survivor or sub-species of the European red deer, was once

widely distributed in the mountains of Kashmir.

But, they are now scattered within 141 km² of the Dachigam National Park located

on foothills of Zabarwan range on the outskirts of Srinagar.

Q Source: Revision: Critically Endangered Species and State animals

31 Monetary policy becomes ineffective in stimulating demand in an economy when

Liquidity trap occurs.A.

Economy is operating at excess capacity.B.

The government is running a fiscal deficit.C.

Foreign Exchange Rate is stable.D.

User Answer :Correct Answer : A


Justification: A liquidity trap occurs when low / zero interest rates fail to stimulate

consumer spending and monetary policy becomes ineffective.

In such as situation, an increase in the money supply could fail to increase spending

because interest rates can't fall further.

A liquidity trap means consumers' preference for liquid assets (cash) is greater than

the rate at which the quantity of money is growing.

So any attempt by policymakers to get individuals to hold non-liquid assets in the

form of consumption by increasing the money supply won't work.


32 Consider the following statements.



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Debtors suffer due to low inflation.1.

Lenders suffer due to high inflation.2.

Bond Holders suffer due to sudden spike of interest rates.3.


1 and 2 onlyA.

3 onlyB.

1 onlyC.

1, 2 and 3 onlyD.

User Answer :

Correct Answer : D


Justification: Suppose a bank (lender) gave loan to a customer (debtor) at 10%

annual simple interest rate.

Assume inflation is at 6% right now, i.e. the value of money is eroded by 6% every

year or effective money holding reduces by 6%.

This means the real or effective interest rate (or return on loan) that the bank

receives is only 4% (10-6).

If inflation increases, real returns to banks decrease and thus 2 would be correct.

By the same logic, 1 would be correct too.

If interest rates spike suddenly, bonds become unattractive for bond holders. This is

because now a lower priced bond can offer the same fixed return that now their high

priced bond (purchased at promise of low interest rates) does. So, 3 is also correct.


33 Chronologically, which of these event(s) happened after the invasion of Nadir Shah?

Ahmad Shah Abdali defeats the Marathas in the third battle of Panipat1.

The diwani of Bengal transferred to the East India Company2.

Humayun defeated by Sher Shah3.


1 and 2 onlyA.

2 onlyB.

1 and 3 onlyC.

1, 2 and 3D.

User Answer :



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Correct Answer : A


Learning: The Mughal empire had been weakened by ruinous wars of succession in

the three decades following the death of Aurangzeb, the Hindu Marathas of the

Maratha Empire had captured vast swathes of territory in Central and Northern

India, whilst many of the Mughal nobles had asserted their independence and

founded small states.

Its ruler, Muhammad Shah, proved unable to stop the disintegration of the empire.

The imperial court administration was corrupt and weak whereas the country was

extremely rich whilst Delhi's prosperity and prestige was still at a high. Nadir Shah,

attracted by the country's wealth, then sought plunder like so many other foreign

invaders before him.


34 Narrow and Broad Money is differentiated based on their

Issuing authorityA.

LiquidityB.

Total volume of circulationC.

Convertibility to foreign exchangeD.

User Answer :

Correct Answer : B


Justification: It is not (a) since all currency that can be classified as either narrow or

broad money is issued by the RBI.

It cannot be (d) either as whether narrow or broad money all are convertible upto

legal limits.

RBI publishes figures for four alternative measures of money supply, viz. M1, M2,

M3 and M4.

M1 is most liquid and easiest for transactions whereas M4 is least liquid of all. M3

is the most commonly used measure of money supply. It is also known as aggregate

monetary resources




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35 Banks hold a part of the money people keep in their bank deposits as reserve money.

Why?

It is profitable for the banks to do so.1.

It is mandated by the RBI.2.

It helps avoid bank failures.3.

It is contributed to the forex reserves.4.


1 and 2 onlyA.

2 and 3 onlyB.

1 onlyC.

2, 3 and 4 onlyD.

User Answer :Correct Answer : B


Justification: Keeping reserves is costly for banks, as, otherwise, they could lend

this balance to interest earning investment projects. So, 1 is wrong.

RBI requires commercial banks to keep reserves in order to ensure that banks have a

safe cushion of assets to draw on when account holders want to be paid. So, 2 and 3

are correct.

