Test Series

TEST SERIES
PRELIMS-2022
THEMATIC TEST – 10
ECONOMY AND SOCIAL

DEVELOPMENT - 2
100 MCQs & ANSWER KEY &
EXPLANATIONS
(Full assessment of exam preparedness)
This test is part of Shield IAS Prelims Test Series 2022
THEMATIC TEST BOOKLET Test Code
GENERAL STUDIES
PTPS22D2602
PAPER-I
TOPIC: Economy and Social Development - 2
Time Allowed: Two Hours Maximum Marks: 200
INSTRUCTIONS
IMMEDIATELY AFTER THE COMMENCEMENT OF THE EXAMINATION, YOU SHOULD

CHECK THAT THIS TEST BOOKLET DOES NOT HAVE ANY UNPRINTED OR TORN or
MISSING PAGES OR ITEMS, ETC. IF SO, GET IT REPLACED BY A COMPLETE TEST
BOOKLET.
1. This Test Booklet contains 100 items (questions). Each item comprises four responses (answers). You
will select the response which you want to mark on the Answer Sheet. In case you feel that there is
more than one correct response, mark the response which you consider the best. In any case, choose
ONLY ONE response for each item.
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Read the directions on the Answer Sheet.
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you have to fill in some particulars in the Answer Sheet as per the instructions contained therein.
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concluded, you should hand over to the Invigilator only the Answer Sheet. You are permitted to take
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Penalty for wrong answers:

THERE WILL BE PENALTY FOR WRONG ANSWERS MARKED BY A CANDIDATE IN THE
OBJECTIVE TYPE QUESTION PAPERS.
(i) There are four alternatives for the answer to every question. For each question for which a wrong
answer has been given by the candidate, one-third of the marks assigned to that question will be
deducted as penalty.
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given answers happens to be correct and there will be the same penalty as above to that question.
(iii) If a question is left blank, i.e., no answer is given by the candidate, there will be no penalty for that
question.
This test is part of Shield IAS Prelims Test Series 2022

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Q1. Consider the following statements: Select the correct answer using the code
1. The NSSF is administered by the given below:
Government of India, Ministry of (a) 1 and 2
Finance under National Small Savings (b) 1 and 3
Fund Rules, 2001. (c) 1, 2 and 3
2. Funds collected under SSS are the (d) All of the above
liabilities of the Union Government
accounted for in the Public Accounts
Q3. Which of the following Conventions are
of India.
related to International Arbitration?
Which of the statements given above is/are
1. New York Convention
correct?
2. Geneva Convention
(a) 1 only
3. ICSID Convention
(b) 2 only
Select the correct answer using the code
(c) Both 1 and 2
given below:
(d) Neither 1 nor 2
(a) 1 only
(b) 1 and 3
Q2. Which of the following pairs is/are
(c) 2 and 3
correctly matched?
(d) 1, 2 and 3
Term Description
1. Letter of - It is a form of bank Q4. Consider the following statements about
undertaking guarantee under which ‘Advance Pricing Agreement’ (APA):
(LOU) a bank can allow its
1. An APA is an agreement between a
customer to raise
tax payer and tax authority
money from another
determining the transfer pricing
Indian bank's foreign
methodology.
branch in the form of a
2. An APA can be unilateral, bilateral, or
short term credit.
multilateral.
2. SWIFT - It is a messaging
network for securely
correct?
transmitting instruction
(a) 1 only
of all financial
(b) 2 only
transactions through a
standardised system of (c) Both 1 and 2
codes. (d) Neither 1 nor 2
3. Nostro - It refers to an account
account that a bank holds in a Q5. ‘World Employment and Social Outlook’
foreign currency in is released by which of the following
another bank. agencies?
4. Buyer’s - A short-term credit (a) World Economic Forum
credit available to an exporter (b) International Labour Organisation
from overseas lenders. (c) World Bank
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(d) International Monetary Fund (a) 1 only

(b) 2 only
Q6. Consider the following statements: (c) Both 1and 2
1. There is an inverse relation between (d) Neither 1 nor 2
bond prices and bond yield.
2. When the interest rates rise, the bond Q9. Consider the following statements:
prices fall. 1. TRIFED functions under the
3. Higher fiscal deficit may lead to low administrative control of Ministry of
bond yield. Tribal Affairs, Govt. of India.
Which of the statements given above is/are 2. TRIFED is headquartered in New
correct? Delhi and has a network of Regional
(a) 1 and 2 Offices located at various places in the
(b) 2 only country.
(c) 2 and 3 Which of the statements given above is/are
(d) 1, 2 and 3 correct?
(a) 1 only
Q7. Consider the following statements: (b) 2 only
1. The index of global economic freedom (c) Both 1 and 2
is released by the Fraser Institute. (d) Neither 1 nor 2
2. The survey attempts to measure the
degree of economic freedom in the Q10. Consider the following statements
world's nations. regarding Asian Infrastructure
Which of the statements given above is/are Investment Bank (AIIB):
correct? 1. It is a multilateral development bank.
(a) 1 only 2. It aims to improve social and
(b) 2 only economic outcomes in Asia only.
(c) Both 1 and 2 Which of the statements given above is/are
(d) Neither 1 nor 2 correct?
(a) 1 only
Q8. Consider the following statements (b) 2 only

regarding ‘Universal Service Obligation (c) Both 1 and 2
Fund’: (d) Neither 1 nor 2
1. The Indian Telegraph (Amendment)
Act, 2003 gives statutory status to the Q11 Which of following statements is/are
Universal Service Obligation Fund correct regarding ‘Adopt a Heritage’
(USOF) scheme?
2. The Universal Service Obligation 1. The scheme is being implemented by
(USO is raised through a 'Universal the Ministry of Tourism, Ministry of
Access Levy’ (UAL). Culture and Archaeological Survey of
Which of the following statements is/are India.
correct?
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2. The scheme aims to bring synergy 1. Raising interest rate by RBI.