4 is wrong as Forex reserves are made of foreign exchange, SDR and Gold.


36 The zamindars held extensive personal lands - milkiyat - in Mughal India. These lands

could NOT be

Cultivated for the private use of zamindars1.

Sold or mortgaged at will by Zamindars2.


1 onlyA.

2 onlyB.Both 1 and 2C.

NoneD.

User Answer :

Correct Answer : D


Justification & Learning:Milkiyat lands were cultivated for the private use of

zamindars, often with the help of hired or servile labour. The zamindars could sell,



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bequeath or mortgage these lands at will. So, both 1 and 2 are wrong.

Zamindars also derived their power from the fact that they could often collect

revenue on behalf of the state, a service for which they were compensated

financially.

Q Source:Page 211: Chapter 8: Themes in Indian History - II: 12th NCERT

37 When the Statutory Liquidity Ratio (SLR) is increased

Banks may cut their lending rates.A.

Money circulation in the economy becomes weak.B.

Inflation will shoot up in the next quarter.C.Banks will lend lesser funds to retail customers.D.

User Answer :

Correct Answer : D


Justification:Statutory Liquidity Ratio which requires the banks to maintain a given

fraction of their total demand and time deposits in the form of specified liquid

assets.

It can be in cash, gold or securities etc. Therefore, as SLR increases, banks have less

to lend.


38 High powered money is the

Total liability of the monetary authority of the countryA.

Reserves kept with RBIB.

Money circulating in security marketsC.

Special deposits kept with the Government of IndiaD.

User Answer :

Correct Answer : AAnswer Justification :

Learning:It is also called as monetary base.

It consists of currency (notes and coins in circulation with the public and vault cash

of commercial banks) and deposits held by the Government of India and commercial

banks with RBI.



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If a member of the public produces a currency note to RBI the latter must pay her

value equal to the figure printed on the note.

Similarly, the deposits are also refundable by RBI on demand from deposit-holders.

These items are claims which the general public, government or banks have on RBI

and hence are considered to be the liability of RBI.


39 The word Yavana was used in India for

Greeks and other peoples who entered the Indian subcontinentA.

Prisoners sentenced for seditious actsB.Messengers who visited Royal courtsC.

Devadasis who performed for social serviceD.

User Answer :

Correct Answer : A


Learning:In Sanskrit sources, the usage of the words "Yona", "Yauna", "Yonaka",

"Yavana" or "Javana" etc. appears repeatedly, and particularly in relation to the

Greek kingdoms which neighbored or sometimes occupied the Punjab region over a

period of several centuries from the 4th century BCE to the first century CE.

Examples are the Seleucid Empire, the Greco-Bactrian Kingdom and the Indo-Greek

Kingdom.

The Yavanas are mentioned in detail in Sangam literature epics such as

Pattinappalai, describing their brisk trade with the Early Cholas in the Sangam

period.


40 If RBI undertakes Open Market Operations (OMOs), which of the following is mostlikely to occur?

The GDP of India will suddenly increase.A.

It will alter the total money supply in the economy in the short-term.B.

Foreign Institutional Investors (FIIs) will suddenly withdraw from the IndianC.

markets.

It will immediately cut operating costs for banks.D.

User Answer :



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Correct Answer : B


Justification:RBI purchases (or sells) government securities to the general public in

a bid to increase (or decrease) the stock of high powered money in the economy.

FIIs would not withdraw as OMOs concern with general public. Moreover, OMOs

only affect money supply, and not the confidence of FIIs. So, (c) will be wrong.

GDP of India may increase or decrease, but that is a medium term phenomenon

about which nothing can be accurately said. (a) is not the most appropriate here.

Operating and lending costs of banks can be cut if their reserve size is reduced.

OMOs do not aim at this, and hence (d) is wrong.


41 According to Francois Bernier, some of the fundamental differences between Mughal

India and Europe was/were

Lack of private property in land in Mughal India1.

Non-existent armies in Europe unlike in Mughal India2.


1 onlyA.2 onlyB.

Both 1 and 2C.

NoneD.

User Answer :

Correct Answer : A


Justification:Statement 1: Owing to crown ownership of land, argued Bernier,

landholders could not pass on their land to their children. So they were averse to any

long-term investment in the sustenance and expansion of production.

Statement 2: Strong armies existed in both Europe and Mughal India. The

organization systems were different though.


42 What is 'Paradox of Thrift'?



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Individuals save more during a recession which further depletes growthA.

prospects.

Capital not flowing from developed countries to developing countries despiteB.

high savings in developed economies

Increase in economic efficiency and savings leading to reduced demandC.

If everyone tries to work during times of recession there will be even moreD.

unemployment.

User Answer :

Correct Answer : A


Learning:It states that individuals try to save more during an economic recession,which essentially leads to a fall in aggregate demand and hence in economic growth.

Such a situation is harmful for everybody as investments give lower returns than

normal.

This theory was heavily criticized by non-Keynesian economists on the ground that

an increase in savings allows banks to lend more. This will make interest rates go

down and lead to an increase in lending and, therefore, spending.

Q Source:Page 58 (Fig 4.6): Chapter 4: 12th Macroeconomics NCERT

43 Public goods are always

Rival goods1.

Exclusive goods2.


1 onlyA.

2 onlyB.

Both 1 and 2C.

NoneD.

User Answer :

Correct Answer : D


Justification:A rival good is a good whose consumption by one consumer prevents

simultaneous consumption by other consumers, for e.g. a berth on train. But, not all

public goods are rival, for e.g. defense, police security, public parks etc. So, 1 is

wrong.

Excludable goods are those for which one can at low cost prevent those who have

not paid for the good from consuming it. You can require people to pay for a stamp



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before you deliver mail or pay for a ticket before they board a train; you cannot

cheaply or easily prevent people from entering a park or from listening to a radio

station. So, 2 is not always correct.


44 Which of the following taxes form part of revenue receipts of the Government of India?

Corporation Tax1.

Excise Taxes2.

Income Tax3.

Select the correct answer using the code below.

1 and 2 onlyA.

2 and 3 onlyB.

1 and 3 onlyC.

1, 2 and 3D.

User Answer :

Correct Answer : D


Learning:Tax revenues, an important component of revenue receipts, comprise of

direct taxes - which fall directly on individuals (personal income tax) and firms

(corporation tax), and indirect taxes like excise taxes (duties levied on goods

produced within the country), customs duties (taxes imposed

on goods imported into and exported out of India) and service tax.


45 Consider the following about Alvars and Nayanars.

They disapproved of the caste based discrimination in India.1.

They did not produce any written compositions.2.

Women devotees were not allowed within the Sangha.3.


1 and 2 onlyA.

1 onlyB.

2 and 3 onlyC.

3 onlyD.

User Answer :

Correct Answer : B




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Justification:Statement 1: Some historians suggest that the Alvars and Nayanars

initiated a movement of protest against the caste system and the dominance of

Brahmanas or at least attempted to reform the system.

To some extent this is corroborated by the fact that bhaktas hailed from diverse

social backgrounds ranging from Brahmanas to artisans and cultivators and even

from castes considered "untouchable".

Statement 2 & 3: The compositions of Andal, a woman Alvar, were widely sung.

Another woman, Karaikkal Ammaiyar, a devotee of Shiva, adopted the path of

extreme asceticism in order to attain her goal. So, 3 is wrong.

One of the major anthologies of compositions by the Alvars, the Nalayira

Divyaprabandham, was frequently described as the Tamil Veda, thus claiming that

the text was as significant as the four Vedas in Sanskrit that were cherished by the

Brahmanas. So, 2 is also wrong.


46 In an open economy without government intervention, trade deficit can be financed by

Excess of investments over savings1.

Capital inflows2.

High consumption expenditure3.


1 and 2 onlyA.

2 onlyB.

1 and 3 onlyC.

1, 2 and 3D.

User Answer :

Correct Answer : B


Justification:Trade deficit is financed by excess of savings over investments, notthe other way round. Only with more savings can we pay for the imports bill as well

as manage the domestic investments. So, 1 is wrong.

Total balance of payments consists of current account (includes trade, invisibles,

remittances etc) as well as capital account. Capital inflows like FDI, FII help bridge

the trade deficit and neutralize BoP. So, 2 is correct.

High consumption expenditure will further inflate the import bill and cause trade



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deficit. So, 3 is incorrect.