among public sector companies, 2. Using forex reserve by RBI in
private sector companies and exchange market.
corporate citizens/individuals to 3. Providing incentives to exporters.
effectively promote responsible
4. RBI raising funds through foreign
tourism.
currency non-repatriable (FCNR)
3. The project primarily focuses on deposits.
providing basic amenities that includes
cleanliness, public conveniences,
given below:
drinking water etc. in tourist sites.
(a) 1 and 2
(b) 1, 2 and 3
given below.
(c) 2, 3 and 4
(a) 1 only
(d) 1, 2, 3 and 4
(b) 1 and 2
(c) 2 and 3
Q14. Consider the following statements
(d) 1, 2 and 3
regarding Gross Fixed Capital
Formation:
Q12. Which of the statements given above is/are
1. It refers to the net increase in physical
correct?
assets (investment minus disposals)
1. Stressed assets are loans on which the within the financial year.
borrower has defaulted or it has been
2. It accounts for the consumption
restructured.
(depreciation) of fixed capital, and
2. An NPA is a loan or advance for also includes land purchases.
which the borrower has failed to repay
the principle or interest for a period of
correct?
90 days.
(a) 1 only
3. Restructured asset or loan are that
(b) 2 only
assets which got an extended
(c) Both 1 and 2
repayment period, reduced interest
rate, converting a part of the loan into (d) Neither 1 nor 2
equity, providing additional financing,
or some combination of these Q15. Sunil Mehta Committee is associated with
measures. (a) developing the cruise tourism in India.
Select the correct answer using the code (b) bringing reform in coal sector.
given below: (c) privatization of Air India.
(a) 1 only (d) resolution of stressed assets.
(b) 1 and 2
(c) 2 and 3 Q16. Consider the following statements:
(d) 1, 2 and 3 1. GDP deflator is more comprehensive
than Consumer Price Index inflation.
Q13. Which of the following may help in
controlling appreciation of rupee?
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2. GDP deflator data is available on a (b) Asian region

monthly basis along with GDP (c) Asia-Pacific region
estimates. (d) Eurasian region
correct?
Q20. World Investment Report is released by
(a) 1 only
(a) UNCTAD
(b) 2 only
(b) World Economic Forum
(c) Both 1 and 2
(c) UNDP
(d) Neither 1 nor 2
(d) IMF
Q17. Consider the following statements:

Q21. Match List I with List II and select the
1. WPI tracks prices at the factory gate correct answer using the codes given
before the retail level. below the lists.
2. WPI covers both goods and services.
List I List II
(Committees) (Chaired by)
correct?
A. Disinvestment of 1. Rajah Chelliah
(a) 1 only
shares in public
(b) 2 only
sector enterprises
(c) Both 1 and 2
B. Industrial 2. Onkar
(d) Neither 1 nor 2
sickness Goswami
C. Tax reforms 3. R. N. Malhotra
D. Reforms in 4. C. Rangarajan
1. Fair and Remunerative Prices (FRP) is
insurance sector
the benchmark price that the sugar
mills must pay to the sugarcane Codes:
farmers in order to buy sugar cane. A B C D
2. FRP is announced every year by the (a) 1 4 2 3
central government under the (b) 4 2 1 3
Sugarcane (Control) Order 1966. (c) 4 1 2 3
Which of the statements given above is/are (d) 1 3 4 2
correct?
(a) 1 only
Q22. What are gilt-edged securities?
(b) 2 only
(a) Securities issued by the multinationals
(c) Both 1 and 2
(b) Securities issued by the government
(d) Neither 1 nor 2
(c) Securities issued by private companies
(d) Securities issued by joint venture
Q19. India is a member of which of the companies
following designated regions in World
Customs Organisation?
Q23. Which of the following committees is
(a) Indo-Pacific region
related with microfinance sector?
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(a) Malegam Committee Q28. NNP (Net National Product) or National

(b) Kelkar Committee Income is the money value of
(c) Naresh Chandra Committee (a) final goods and services produced
(d) Swaminathan Committee annually in the economy
(b) annual service generation in the
economy
Q24. Temporarily inflation can be checked by
(c) tangible goods produced annually in
(a) decrease in money supply
the economy
(b) increase in wages
(d) tangible goods available in the
(c) decrease in taxes
economy
(d) reduction in taxes
Q29. Demand means

Q25. The open market operations refer to the
(a) ability of the society to buy goods and
sale and purchase by the RBI of
services
(a) foreign exchange
(b) willingness and ability of an
(b) gold
individual to buy goods
(c) government securities
(c) the desire of an individual for goods
(d) All of these and services needed by him
(d) the desire of the society to buy certain
Q26. Which of the following is the most likely necessities at a given price per unit of
reason as to why total income tends to time
fluctuate?
(a) Consumption is not always a constant Q30. Deflation is
fraction of income.
(a) deficit budget.
(b) People adjust to changing incomes by
(b) reduction in taxation.
changing saving habits.
(c) contraction in volume of money/credit
(c) Consumption habits often undergo
that results in a decline of price level.
dramatic changes.
(d) increase in public expenditure.
(d) Many savings and investment
decisions are taken by different
Q31. Bank rate means
people.
(a) interest rate charged by money lenders
(b) interest rate charged by scheduled
Q27. If an economy is in equilibrium at the
banks
point where plans to save and to invest
are equal, then government expenditure (c) rate of profit of banking institution
must be (d) official rate of interest charged by the
(a) zero central bank of the country
(b) equal to government income
(c) larger than government income Q32. Private investment will be most likely to
be increased as a result of a rise in
(d) negative
(a) the rate of interest
(b) the price of shares
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(c) expected yield on new capital Full convertibility of the rupee may mean
(d) personal taxation (1) its free float with other international
currencies.
Q33. Currency drain is a phenomenon referred (2) its direct exchange with any other
to when international currency at any
(a) holding of currency by foreigners in a prescribed place inside and outside the
country goes up country.
(b) domestic currency is exported (3) it acts just like any other international
currency.
(c) the currency holding by parallel
economy increases Which of the above statements are correct?
(d) bank’s cash is drained into non-bank (a) 1, 2 and 3
customers (b) 1 and 2
(c) 2 and 3
Q34. The goals of monetary policy does not (d) 1 and 3
include
(a) financial stability Q38. Tax revenues act as an automatic
(b) adequate availability of credit stabilizer because
(c) price stability (a) they increase during economic booms
(d) maximum tax revenue and decrease during economic
recessions.
(b) they decrease during economic booms
Q35. Gross National Product (GNP) is
and decrease during economic
(a) the total output of goods and services
recessions, as well
produced by the country’s economy
(c) tax rates will automatically decrease to
(b) total value of all finished goods and
stimulate the economy during
services produced by a country's
economic booms.
citizens.
(d) tax rates will automatically increase to
(c) sum of gross domestic product and
stimulate the economy during
investment
economic recessions.
(d) national income minus national
expenditure
Q39. Expansionary monetary policy
(a) tends to lead to an appreciation of a
Q36. The consumer surplus can be defined as
nation’s currency.
(a) extra units of a commodity bought
(b) usually has no effect on a currency’s
(b) surplus commodity left after
exchange value.
consumption
(c) tends to lead to a depreciation of the
(c) difference between actual price and
currencies of other nations.
potential price
(d) tends to lead to a depreciation of a
(d) total consumer satisfaction
nation’s currency.
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Q40. Which one of the following is not an Which of the statement(s) given above is/are
instrument of selective credit control in correct?
India? (a) 1, 2 and 3
(a) Regulation of consumer credit (b) 1 only
(b) Rationing of credit (c) 2 only
(c) Margin requirement (d) None of the above
(d) Variable cash reserve ratio
Q44. Laffer Curve establishes relationship
Q41. Effective Revenue Deficit does not take between
into account (a) tax slabs and tax rates
(a) those grants to States which are for (b) tax rates and GDP
non-developmental purposes. (c) tax rates and tax revenues
(b) those grants to States which are used (d) tax slabs and tax revenues
for creation of capital assets.
(c) interest payments on loans taken by
Q45. Which of the following is not a credit
the government.
control tool?
(d) loans.
(a) Statutory Liquidity Ratio (SLR)
(b) Repo Rate
Q42. Fiscal Consolidation implies
(c) Marginal Standing Facility
(1) rationalization of expenditure.
(d) Open Market Operations
(2) increase in tax revenues.
(3) increase in non-tax revenues.
Q46. Base Rate in the Indian Banking System
(4) adoption of sound budgeting is determined by
techniques like Zero Based Budgeting
(a) RBI
and Outcome Budgeting.
(b) Ministry of Finance
Which of the statements given above are
(c) commercial banks independently
correct?
(d) both RBI and commercial banks
(a) 1, 2, 3 and 4
(b) 1 and 2 only
Q47. Call Money Market means
(c) 1, 2 and 4 only
(a) banks borrowing from the RBI for
(d) 1, 2 and 3 only
short period
(b) RBI borrowing from banks for
Q43. Fiscal Marksmanship implies
overnight
(1) degree of accuracy and precision of
(c) government borrowing from banks for
targets, estimates and forecasts laid
short period
down in the budget in respect of fiscal
(d) inter-bank borrowing and lending for
parameters.
overnight
(2) fiscal consolidation.
(3) adoption of techniques and measures
Q48. Treasury Bills are
to reduce fiscal deficit
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(1) short term securities of the Q51. The Lorenz Curve shows the relationship
government between
(2) issued by the Government for 14 days. (a) asset creation and income generation
(3) issued for periods of either 14 days, 91 (b) population groups and their respective
days, 182 days or 364 days income shares
(4) issued for 91 days, 182 days and 364 (c) unemployment and inflation
days (d) wage, labour hours and leisure
Which of the statements given above are
correct? Q52. Which of the following defines
(a) 1 and 3 only depreciation?
(b) 1 and 4 only (a) Destruction of a plant in a fire
(c) 1 and 2 only accident
(d) 1, 2 and 3 (b) Loss of equipment over time due to
wear and tear
Q49. Which of the following is/are example(s) (c) Closure of a plant due to labour
of a non-banking financial company? trouble
(1) Infrastructure Finance Company (d) Closure of a plant due to lockout
(2) A Finance Company selling insurance
products Q53. Generally, deficit financing can create
(3) A company engaged in construction inflation. However, it can be checked if
and agricultural activities _________.
(4) A company providing finance for (a) government expenditure increases the
housing aggregate supply in the aggregate
Select the correct answer from the codes demand ratio.
given below: (b) all the investment is indicated as
(a) 1, 2, 3 and 4 payment on national debt only.
(b) 2, 3 and 4 (c) only the aggregate demand is
increased.
(c) 1, 2 and 4
(d) All of the above
(d) 2 and 4
Q54. Quantitative easing is the common name

Q50. What option does the central government
for?
not include in the development
expenditure? (a) Asset selling by a central bank
(a) Grants to states (b) Asset purchasing by a central bank
(b) Expenditure on social and community (c) Lowering of the interest rate for
services commercial bank lending
(c) Expenditure on economic services (d) When a central bank reduces rates
(d) Defence expenditure
Q55. Which of the following are the indicators
of the Monetary Policy?
(a) Inflation
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(b) GDP 4. Joint Plant Committee

(c) MSF Rate 5. Ministry of Petroleum and Natural
(d) All of the above Gas
6. Coffee Board
Q56. An increase in Repo Rate can Choose the correct option from the codes
1. Increase the cost of borrowing and given below:
lending of the banks. (a) 1, 2, 3 and 4
2. Decrease the cost of lending to the (b) 1, 2, 4, 5 and 6
banks. (c) 1, 2, 3, 4, 5 and 6
Choose the correct answer using codes given (d) 1, 2, 3, 4 and 5
below:
(a) 1 only Q60. Suppose a market is in equilibrium, and
(b) 2 only then the demand increases. Which of the
(c) Both 1 and 2 following would be shown on a graph that
(d) Neither 1 nor 2 illustrated the effects?
(a) An excess demand at the initial
equilibrium price.
Q57. Which among the following is NOT a
money market instrument? (b) An excess demand at the new
equilibrium price.
(a) Cash Management Bill
(c) An excess supply at the initial
(b) Certificate of Deposit
equilibrium price.
(c) Commercial Paper
(d) An excess supply at the new
(d) Debenture
equilibrium price.
Q58. Which of the following denotes ‘shares

Q61. Suppose there is an increase in demand in
outstanding’?
a market where the supply curve slopes
(a) Difference between authorised capital
upwards and the demand curve slopes
and issued capital of a company
downwards. Which of the following might
(b) Difference between issued capital and not occur?
subscribed capital of a company
(a) An excess supply.
(c) Difference between subscribed capital
(b) A fall in price.
and paid up capital of a company
(c) A rise in the quantity traded.
(d) Shares of the company issued and
(d) A fall in the equilibrium level of
purchased by investors and are held by
expenditure.
them
Q59. Which among the following agencies give
Q62. Consider the following statements related
data for IIP compilation?
to Shares with Differential voting rights
1. Department of Industrial Policy and
(DVRs):
Promotion,
1. The Shares with differential voting
2. Indian Bureau of Mines
rights may either have enhanced or
3. Central Electricity Authority
reduced voting rights.
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2. Presently, there is no restriction on the (a) World Economic Forum