Q Source:Chapter 6: 12th Macroeconomics NCERT

47 Which of these bills presented along with the Annual Financial Statement, provides

details of the imposition, abolition, remission, alteration or regulation of taxes proposed in

the Budget?

Appropriate BillA.

Medium Term Framework BillB.

Finance BillC.

Budget Amendment BillD.

User Answer :

Correct Answer : C


Learning:While the Finance Bill generally seeks approval of the Parliament for

raising resources through taxes, cess etc., an Appropriation Bill seeks Parliament's

approval for the withdrawal from the Consolidated Fund of India to meet the

approved expenditures of the Government. So, (a) is wrong.

No such bill as (b) exists.

Finance Bill is a secret bill introduced every year in Lok Sabha (Lower chamber of

the Parliament) immediately after the presentation of the Union Budget, to give

effect to the financial proposals of the Government of India for the immediately

following financial year.

It is through the Finance Act that amendments are made to the various Acts like

Income Tax Act 1961, Customs Act 1962 etc.

Q Source:Page 62 (Footnote): Chapter 5: 12th Macroeconomics NCERT

48 The main items of non-plan expenditure areInterest payments1.

Defence services2.

Subsidies3.

Salaries4.

Pensions5.


3, 4 and 5 onlyA.



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1 and 2 onlyB.

1, 2 and 3 onlyC.

1, 2, 3, 4 and 5D.

User Answer :

Correct Answer : D


Learning:Budget documents classify total revenue expenditure into plan and non-

plan expenditure.

Plan revenue expenditure relates to central Plans (the Five-Year Plans) and central

assistance for State and Union Territory Plans.

Non-plan expenditure, the more important component of revenue expenditure,

covers a vast range of general, economic and social services of the government.

Interest payments on market loans, external loans and from various reserve funds

constitute one of the single largest components of non-plan revenue expenditure.


49 The main items of capital receipts of the government are

Monetization of RBI's reserves1.Market borrowings of the government from the public2.

Earnings from import and export duties3.

Loans received from international organisations4.

Sale of shares in Public Sector Undertakings (PSUs)5.


2, 4 and 5 onlyA.

1 and 2 onlyB.

1, 4 and 5 onlyC.

1, 2, 3, 4 and 5D.

User Answer :

Correct Answer : A


Learning:The main items of capital receipts are loans raised by the government

from the public which are called market borrowings, borrowing by the government

from the Reserve Bank and commercial banks and other financial institutions

through the sale of treasury bills, loans received from foreign



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governments and international organisations, and recoveries of loans granted by the

central government.

Other items include small savings (Post-Office Savings Accounts, National Savings

Certificates, etc), provident funds and net receipts obtained from the sale of shares in

Public Sector Undertakings (PSUs).


50 Consider the following statements about Lala Lajpat Rai.

He was a co-founder of the Anglo-Vedic School alongwith Dayanand Saraswati.1.

He was the founder of Servants of the People Society.2.He had been the President of the Indian National Congress (INC).3.


2 onlyA.

1 and 3 onlyB.

2 and 3 onlyC.

1, 2 and 3D.

User Answer :

Correct Answer : C


Learning:Statement 1: He had helped establish the nationalistic Dayanand Anglo-

Vedic School and became a follower of Dayanand Saraswati (founder of the Arya

Samaj). He was not its co-founder.

Statement 2: In 1921, he had founded Servants of the People Society, a non-profit

welfare organisation, in Lahore, which shifted based to Delhi after partition, and has

branches in many parts of India.

Statement 3: In 1888 and 1889 he was a delegate to the annual sessions of Indian

National Congress (INC) and was

elected as its President in the Calcutta Special Session of 1920.

Q Source:150th birth anniversary of Lala Lajpat Rai.

51 The exercise of Gender Budgeting usually involves which of these activities in India?

Special initiatives for empowering women1.

Examination of the utilisation of resources allocated for women2.



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Impact of public expenditure and policies of the government on women3.


1 and 2 onlyA.

2 and 3 onlyB.

1 and 3 onlyC.

1, 2 and 3D.

User Answer :

Correct Answer : D


Learning:GB entails dissection of the Government budgets to establish its gender

differential impacts and to ensure that gender commitments are translated in tobudgetary commitments.