Indian Companies for the issuance of (b) UNCTAD
shares with differential voting rights. (c) World Bank
Which of the statements given above is/are (d) International Institute for Management
correct? and Development (IMD)
(a) 1 only
(b) 2 only Q66. With reference to Equalisation levy,
(c) Both 1 and 2 consider the following statements:
(d) Neither 1 nor 2 1. It is tax which is applicable on both
Business to Business (B2B) and
Q63. Which among the following factors may Business to Customer (B2C)
possibly lead to depreciation in the value transactions in the digital economy.
of Rupee? 2. The tax would be applicable only
1. Increase in Exports when the payment is made to non-
2. Outflow of FPIs resident service provider.
3. Decrease in remittances Which of the statements given above is/are
correct?
given below: (a) 1 only
(a) 1 only (b) 2 only
(b) 1 and 2 only (c) Both 1 and 2
(c) 2 and 3 only (d) Neither 1 nor 2
(d) 1 and 3 only
Q67. Which among the following is/are
determined by the Quota of the member
countries in the IMF?
to India's External Debt:
1. Financial Contribution of the member
1. The Non-Resident Deposits account
countries.
for the highest share of India's
External Debt. 2. Voting Power of the Member
countries
2. The Share of Short-term External Debt
is much higher than long term external 3. Borrowing Limit on the Member
Debt. countries
Which of the statements given above is/are Select the correct answer using the code
correct? given below:
(a) 1 only (a) 1 only
(b) 2 only (b) 1 and 2 only
(c) Both 1 and 2 (c) 1 and 3 only
(d) Neither 1 nor 2 (d) 1, 2 and 3
Q65. Which among the following International Q68. Which among the following International
agencies publishes the "World Digital agencies publishes the Global Innovation
Competitiveness" report? Index (GII)?
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(a) World Economic Forum (d) 1, 2 and 3

(b) WIPO
(c) US Chamber of Commerce Q72. Which among the following is/are
(d) UNCTAD considered to be part of India's Forex
Reserves?
Q69. Consider the following statements related 1. Foreign Currency Assets (FCA)
to Gross Enrolment ratio (GER): 2. Gold
1. It is the ratio of children enrolled in a 3. Special Drawing Rights (SDRs)
particular class (regardless of the age) Select the correct answer using the code
to the eligible population in the age given below:
group for that class. (a) 1 only
2. The GER can never be more than 100. (b) 1 and 2 only
Which of the statements given above is/are (c) 1 and 3 only
correct? (d) 1, 2 and 3
(a) 1 only
(b) 2 only Q73. With reference to Provisioning Coverage
(c) Both 1 and 2 Ratio (PCR), consider the following
(d) Neither 1 nor 2 statements:
1. Under the RBI's provisioning norms,
Q70. Which among the following International the banks are required to set aside
agencies publishes the Goods Trade certain percentage of their profits in
Barometer Index? order to cover risk arising from NPAs
(a) World Economic Forum 2. The Provisioning Coverage Ratio
(b) WTO (PCR) remains same for all the
categories of NPAs.
(c) International Trade Centre
(d) UNCTAD
correct?
(a) 1 only
Q71. Which among the following categories of
(b) 2 only
subsidies are prohibited under the WTO’s
Agreement on Subsidies and (c) Both 1 and 2
countervailing measures (SCM)? (d) Neither 1 nor 2
1. Export Subsidies
2. Local Content Subsidies Q74. Which of the following are indicators of
3. Subsidies to enhance production of Inclusive Development Index?
Goods 1. Growth and development
Select the correct answer using the code 2. Dependency ratio
given below: 3. Public debt as a share of GDP
(a) 1 only Select the correct option using the codes
(b) 1 and 2 only given below.
(c) 1 and 3 only (a) 1 only
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(b) 1 and 2 (d) 1, 2 and 3

(c) 2 and 3
(d) 1, 2 and 3 Q78. With reference to Ways and Means
Advances (WMA), consider the following
Q75. Which among the following criteria is/are statements:
adopted by the 15th Finance Commission 1. It is used as a source for financing
for the horizontal distribution of taxes Budget deficit by both Centre and
among the states? States.
1. Population (1971 Census) 2. The interest rate on the WMA is lower
2. Income Distance than Repo Rate.
3. Population (2011 Census) Which of the statements given above is/are
correct?
4. Tax Effort
(a) 1 only
5. Demographic performance
(b) 2 only
given below: (c) Both 1 and 2
(a) 1, 2 and 4 only (d) Neither 1 nor 2
(b) 1, 2, 3 and 4 only
(c) 2, 3, 4 and 5 only Q79. With reference to Targeted Long-term
Repo Operations (TLTROs), consider the
(d) 2, 3 and 4 only
following statements:
1. The Interest rate on TLTROs would be
Q76. Which among the following International
higher than Repo rate since they are
Organizations publishes the "Migration
long-term tools to inject liquidity.
and Development Brief" Report?
2. The liquidity availed by the Banks
(a) UNCTAD
must be deployed in investment grade
(b) World Bank
corporate bonds, commercial paper
(c) IMF and other financial instruments.
(d) OECD Which of the statements given above is/are
correct?
Q77. Which among the following can be (a) 1 only
considered as advantages of issuing GDP (b) 2 only
linked Bonds in India?
(c) Both 1 and 2
1. Lower Possibility of Default.
(d) Neither 1 nor 2
2. Higher Sustainability of Debt.
3. Less volatility as compared to Equities
Market.
to Real rate of Interest in an Economy:
1. The Increase in Rate of Inflation
given below:
would lead to decrease in Real Rate of
(a) 1 only Interest.
(b) 1 and 2 only 2. Negative Real Interest Rates
(c) 1 and 3 only discourages savings with the Banks.
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Which of the statements given above is/are (b) 2 only

correct? (c ) Both 1 and 2
(a) 1 only (d) Neither 1 nor 2
(b) 2 only
(c) Both 1 and 2 Q84. With reference to CPI-IW, consider the
(d) Neither 1 nor 2 following statements:
1. It is published by National Statistical
Q81. Two Countries have signed a Free Trade Office (NSO)
Agreement (FTA). Later, they decided to 2. It is used to calculate the Dearness
adopt common customs duty and Allowance (DA) of the Government
facilitate free movement of labour and employees.
Capital. What would you call the next Which of the statements given above is/are
stage of Trade Integration? correct?
(a) Comprehensive Economic (a) 1 only
Cooperation Agreement (CECA) (b) 2 only
(b) Customs Union (c) Both 1 and 2
(c) Common Market (d) Neither 1 nor 2
(d) Economic Union
Q82. With reference to Internal Debt of India, organisations publishes the Poverty and
consider the following statements: Shared Prosperity Report?
1. The Internal Debt of India is much (a) World Bank
higher than the External Debt. (b) UNDP
2. Most of the Internal Debt in India is (c) World Economic Forum
dominated by Dated Securities.
(d) IMF
correct?
Q86. With reference to Protection of
(a) 1 only
Intellectual Property Rights (IPRs) in
(b) 2 only India, consider the following statements:
(c ) Both 1 and 2 1. The Ministry of Human Resources
(d) Neither 1 nor 2 Development is responsible for the
protection of Copyrights in India.
Q83. Consider the following statements related 2. The Cell for IPR Promotion and
to Payroll Reporting Data: Management (CIPAM) has set up
1. It measures the employment only in under the Department for promotion
the formal sector. of Industry and Internal Trade (DPIIT)
2. It is measured by Labour Bureau, for enhancing awareness of the IPRs.
Ministry of Labour and Employment. Which of the statements given above is/are
Which of the statements given above is/are correct?
correct? (a) 1 only
(a) 1 only (b) 2 only
www.shieldias.in
(c) Both 1 and 2 Which of the statements given above is/are

(d) Neither 1 nor 2 correct?
(a) 1 and 2 only
Q87. With reference to Gross Savings in India, (b) 2 and 3 only
consider the following statements: (c) 1 and 3 only
1. The Household sector accounts for the (d) 1, 2 and 3
highest share of Gross Savings.
2. The financial savings of the household Q90. Consider the following statements related
is much higher than their physical to Recapitalization Bonds:
savings. 1. The money raised by the Government
Which of the statements given above is/are through the issuance of Recap Bonds
correct? is not accounted for calculation of
(a) 1 only Fiscal Deficit.
(b) 2 only 2. All the Recapitalization Bonds issued
(c) Both 1 and 2 by the Government are Zero Coupon
(d) Neither 1 nor 2 Bonds.
correct?
Q88. Which among the following exceptions
is/are provided under the Trade Related (a) 1 only
Aspects of Intellectual Property Rights (b) 2 only
(TRIPS) Agreement? (c) Both 1 and 2
1. Compulsory Licensing (d) Neither 1 nor 2
2. Grey Imports
3. Bolar Exception Q91. With reference to Fixed-term employment
Select the correct answer using the code (FTE), consider the following statements:
given below: 1. The Fixed Term employees are
(a) 1 only directly appointed by the Industries
(b) 1 and 2 only without any role of contractor.
(c) 1 and 3 only 2. The Fixed Term employees are
entitled to same benefits and
(d) 1, 2 and 3
conditions of work as available to
permanent employees.
Q89. With reference to Development Banks,
consider the following statements:
correct?
1. The Development Banks are mainly
(a) 1 only
financed by the Government.
(b) 2 only
2. The Development Banks mainly
(c) Both 1 and 2
extend long term loans.
(d) Neither 1 nor 2
3. The Development Banks can provide
partial credit Guarantee support on the
loans raised by private sector
companies.
www.shieldias.in
Q92. Consider the following statements related Q95. The Kuznets curve shows the nature of
to Domestic Systemically important relationship between?
Banks (D-SIBs) in India: (a) Tax rate and Tax Revenue
1. The Domestic Systemically important (b) Inflation and Unemployment
Banks (D-SIBs) are those banks (c) Economic Growth and Inequality
whose size is equal to or more than
(d) Money supply and Economic Growth
0.5% of GDP.
2. Presently, only the State Bank of India
has been identified as Domestic-
agencies publishes the "Enabling the
Systemically Important Bank (D-SIB).
Business of Agriculture (EBA)" Report?
(a) World Bank
correct?
(b) IMF
(a) 1 only
(c) UNCTAD
(b) 2 only
(d) World Economic Forum
(c) Both 1 and 2
(d) Neither 1 nor 2
Q97. The Special Drawing Rights (SDRs) can
be used for which among the following
purposes?
1. The Asset Reconstruction Company is
1. Exchange into other freely usable
registered with the RBI under the
currencies.
provisions of Insolvency and
2. Repayment of IMF loans.
Bankruptcy Code (IBC)
3. Payment for increasing Quota in IMF.
2. The SARFAESI Act provides for the
issuance of Security Receipts by the
given below:
Asset Reconstruction Companies.
(a) 1 only
correct? (b) 2 and 3 only
(a) 1 only (c) 1 and 3 only
(b) 2 only (d) 1, 2 and 3
(c) Both 1 and 2
(d) Neither 1 nor 2 Q98. Which among the following indicators
is/are monitored by the RBI to place the
Banks under Prompt Corrective Action
Q94. Which among the following agencies
(PCA) framework?
publishes the "World Employment and
1. Capital Adequacy Ratio (CAR)
Social Outlook Report"?
2. Gross NPA
(a) International Labour Organisation
(ILO) 3. Provisioning Coverage Ratio (PCR)
(b) World Bank Select the correct answer using the code
given below:
(c) IMF
(a) 1 only
(d) OECD
(b) 1 and 2 only
www.shieldias.in
(c) 1 and 3 only (b) 2 only

(d) 1, 2 and 3 (c) Both 1 and 2
(d) Neither 1 nor 2
Q99. With reference to Negotiable
Warehousing Receipts (NWRs), consider Q100.Which among the following is/are
the following statements: advantages of System of Rice
1. The Warehousing development and Intensification (SRI) over the
Regulation Act (WDR Act) provides conventional Rice management methods?
for the issuance of Negotiable 1. Transplantation of young seedlings
Warehouse Receipts (NWRs) by the 2. Require less water
warehouses registered under the Act.
3. Lower incidence of Pests and Diseases
2. The farmers can use Warehouse
Receipt as collateral for short-term
given below:
borrowing to obtain working capital.
(a) 1 and 2 only
(b) 2 only
correct?
(c) 1 and 3 only
(a) 1 only
(d) 1, 2 and 3
ANSWER KEY
&
EXPLANATIONS
THEMATIC TEST – 10
ECONOMY AND SOCIAL