Gender Budgeting Cells (GBCs) in Union Government are envisaged to serve as

focal points for coordinating gender budgeting initiatives within their Ministries and

across Departments. So far 56 Ministries/Department have confirmed setting up of a

cell/nominating a nodal person.

Q Source:Page 64 (Footnote): Chapter 5: 12th Macroeconomics NCERT

52 The Central Bank does not intervene via foreign reserve transactions in the system of

Flexible Exchange RatesA.

Fixed Exchange RatesB.

Managed Exchange ratesC.

All of the aboveD.

User Answer :

Correct Answer : A


Learning:In a system of flexible exchange rates (also known as floating exchange

rates), the exchange rate is determined by the forces of market demand and supply.

In a completely flexible system, the central banks follow a simple set of rules - they

do nothing to directly affect the level of the exchange rate, in other words they do

not intervene in the foreign exchange market (and therefore, there are no official

reserve transactions).




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53 The Union Government has issued detailed guidelines to tackle the outbreak of Zika

Virus Disease in the wake of reported cases in Americas. Which of the following would

help best control its outbreak in India?

Controlling mosquito populationA.

Proper Polio immunizationB.

Cutting down air pollution in citiesC.

Sterilizing soil by special chemicalsD.

User Answer :

Correct Answer : A


Learning:Zika virus is spread to people through mosquito bites. The most commonsymptoms of Zika virus disease are fever, rash, joint pain, and conjunctivitis (red

eyes). The illness is usually mild with symptoms lasting from several days to a

week. Severe disease requiring hospitalization is uncommon.

The World Health Organisation (WHO) has declared an international public health

emergency over the explosive spread of the mosquito-borne Zika virus.

Q Source:http://pib.nic.in/newsite/PrintRelease.aspx?relid=135922

54 Consider the following statements.

Fiscal deficit will always cause inflation.1.

Fiscal deficit will always slowdown the economy.2.


1 onlyA.

2 onlyB.

Both 1 and 2C.

NoneD.

User Answer :

Correct Answer : D


Justification:Statement 1: One of the main criticisms of deficits is that they are

inflationary. This is because when government increases spending or cuts taxes,

aggregate demand increases. If firms can't match (supply) increased demand,

inflation will occur.

However, if there are unutilised resources, output is held back by lack of demand. A

high fiscal deficit is accompanied by higher demand and greater output and,

therefore, need not be inflationary.

https://www.insightsias.com/http://pib.nic.in/newsite/PrintRelease.aspx?relid=135922https://www.insightsias.com/http://pib.nic.in/newsite/PrintRelease.aspx?relid=135922


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Statement 2: Only when persistently high fiscal deficit is run by the government, it

crowds out private sector investment, leads to inflation and slows down the

economy.

But a carefully crafted fiscal deficit will actually facilitate production by private

sector by building human and physical capital. So, 2 is also wrong.


55 The degree of openness of an economy can be measured best by

Total foreign trade as a proportion of GDPA.

Annual GDP growth trendsB.Volume of total money supply as a proportion of GDPC.

Number of financial institutions active in the economyD.

User Answer :

Correct Answer : A


Learning:An open economy is one that trades with other nations in goods and

services and, most often, also in financial assets.

First, when a nation buys foreign goods, this spending escapes as a leakage from the

circular flow of income decreasing aggregate demand.

Second, our exports to foreigners enter as an injection into the circular flow,

increasing aggregate demand for domestically produced goods.

Total foreign trade (exports + imports) as a proportion of GDP is a common

measure of the degree of openness of an economy.

Even a closed economy can have high number of FIs or have high GDP growth rate

or high circulation of money supply. So, other options are wrong.


56 Union Law Ministry has constituted an expert committee to review the Specific Relief

Act, 1963. The review will help

Ensure ease of doing businessA.

Reduce atrocities against Scheduled CastesB.

Cut down total number of laws in the countryC.



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Modify the framework for implementation of Directive Principles of StateD.

Policy

User Answer :

Correct Answer : A


Learning:The committee has been tasked to examine the Act in the context of

present scenario involving many issues and dealing with its various provisions.

The present scenario issues mainly include public private partnerships, contract

based infrastructure development and other public projects involving enforceability

of the contracts and huge investments thereof.

The review of the Act will also ensure ease of doing business as it has been not

amended since its inception to meet need of changing time.

Q Source: http://pib.nic.in/newsite/PrintRelease.aspx?relid=135898

57 The current account of India records

Exports and imports in goods and services1.

Remittances2.

Official Gifts and grants by foreign nations3.


1 and 2 onlyA.

2 and 3 onlyB.

1 and 3 onlyC.

1, 2 and 3D.

User Answer :

Correct Answer : D


Learning:The current account records exports and imports in goods and services

and transfer payments.

Trade in services denoted as invisible trade (because they are not seen to cross

national borders) includes both factor income (payment for inputs-investment

income, that is, the interest, profits and dividends on our assets abroad minus the

income foreigners earn on assets they own in India) and non-factor

income (shipping, banking, insurance, tourism, software services, etc.).

https://www.insightsias.com/http://pib.nic.in/newsite/PrintRelease.aspx?relid=135898https://www.insightsias.com/http://pib.nic.in/newsite/PrintRelease.aspx?relid=135898


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Transfer payments are receipts which the residents of a country receive 'for free',

without having to make any present or future payments in return.

They consist of remittances, gifts and grants. They could be official or private.


58 Which of these factors affect the exchange rate of rupee?

Demand for Indian goods abroad1.

Net foreign investments in India2.

Political stability of India3.

Select the correct answer using the code below.1 and 2 onlyA.

2 and 3 onlyB.

1 and 3 onlyC.

1, 2 and 3D.

User Answer :

Correct Answer : D


Justification:Statement 1 refers to Indian exports. More the exports, more is the

demand of rupee abroad, and higher is the appreciation of the currency.

Statement 2: Higher FDI movements also indicate demand for rupee as investors

must convert their currency into rupees for investments.

Statement 3: Due to political instability FIIs can fly away from the country, FDI

becomes less attractive. So, exchange rate fluctuates due to in and out movement of

foreign capital.


59 The term 'Agrarian structure' in context of rural India impliesDistribution of landholding1.

Land management system2.


1 onlyA.

2 onlyB.

Both 1 and 2C.

NoneD.



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User Answer :

Correct Answer : C


Learning:The term Agrarian Structure denotes all of the existing and lasting

production and living conditions found in a rural region. It comprises social,

technological, and economic elements and determines the achievable productivity,

income and its distribution, and the rural population's social situation.

The system of land tenure governs the traditional or legal rights individuals or

groups have to land and the resulting social relationships among the rural

population. Its components are the system of land ownership and system of labourorganization.

The land management system covers the factors on which the cultivation of land is

possible. The main factors on which the cultivation of a land depends are land, labor

and capital.

Q Source: Page 58: Chapter 4: 12th NCERT: Social Change and Development in

India

60 'Credit creation' in terms of money multiplier is done by

Only Central Bank A.

Only governmentsB.

BanksC.

Financial authorities that regulate marketsD.

User Answer :

Correct Answer : C


Justification & Learning:Money creation is the process by which the money

supply of a country or a monetary region (such as the Eurozone) is increased. A

central bank may introduce new money into the economy (termed "expansionarymonetary policy", or "money printing" by detractors) by purchasing financial assets

or lending money to financial institutions.

Commercial bank lending also creates money in the form of demand deposits.

Through fractional reserve banking, bank lending multiplies the amount of broad

money beyond the amount of base money originally created by the central bank.

The exact process has been explained very well in the NCERT book.



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Q Source:Chapter 4: 12th NCERT Macroeconomics

61 Fiscal deficit is the difference between

Government's total expenditure and its total receipts excluding borrowingA.

Government's total revenue expenditure and its revenue receipts excludingB.

borrowing

Government's planned expenditure and its total receiptsC.

Government's total expenditure and its total receipts including borrowingD.

User Answer :

Correct Answer : A


Justification:Gross fiscal deficit = Total expenditure - (Revenue receipts + Non-

debt creating capital receipts)

Non-debt creating capital receipts are those receipts which are not borrowings and,

therefore, do not give rise to debt. Examples are recovery of loans and the proceeds

from the sale of PSUs.


62 Consider the following statements.Assertion (A): A rise in the interest rates at home often leads to an appreciation of 1.

the domestic currency.

Reason (R): Higher interest rates attract foreign capital.2.

In the context of the above, which of these is correct?

A is correct, and R is an appropriate explanation of A.A.

A is correct, but R is not an appropriate explanation of A.B.

A is correct, but R is incorrect.C.

Both A and R are incorrect.D.

User Answer :

Correct Answer : A


Justification:There are huge funds owned by banks, multinational corporations and

wealthy individuals which move around the world in search of the highest interest

rates.

The country offering higher interest rates (with safe assets) attract foreign capital

and increase the demand for the currency of that nation (since foreign currency must



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be converted to domestic currency for investment).

Higher demand for domestic currency leads to its appreciation.


63 Which of the following raises the productivity of the economy?

Factor paymentsA.

Investment expenditureB.

Rent expenditureC.

Transfer paymentsD.



Justification:You should choose the most appropriate option here.

Factor payments include payment towards land, labour, raw material etc. Since these

are regular payments towards factors which are already productive, they don't add to

their productive capacity. For e.g. a training programme may have increased labour

productivity. Mere wage payment may not lead to the same. So, (a) is not most

appropriate here.

By the same logic, (c) is incorrect.

Transfer payments do not directly absorb resources or create output. They are

considered as a redistribution of resources in the economic system, e.g. pensions.

So, (d) is also not correct.

Learning:Investment expenditure refers to the expenditure incurred either by an

individual or a firm or the government for the creation of new capital assets like

machinery, building etc.

Net investment expenditure is calculated by deducting the depreciation charges from

the value of existing capital assets.


64 The term 'twin deficits' is often in news. It occurs

When an economy has both current account deficit and fiscal deficitA.



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When an economy has deficits in both trade and remittancesB.

When an economy is suffering from both depreciation of exchange rate andC.

high inflation

When a nation with high fiscal deficit is suffering from savings deficitD.

User Answer :

Correct Answer : A


Learning:Twin deficit identity is used to refer to a nation's current account deficits

and a simultaneous fiscal deficit.

The term became widely used in the 1980s until the 1990s because the United Statesexperienced the "twin" deficits during this timeframe. However, there is no reason

why current account deficits and government budget deficits occurs at the same

time.

This is an insightful article on the issue

http://www.thehindubusinessline.com/opinion/columns/harish-damodaran/the-twin-

deficits-myth/article3961796.ece

India was running high twin deficits in the post-2008 phase.


65 United Nations Disengagement Observer Force (UNDOF) maintains the ceasefire

between

Syria and IsraelA.

Jordan and EgyptB.

Kuwait and IraqC.

Saudi Arabia and KuwaitD.

User Answer :

Correct Answer : A


Learning: The UNDOF was established in 1974 by United Nations Security

Council (UNSC) following the agreed disengagement of Syrian and Israeli forces in

the Golan Heights.

Since then, UNDOF has remained in the area to maintain the ceasefire between

Syrian and Israeli forces and to supervise the implementation of the disengagement

https://www.insightsias.com/http://www.thehindubusinessline.com/opinion/columns/harish-damodaran/the-twin-deficits-myth/article3961796.ecehttp://www.thehindubusinessline.com/opinion/columns/harish-damodaran/the-twin-deficits-myth/article3961796.ecehttps://www.insightsias.com/http://www.thehindubusinessline.com/opinion/columns/harish-damodaran/the-twin-deficits-myth/article3961796.ecehttp://www.thehindubusinessline.com/opinion/columns/harish-damodaran/the-twin-deficits-myth/article3961796.ece


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agreement.

Major General Jai Shanker Menon of India has been appointed as the Head of

Mission and Force Commander of the United Nations Disengagement Observer

Force (UNDOF).

Q

Source:http://www.thehindu.com/news/international/ban-appoints-major-general-m

enon-as-undof-head/article8188708.ece

66 If we subtract 'X' from the fiscal deficit we will obtain 'Primary deficit'. Here 'X is

Interest paymentsA.Major subsidiesB.

Defence expenditureC.

Recovery of loansD.

User Answer :

Correct Answer : A


Learning:Primary deficit refers to difference between fiscal deficit of the current

year and interest payments on the previous borrowings. Primary Deficit = Fiscal

Deficit - Interest Payments

The total borrowing requirement of the government includes the interest

commitments on accumulated debts. Primary deficit reflects the extent to which

such interest commitments have compelled the government to borrow in the current

period.


67 Which of these are recent reforms in the International Monetary Fund (IMF)?

Voting quotas of some emerging economies has been increased.1.

IMF's Executive Board will now consist entirely of elected Executive Directors.2.Which of the above is/are correct?

1 onlyA.

2 onlyB.

Both 1 and 2C.

NoneD.

User Answer :

Correct Answer : C

https://www.insightsias.com/http://www.thehindu.com/news/international/ban-appoints-major-general-menon-as-undof-head/article8188708.ecehttp://www.thehindu.com/news/international/ban-appoints-major-general-menon-as-undof-head/article8188708.ecehttps://www.insightsias.com/http://www.thehindu.com/news/international/ban-appoints-major-general-menon-as-undof-head/article8188708.ecehttp://www.thehindu.com/news/international/ban-appoints-major-general-menon-as-undof-head/article8188708.ece


43/65

TEST - 11


Total Marks : 200

Mark Scored : -2



Justification:Statement 1: India's voting rights increased by 0.3% from the current

2.3% to 2.6%. China's voting rights increased by 2.2% from current 3.8% to 6 %.

These reforms shifted more than 6% of the quota shares to emerging and developing

countries from the US and European countries. Russia and Brazil also have gained

from the reforms.

Statement 2: Currently, US, Japan, France, Germany, Italy, United Kingdom,

Canada and Saudi Arabia are among the top ten members of the IMF.

But, the member countries with the 5 largest quotas appointed the Executive

Director, which will be made to an entirely elected system now. So, 2 is correct.

Learning:The reforms were agreed upon by the 188 members of the IMF in 2010 in

the aftermath of the global financial meltdown. However, there implementations

were delayed due to the time taken by the US Congress to approve the changes.

Q

Source:http://www.thehindu.com/business/india-gets-more-voting-rights-in-imf-ref

orms/article8163827.ece

68 Which of the following cities have been shortlisted under the Smart Cities Mission?

Bhubneshwar1.

Jabalpur2.

Udaipur3.

Guwahati4.


1 and 2 onlyA.

2 and 4 onlyB.

1 onlyC.

1, 2, 3 and 4D.



Learning:The Union Ministry of Urban Development has shortlisted 20 cities from

11 States and Delhi Union Territory in the list of first batch of Smart Cities Mission.

Among the shortlisted 20 Smart cities, 3 are from Madhya Pradesh, 2 each are from

Maharashtra, Rajasthan Tamil Nadu, Karnataka, Gujarat and Andhra Pradesh and 1

https://www.insightsias.com/http://www.thehindu.com/business/india-gets-more-voting-rights-in-imf-reforms/article8163827.ecehttp://www.thehindu.com/business/india-gets-more-voting-rights-in-imf-reforms/article8163827.ecehttps://www.insightsias.com/http://www.thehindu.com/business/india-gets-more-voting-rights-in-imf-reforms/article8163827.ecehttp://www.thehindu.com/business/india-gets-more-voting-rights-in-imf-reforms/article8163827.ece


44/65

TEST - 11


Total Marks 200

Mark Scored -2


each from Odisha, Kerala, Delhi (UT), Assam and Punjab.

Q

Source:http://indianexpress.com/article/india/india-news-india/india-20-smart-cities

-list/

69 Which of these argument(s) support the existence of an International Monetary System

(IMS)?

An international payment system will fail if there is no authority to force the use of a1.

particular currency in all international transactions.

An IMS is needed to decide on the exchange rate values of all currencies used in2.

international transactions.


1 onlyA.

2 onlyB.

Both 1 and 2C.

NoneD.

User Answer :

Correct Answer : D


Justification:Statement 1: Even presently, there is no IMS that enforces the use of a

particular currency in all international transactions. What is required is confidence in

a currency, which is given by national governments themselves

announcing the free convertibility of their currencies. So, 1 is not correct.

Statement 2: Presently a mix of managed and floating exchange rate system is

followed by most national governments themselves. The foreign exchange market

forces decide the currency value. It will be a disaster if a single authority supersedes

market forces. So, 2 is wrong.

Q Source:Page 77: Chapter 6: 12t

11-insight 2016 prelims test series

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