DEVELOPMENT - 2
TEST CODE- PTPS22D602

PRELIMS TEST SERIES 2022 - ANSWER KEY & EXPLANATIONS
1. (c)
2. (c) Exp:
Buyer's credit is a short-term loan to an importer by an overseas lender for the purchase of
goods or services.
3. (d)
4. (c) Exp:
An advance pricing agreement (APA) is an ahead-of-time agreement between a taxpayer
and a tax authority on an appropriate transfer pricing methodology (TPM) for a set of
transactions at issue over a fixed period of time (called "Covered Transactions").
5. (b)
6. (a)
7. (c)
8. (c) Exp:
Universal Service Obligation Fund (USOF) is the pool of funds generated by 5% Universal
Service Levy that is charged upon all the telecom fund operators on their Adjusted Gross
Revenue (AGR). This fund is deposited in the Consolidated Fund of India and is dispatched
on the approval of the Indian Parliament.
9. (c)
10. (a) Exp:

The Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank
headquartered in Beijing. Like other development banks, its mission is to improve social
and economic outcomes in its region, Asia, and beyond.
11. (d)
12. (d)
13. (d)
14. (a) Exp:

Gross fixed capital formation (GFCF), also called "investment", is defined as the acquisition
of produced assets (including purchases of second-hand assets), including the production of
such assets by producers for their own use, minus disposals.
15. (d)
16. (a) Exp:

The GDP deflator, also called implicit price deflator, is a measure of inflation. It is the ratio
of the value of goods and services an economy produces in a particular year at current prices
to that of prices that prevailed during the base year.
17. (a) Exp:

A wholesale price index (WPI) measures and tracks the changes in the price of goods before
they reach consumers: goods that are sold in bulk and traded between entities or businesses
(rather than consumers).
Wholesale price indexes (WPIs) are one indicator of a country's level of inflation.
18. (c) Exp:

Fair and Remunerative Price or FRP is the price required to be paid by sugar mills and
factories to sugarcane farmers. It was introduced in 2009 and replaced the concept of
Statutory Minimum Price (SMP). Under the FRP system, the price paid to farmers for
sugarcane is not linked to the profits generated by sugar mills.
19. (c)
20. (a)
21. (b)
22. (b)
23. (a)
24. (a)
25. (d) Exp:

An Open Market Operation (OMO) is the buying and selling of government securities in the
open market, hence the nomenclature. It is done by the central bank in a country (the RBI in
India). When the central bank wants to infuse liquidity into the monetary system, it will buy
government securities in the open market. This way it provides commercial banks with
liquidity. In contrast, when it sells securities, it curbs liquidity. Thus, the central bank
indirectly controls the money supply and influences short-term interest rates. In India, after
the economic reforms of 1991, the OMO has gained more importance than the CRR (cash
reserve ratio) in adjusting liquidity.
RBI employs two kinds of OMOs:
Outright Purchase (PEMO) – this is permanent and involves the outright selling or buying
of government securities.
Repurchase Agreement (REPO) – this is short-term and are subject to repurchase.
26. (d)
27. (b)
28. (a) Exp:

Net national product (NNP) is gross national product (GNP), the total value of finished
goods and services produced by a country's citizens overseas and domestically, minus
depreciation.
29. (b)
30. (c) Exp:

Deflation is a general decline in prices for goods and services, typically associated with a
contraction in the supply of money and credit in the economy.
31. (d) Exp:

A bank rate is the interest rate at which a nation's central bank lends money to domestic
banks, often in the form of very short-term lo Managing the bank rate is a method by which
central banks affect economic activity.
32. (c)
33. (a)
34. (d) Exp:

Monetary policy of India refers to that policy which is concerned with the measures taken to
regulate the volume of credit created by the banks. The main objectives of monetary policy
are to achieve price stability, financial stability and adequate availability of credit for
growth.
35. (b) Exp:

Gross National Product (GNP) is the total value of all finished goods and services produced
by a country's citizens in a given financial year, irrespective of their location. GNP also
measures the output generated by a country's businesses located domestically or abroad.
36. (c) Exp:

Consumer surplus, also called social surplus and consumer's surplus, in economics, the
difference between the price a consumer pays for an item and the price he would be willing
to pay rather than do without it.
37. (b)
38. (a)
39. (d) Exp:

Expansionary monetary policy is when a central bank uses its tools to stimulate the
economy. That increases the money supply, lowers interest rates, and increases demand. It
boosts economic growth. It lowers the value of the currency, thereby decreasing the
exchange rate. It is the opposite of contractionary monetary policy.
40. (d)
41. (a) Exp:

Effective Revenue Deficit is the difference between Revenue Deficit and those grants which
are used by the States for creation of Capital assets. Thus, deducing grants reduces the total
expenditure and brings down the Revenue Deficit.
42. (a)
43. (b) Exp:

For example, if the government estimates fiscal deficit to be 4.8% in its Union budget and is
able to adhere to this target at this target at the end of the financial year, it would imply
fiscal marksmanship.
44. (c) Exp:

The Laffer Curve is a theory formalized by supply-side economist Arthur Laffer to show the
relationship between tax rates and the amount of tax revenue collected by governments. The
curve is used to illustrate the argument that sometimes cutting tax rates can result in
increased total tax revenue.
45. (c) Exp: The different instruments of credit control used by the Reserve Bank of India are
Statutory Liquidity Ratio (SLR), Cash Reserve Ratio (CRR), the Bank Rate Policy,
Selective Credit Control (SCC), Open Market Operations (OMOs).
46. (a) Exp:

The RBI (Reserve Bank of India) calculates the base rate in India. The RBI sets this to bring
uniform rates to all banks in India. A base rate comprises of all the elements of lending
rates, which are common among the borrowers of various categories.
47. (d) Exp:

Definition: Call money rate is the rate at which short term funds are borrowed and lent in
the money market.
Description: The duration of the call money loan is 1 day. Banks resort to these type of
loans to fill the asset liability mismatch, comply with the statutory CRR and SLR
requirements and to meet the sudden demand of funds. RBI, banks, primary dealers etc are
the participants of the call money market. Demand and supply of liquidity affect the call
money rate. A tight liquidity condition leads to a rise in call money rate and vice versa.
48. (b) Exp:

Treasury bills or T-bills, which are money market instruments, are short term debt
instruments issued by the Government of India and are presently issued in three tenors,
namely, 91 day, 182 day and 364 day. Treasury bills are zero coupon securities and pay no
interest. Instead, they are issued at a discount and redeemed at the face value at maturity.
For example, a 91 day Treasury bill of ₹100/- (face value) may be issued at say ₹ 98.20, that
is, at a discount of say, ₹1.80 and would be redeemed at the face value of ₹100/-. The return
to the investors is the difference between the maturity value or the face value (that is ₹100)
and the issue price (for calculation of yield on Treasury Bills
49. (c)
50. (d)
51. (b) Exp:

Population groups and their respective income shares.
52. (b)
53. (d)
54. (b) Exp:

Quantitative easing (QE) is a monetary policy whereby a central bank purchases
predetermined amounts of government bonds or other financial assets (e.g., municipal
bonds, corporate bonds, stocks, etc.) in order to inject money into the economy to expand
economic activity.
55. (d) Exp:

The key indicators of the monetary policy include all the above. It also includes Inflation,
MSF, SLR, CRR, Bank rate etc.
56. (a) Exp:

The increase in the repo rate will increase the cost of borrowing and lending of the banks
which will discourage the public to borrow money.
57. (d)
58. (d)
59. (c)
60. (a) Exp:

Statement a shows what would be shown on a graph. Statement b is incorrect because there
will be no excess demand, or indeed an excess supply, at the new equilibrium price.
Statements c and d are incorrect because there will be no excess supply.
61. (d) Exp:

The event in statement d might not occur. If the fall in price is modest and the increase in
quantity traded is substantial, then spending will increase.
62. (a) Exp:

The shares with Differential Voting Rights (DVRs) in a company means those shares that
give the holder of the shares the differential rights related to voting, i.e. either more voting
rights or less voting rights compared to the ordinary shareholders of the company.
The equity share capital of a company contains the class of equity shares with differential
rights relating to the voting power and dividend. There are two types of DVRs, i.e. shares
with superior voting rights and shares with inferior voting rights.
Generally, the equity shares with less voting rights carry a higher dividend rate, whereas the
equity shares with higher voting shares carry a lesser dividend rate. The equity shares with
higher voting rights are issued to promoters, managing directors, key managerial persons,
etc.
The companies can issue equity shares with differential rights under Section 43(2) of the
Companies Act, 2013 read with the Companies (Share Capital and Debentures) Rules, 2014,
subject to the following conditions-
o The Articles of Association (AOA) of a company should provide for the issue of equity
shares with differential voting rights.
o The company must obtain approval from the shareholders by passing an ordinary
resolution in the general meeting.
o There should be no default by the company in filing its financial statements or annual
returns for the last three financial years preceding the financial year of the issue of the
DVRs.
o The company should not have defaulted in repayment of declared dividends or matured
deposits to the shareholders. o
o In case the company is listed, the issue of differential shares should be approved by
postal ballot.
o There should be no default by the company to repay the instalment of term loan taken
from any state-level or public financial institution or scheduled bank.
o There should be no default by the company in the redemption of its debentures or
preference shares which are due for redemption and payment of any statutory dues of its
employees.
63. (c)
64. (b)
65. (d)
66. (b) Exp:

Equalisation Levy was introduced in India in 2016, with the intention of taxing the digital
transactions i.e. the income accruing to foreign e-commerce companies from India. It is
aimed at taxing business to business transactions.
67. (d)
68. (b)
69. (a) Exp:

Gross Enrolment Ratio (GER)
Gross Enrolment Ratio determine the number of students enrolled in school at several
different grade levels. The data is defined as the percentage of student enrolment in primary
and secondary school on gender basis.
Gross Enrolment Ratio (GER) in Higher education in India is calculated for 18-23 years of
age group. Total enrolment in higher education, regardless of age, expressed as a percentage
to the eligible official population (18-23 years) in a given school year. The GER is widely
used to show the general level of participation in and capacity of higher education. Data
includes details on gender wise gross enrolment ratio in higher education for all categories,
SC and ST.
70. (b)
71. (b)
72. (d)
73. (a) Exp:

A Provisioning Coverage Ratio or PCR is the percentage of funds that a bank sets aside for
losses due to bad debts. A high PCR can be beneficial to banks to buffer themselves against
losses if the NPAs start increasing faster. ... Provision Coverage Ratio = Total provisions /
Gross NPAs.
74. (d) Major Factors

Major Factors Indicators
Growth and Development 1. GDP (Per capita)
2. Labour Productivity
3. Employment
4. Healthy Life Expectancy
Inclusion 1. Median Household Income
2. Income Gini
3. Poverty Rate
4. Wealth Gini
Intergenerational Equity 1. Adjusted Net Savings

and Sustainability 2. Dependency Ratio
3. Public Debt (as a share of GDP)
4. Carbon Intensity of GDP.
75. (c)
76. (b)
77. (d)
78. (d) Exp:

Simply put, it is a facility for both the Centre and states to borrow from the RBI. These
borrowings are meant purely to help them to tide over temporary mismatches in cash flows
of their receipts and expenditures. In that sense, they aren’t a source of finance per se.
Section 17(5) of the RBI Act, 1934 authorises the central bank to lend to the Centre and
state governments subject to their being repayable “not later than three months from the date
of the making of the advance”.
79. (b) Exp:

Targeted long-term repo operations (TLTRO) are borrowed from the central bank at repo
rates, which currently stand at 4 percent, for a period of three years. These funds need to be
invested in corporate bonds, commercial papers, and non-convertible debentures distributed
in 31 specific sectors.
80. (c) Exp:

A real interest rate is an interest rate that has been adjusted to remove the effects of inflation
to reflect the real cost of funds to the borrower and the real yield to the lender or to an
investor. A nominal interest rate refers to the interest rate before taking inflation into
account.
81. (c) Exp:

A common market is a formal agreement where a group is formed amongst several
countries that adopt a common external tariff. In a common market, countries also allow
free trade and free movement of labor and capital among the members of the group. The
trade arrangement is aimed at providing improved economic benefits to all the members of
the common market.
82. (c)
83. (a)
84. (b) Exp:

The Labour Bureau, an attached office of the M/o Labour & Employment, has been
compiling Consumer Price Index for Industrial Workers every month on the basis of retail
prices collected from 317 markets spread over 88 industrially important centres in the
country.
85. (a)
86. (b) Exp:

The Registrar of Copyrights is the head of the Copyright Office under the Department of
Industrial Policy and Promotion of the Ministry of Commerce and Industry and in-charge of
implementation of Copyright Act.
87. (a)
88. (d)
89. (d)
90. (a) Exp:

Recapitalisation Bonds:
The government issues bonds which are subscribed by banks. The money collected by the
government goes to banks in the form of equity capital as the government increases its share
of equity holding, thereby shoring up banks' capital reserves.
The money invested by banks in recapitalisation bonds is classified as an investment which
earns them an interest. This helps the government in maintaining its fiscal deficit target as
no money directly goes out from its coffers.
Special Zero Coupon Recapitalisation Bonds :
These are special types of bonds issued by the Central government specifically to a
particular institution.
Only those banks, whosoever is specified, can invest in them, nobody else.
It is not tradable, it is not transferable. It is limited only to a specific bank, and it is for a
specified period.
There is no coupon, it is zero coupon, it is issued at par and will be paid at the end of the
specified period.
Coupon is the Interest which the Investor gets on a bond.
91. (a)
92. (d) Exp:

Reserve Bank of India has retained State Bank of India, ICICI Bank and HDFC Bank as
Domestic Systemically Important Banks (D-SIBs). In order to be listed as a D-SIB, a bank
needs to have assets that exceed 2 percent of the national GDP.
93. (b) Exp:

The asset reconstruction companies or ARCs are registered under the RBI and regulated
under the Securitisation and Reconstruction of Financial Assets and Enforcement of
Securities Interest Act, 2002 (SARFAESI Act, 2002).
94. (a)
95. (c) Exp:

The Kuznets curve expresses a hypothesis advanced by economist Simon Kuznets in the
1950s and 1960s. According to this hypothesis, as an economy develops, market forces first
increase and then decrease economic inequality.
96. (a)
97. (d) Exp:

The SDR was created as a supplementary international reserve asset in the context of the
Bretton Woods fixed exchange rate system. The collapse of the Bretton Woods system in
1973 and the shift of major currencies to floating exchange rate regimes lessened the
reliance on the SDR as a global reserve asset. Nonetheless, SDR allocations can play a role
in providing liquidity and supplementing member countries’ official reserves, as was the
case amid the global financial crisis.
The SDR serves as the unit of account of the IMF and other international organizations.
The SDR is neither a currency nor a claim on the IMF. Rather, it is a potential claim on the
freely usable currencies of IMF members. SDRs can be exchanged for these currencies.
98. (a)
99. (c) Exp: The idea of e-NWRs flows from the Warehousing Development and Regulatory
Authority (WDRA), which was set up under the Warehousing (Development and
Regulation) Act, 2007. The Act came into force on 26 October 2010 because the
government took three years to decide the appointment to the posts of chairperson and two
members of the WDRA.
The main objective of the WDRA is to implement Negotiable Warehouse Receipt
(NWR)/electronic-Negotiable Warehouse Receipt (e-NWR) system in India so that farmers
(as well as businesses) are encouraged not to sell their produce immediately after harvest
when prices tend to be the lowest in the year. They can store their produce in WDRA-
registered warehouses that have to issue NWR/e-NWR to them. The farmers can seek loans
from banks against their NWR/e-NWR. The WDRA regulates negotiability of warehouse
receipts so as to improve the trust of depositors and banks in the newly evolving ecosystem.
100. (d) Exp:

The System of Rice Intensification (SRI) initiative involves transplanting young single
seedlings wide apart instead of the conventional method of transplanting multiple mature
seedlings close together. SRI does not depend on continuous flooding of rice fields; it only
requires the fields to be wet.

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Test Series - 2022: Prelims

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ECONOMY AND SOCIAL

THEMATIC TEST BOOKLET Test Code

TOPIC: Economy and Social Development - 2

Time Allowed: Two Hours Maximum Marks: 200

IMMEDIATELY AFTER THE COMMENCEMENT OF THE EXAMINATION, YOU SHOULD

Penalty for wrong answers:

This test is part of Shield IAS Prelims Test Series 2022

(d) International Monetary Fund (a) 1 only

Q8. Consider the following statements (b) 2 only

2. The scheme aims to bring synergy 1. Raising interest rate by RBI.

2. GDP deflator data is available on a (b) Asian region

Q17. Consider the following statements:

(a) Malegam Committee Q28. NNP (Net National Product) or National

Q29. Demand means

Q37. Consider the following statements:

Q54. Quantitative easing is the common name

(b) GDP 4. Joint Plant Committee

Q58. Which of the following denotes ‘shares

2. Presently, there is no restriction on the (a) World Economic Forum

(a) World Economic Forum (d) 1, 2 and 3

(b) 1 and 2 (d) 1, 2 and 3

Which of the statements given above is/are (b) 2 only

(c) Both 1 and 2 Which of the statements given above is/are

(c) 1 and 3 only (b) 2 only

ECONOMY AND SOCIAL

TEST CODE- PTPS22D602

10. (a) Exp:

14. (a) Exp:

16. (a) Exp:

to that of prices that prevailed during the base year.

17. (a) Exp:

18. (c) Exp:

25. (d) Exp:

28. (a) Exp:

30. (c) Exp:

31. (d) Exp:

34. (d) Exp:

35. (b) Exp:

36. (c) Exp:

39. (d) Exp:

41. (a) Exp:

expenditure and brings down the Revenue Deficit.

43. (b) Exp:

44. (c) Exp:

46. (a) Exp:

47. (d) Exp:

48. (b) Exp:

51. (b) Exp:

54. (b) Exp:

55. (d) Exp:

56. (a) Exp:

60. (a) Exp:

61. (d) Exp:

62. (a) Exp:

66. (b) Exp:

69. (a) Exp:

73. (a) Exp:

74. (d) Major Factors

Intergenerational Equity 1. Adjusted Net Savings

78. (d) Exp:

79. (b) Exp:

80. (c) Exp: