NAMAN SHARMA IAS ACADEMY

TEST BOOKLET

ECONOMY-1

TIME ALLOWED: 2 HOURS MARKS: 200

1.This Test Booklet contains 100 items (Questions). Each item is printed in English. 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 which you consider the best. In any case, choose ONLY ONE
response for each item.

2.You have to mark all your responses ONLY on the separate Answer Sheet provided. See direction in the
answers sheet.

3.All items carry equal marks. Attempt all items. Your total marks will depend only on the number of correct
responses marked by you in the answer sheet. For every incorrect response 1/3rd of the allotted marks will be
deducted.

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to fill in some particulars in the answer sheets as per instruction .

5.After you have completed filling in all responses on the answer sheet and the examination has concluded,
you should hand over to Invigilator only the answer sheet. You are permitted to take away with you the Test
Booklet.

DO NOT OPEN THIS BOOKLET UNTIL YOU ARE ASKED TO DO SO

1. To finance its deficit, government prefers 4. Consider the following statements:
borrowing from public over RBI. What can be 1. The Net Domestic product can be lesser than
the best reason for this? or equal to Gross Domestic Product for the same
(a) Rate of interest charged by RBI is higher. year.
(b) Government has to return the sum to RBI 2. Gross National Product of an economy is
within a fixed period of time. always lesser than its Gross Domestic Product
(c) Public borrowing does not affect the money for the same year.
supply in the market. Which of the statements given above is/are
(d) It increases the sale of government bonds. correct?
(a) 1 only
2. The Union Government recently came out (b) 2 only
with the National Capital Goods Policy 2016 (c) Both 1 and 2
aimed at increasing production of capital goods. (d) Neither 1 nor 2
Which among the following are considered as
capital goods? 5. With reference to the International Energy
1. Dies, moulds and press tools Agency, consider the following statements:
2. Automobiles 1. It is an autonomous body within the OECD
3. Food processing equipment framework.
4. Plastic machinery 2. It releases emergency oil stocks to the markets
Select the correct answer using the code given in case of disruptions in oil supply.
below. 3. It dispenses grants or makes loans to its
(a) 1 and 2 only member countries.
(b) 3 and 4 only Which of the statements given above is/are
(c) 1, 3 and 4 only correct?
(d) 1, 2, 3 and 4 (a) 1 and 2 only
(b) 2 and 3 only
3. Which among the following is/are not part of (c) 1 and 3 only
the Personal Income, a subdivision of National (d) 1, 2 and 3
Income?
1. Net Interest payments made by households. 6. With reference to currency deposit ratio,
2. Corporate Tax. consider the following statements:
3. Direct cash benefits transferred to a household 1. It is the ratio of money held by the public in
for LPG subsidy. currency to that they hold in bank deposits.
4. Personal Tax Payments. 2. An increase in the deposit rates decreases the
Select the correct answer using the code given money multiplier effect.
below. Which of the statements given above is/are
(a) 1, 2 and 4 only correct?
(b) 1 and 2 only (a) 1 only
(c) and 4 only (b) 2 only
(d) 1, 2, 3 and 4 (c) Both 1 and 2
(d) Neither 1 nor 2
7. Which of the following best describes 'Care
Economy'?
(a) It is an economic system in which deliberate
attention is paid to good governance policies for
the dependent population.
(b) It consists of the work done by women at
home taking care of the household chores.
(c) It is an economic system in which genuine
care for people and nature is the top priority.
(d) It refers to the philosophy of making
investments in demographic dividend to ensure
better economic results in future.
8. Which of the following statements is/are
correct regarding Monetary Transmission?
1. It refers to the process by which a central
bank's monetary policy decisions are passed on
to the financial markets.
2. Rising Non Performing Assets (NPAs) and
higher returns on small savings schemes may
hinder effective monetary transmission.
3. Lowering of CRR and SLR requirements may
help ensure effective monetary transmission.
Select the correct answer using the code given
below.
(a) 1 and 3 only
(b) 2 and 3 only
(c) 1 and 2 only
(d) 1, 2 and 3
9. Which of the following measures can be used
to reduce inflation?
1. Increasing Cash Reserve Ratio (CRR).
2. Increasing Statutory Liquidity Ratio (SLR).
3. Reducing fiscal deficit.
4. Reducing Reverse Repo Rate.
Select the correct answer using the code below.
(a) 1 and 2 only
(b) 1, 2 and 3 only
(c) 3 and 4 only
(d) 1, 2, 3 and 4
10. Which of the following services are
accounted in the Gross Domestic Product of a
country?
1. services rendered by a domestic help
2. services rendered by a worker from
unorganized sector
3. services produced in Indian embassies located
abroad
4. services produced in military establishments
located abroad
Select the correct answer using the codes given
below.
(a) 1 and 2 only
(b) 1, 2 and 3 only
(c) 2, 3 and 4 only
(d) 1, 2, 3 and 4
11. How does Shadow Banking differ from
commercial banking?
1. While commercial banks are tightly regulated,
shadow banking regulation lacks transparency.
2. While commercial banks can create money
being depository institutions, shadow banking
cannot create money.
3. While liabilities of commercial banks are
insured, shadow banking liabilities are not
insured.
4. While commercial banks have access to
central bank liquidity in the times of distress,
shadow banking does not have such recourse.
Select the correct answer using the code given
below.
(a) 1 only
(b) 1 and 2 only
(c) 2, 3 and 4 only
(d) 1, 2, 3 and 4
12. Consider the following factors:
1. Increase in government expenditure
2. Rising population and household consumption
3. Buying and selling of real estate in urban
areas
4. Fluctuations in output and supply
5. Increase in administered prices
Which of the above is/are attributed to the
demand-pull factors of inflation?
(a) 1, 2 and 3 only
(b) 1, 3 and 5 only
(c) 2, 3 and 4 only
(d) 4 and 5 only
13. With reference to Special Drawing Rights
(SDRs), consider the following statements:
1. The SDR is an international reserve currency,
created by the IMF to supplement foreign
exchange reserves of its member countries.
2. A member country cannot hold SDRs above
the allocations made in proportion to its quota in
the IMF.
Which of the statements given above is/are
correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
14. High powered money is:
(a) That money which is issued by the authority
of the government.
(b) That money, whose money value exceeds
commodity value of money.
(c) Notes and coins held by the people as well as
cash reserves of the commercial banks.
(d) That money which is accepted as a medium
of exchange because of the trust between the
payer and the payee
15. Consider the following statements:
1. Nominal Gross Domestic Product (GDP)
reflects the changes in both prices and quantities
of the goods and services produced in an
economy.
2. Real GDP reflects only the changes in the
quantities of the goods and services produced in
an economy.
3. GDP deflator reflects only the changes in
prices of the goods and services produced in an
economy.
Which of the statements given above is/are
correct?
(a) 1 and 2 only
(b) 1 and 3 only
(c) 2 and 3 only
(d) 1, 2 and 3
16. GDP is defined as the output of economic
activities carried out within the economic
boundaries of a country. Which of the following
constitutes the economic territory
of a country with respect to GDP calculation?
1. Fishing vessels, oil and natural gas rigs
operated by the residents of a country in the
international waters.
2. Embassies, consulates and military
establishment of the country located abroad.
3. Ships and aircraft owned by residents of the
country operating between two different
countries.
Select the correct answer using the code given
below.
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
17. Consider the following statements:
1. Decreasing the reverse-repo rate can be a
suggestive monetary policy to combat inflation.
2. Purchasing power of money decreases if there
is inflation in the market.
3. Inflation favors the debtors.
Select the correct answer using the code given
below.
(a) 1 only
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1, 2 and 3
18. Which of the following would have
inflationary effect on the economy?
1. RBI releasing new bonds in the market.
2. RBI decreasing the SLR.
3. RBI increasing the Bank Rate. (c) 2 and 4 only
4. Abolition of CRR. (d) 1, 3 and 4 only
Select the correct answer using the code given
below. 22. Which the following are the effects of
(a) 1, 2 and 3 only inflation in the economy?
(b) 1 and 4 only 1. With the same wages purchasing power of
(c) 2 and 4 only people get reduced.
(d) 3 and 4 only 2. Savings rate may increase as a result of short-
run effect of inflation.
19. Sterilization by RBI is a/an: 3. Investment may be boosted as a result of
(a) Open market operation short-run effect of inflation.
(b) Bank rate policy Select the correct answer using the code below.
(c) Deficit financing operation (a) 1 and 2 only
(d) Change in SLR (b) 1 and 3 only
(c) 2 and 3 only
20. With reference to Marginal Standing Facility (d) 1, 2 and 3
(MSF), consider the following statements:
1. It does not affect the value of rupee in 23. Consider the following statements regarding
international market as it is used for overnight Nidhi Companies:
transactions. 1. The Nidhi companies borrow from and lend to
2. The purpose of marginal standing facility is to the members only.
reduce volatility in the overnight lending rates in 2. They are registered under Companies Act and
the inter-bank are regulated by Ministry of Corporate Affairs.
market. 3. They are included under NBFCs and are also
3. Marginal standing facility is generally kept regulated by RBI.
lower than repo rate. Which of the statements given above is/are
Which of the statements given above is/are correct?
correct? (a) 1 and 2 only
(a) 1 and 2 only (b) 1 and 3 only
(b) 1 and 3 only (c) 3 only
(c) 2 only (d) 1, 2 and 3
(d) 1, 2 and 3
24. Consider the following statements:
21. Which of the following developments can 1. The income method of GDP calculation
occur in an economy due to deficit financing by considers incomes received by factors of
the government? production only.
1. Rise in Inflation 2. The Income method of GDP calculation
2. Decrease in public debt provides a lower value of GDP than expenditure
3. Increase in money supply method for the same year.
4. Improvement in current account deficit Which of the statements given above is/are
Select the correct answer using the code given correct?
below. (a) 1 only
(a) 1 and 2 only (b) 2 only
(b) 1 and 3 only (c) Both 1 and 2
(d) Neither 1 nor 2
28. Consider the following statements:
25. With reference to national income 1. Public goods are non-rival in their
accounting, consider the following statements: consumption but excludable.
1. Depreciation of a capital good is independent 2. Common resources are non-rival in their
of its cost. consumption and are non-excludable.
2. Depreciation for a capital good does not take 3. Private goods are rival in their consumption
into account the destruction of good in and excludable.
accidents. Which of the statements given above is/are
Which of the statements given above is/are correct?
correct? (a) 1 and 2 only
(a) 1 only (b) 1 and 3 only
(b) 2 only (c) 3 only
(c) Both 1 and 2 (d) 1, 2 and 3
(d) Neither 1 nor 2
29. With reference to assessment of labour
26. With reference to Value added method for market condition, consider the following
national income accounting, consider the statements:
following statements: 1. Labour Force Participation Rate is the ratio of
1. Gross Value added (GVA) at factor cost does the number of persons in the labour force to the
not include any taxes. total population.
2. GVA at basic prices excludes production 2. Unemployment Rate is the ratio of the number
taxes and includes production subsidies of unemployed persons to the total population.
available on the commodity. Which of the above statements is/are correct?
Which of the statement given above is/are (a) 1 only
correct? (b) 2 only
(a) 1 only (c) Both 1 and 2
(b) 2 only (d) Neither 1 nor 2
(c) Both 1 and 2
(d) Neither 1 nor 2 30. With reference to Quantitative Easing, which
among the following statements is/are correct?
27. Priority sector lending by banks in India 1. It is a monetary policy in which the central
constitutes the lending to which of the following bank sells government securities.
sectors? 2. It is adopted to lower the interest rates and
1. Renewable Energy increase the money supply.
2. Education 3. It can lead to higher rates of inflation.
3. Housing Select the correct answer using the code given
4. Social Infrastructure below.
Select the correct answer using the code given (a) 1 and 2 only
below. (b) 3 only
(a) 1 and 4 only (c) 2 and 3 only
(b) 1, 2 and 3 only (d) 1, 2 and 3
(c) 2, 3 and 4 only
(d) 1, 2, 3 and 4
31. When there is a fall in the prices in an
economy, it may lead to which of the following?
1. Increase in the demand for consumption
goods
2. Rise in the interest rates
3. Increase in net exports
Select the correct answer using the code given
below.
(a) 1 and 2 only
(b) 2 only
(c) 1 and 3 only
(d) 1, 2 and 3
32. Which of the following best describes
'Disposable Income'?
(a) Net wages after deducting direct taxes.
(b) Net wages after deducting indirect taxes.
(c) Net wages after adjusting inflation.
(d) None of the above
33. With reference to Small Banks and Payment
Banks, consider the following statements:
1. While both can accept deposits, Payment
Banks cannot issue debit cards.
2. While both are required to maintain CRR,
Small Banks are also required to maintain SLR
and PSL requirements.
3. Both have the same initial minimum capital
requirement of 100 cr INR.
Which of the statements given above is/are
correct?
(a) 1 only
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1, 2 and 3
34. With reference to Cash Reserve Ratio (CRR)
which of the following statements is/are correct?
1. CRR is a reserve requirement that requires
banks to maintain in the form of gold, cash or
government securities with itself.
2. When the RBI lowers CRR, it is said to
follow an expansionary monetary policy.
Select the correct answer from the codes given
below.
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
35. Consider following statements regarding
components of "double financial repression":
1. Statutory liquidity ratio (SLR) and Priority
sector lending (PSL) requirements are a
repression on the asset side.
2. Rising Non Performing Assets (NPAs) and
reduction in households financial savings are a
repression on the liability side.
Which of the statements given above is/are
correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
36. With reference to recapitalization of public
sector banks, consider the following statements:
1. Reduction of Repo Rate.
2. Reduction of Statutory Liquidity Ratio (SLR).
3. Infusion of more capital into the banks.
Which of the statement(s) given above is/are not
correct?
(a) 2 only
(b) 1 and 3 only
(c) 1 and 2 only
(d) 2 and 3 only
37. Consider the following statements regarding
Dear Money Policy:
1. RBI raises the Bank Rate.
2. Commercial banks can get the money at the
higher rate of interest.
3. RBI starts raising the CRR and sells the
securities to Commercial Banks.
Which of the statements given above is/are
correct?
(a) 1 only
(b) 1 and 3 only
(c) 1, 2 and 3
(d) None
38. With reference to GDP deflator, a measure
of general price inflation, consider the following
statements:
1. GDP deflator is more comprehensive measure
of inflation than consumer price index and
wholesale price index.
2. Unlike WPI and CPI, monthly change in
inflation cannot be tracked using GDP deflator.
3. A GDP deflator value of zero implies no
change in price levels from the base year.
Which of the statements given above is/are
correct?
(a) 1 only
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1, 2, and 3
39. According to RBI, Banks are required to
classify Special Mention Accounts (SMA) for
which of the following reasons?
(a) Categorization for different sectors in
Priority Sector Lending.
(b) Capital norms as per Basel III norms.
(c) Early recognition of stressed assets.
(d) None of the above
40. Which of the following factors may increase
the level of inflation in an economy?
1. Deficit financing
2. Reduction in Indirect taxes
3. Increase in Black money in the economy
4. Defective supply chain
Select the correct answer using the code given
below.
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1, 3 and 4 only
(d) 1, 2, 3 and 4
41. Addition of which of the following into Net
National Product at market prices would convert
it into National Disposable Income of a country?
1. Remittances from foreign countries.
2. Gifts to residents from foreign citizens.
3. Amount received in the form of aid.
4. Surplus of merchandise export.
Select the correct answer using the code given
below.
(a) 1 and 4 only
(b) 1, 2 and 3 only
(c) 2, 3 and 4 only
(d) 1, 2, 3 and 4
42. The "Gross" concept of income accounting
can be changed to "Net" concept by:
(a) Adjusting for inflation
(b) Adjusting for Exchange rate fluctuations
(c) Adjusting for Bad debts of banks and other
financial institutions
(d) Adjusting for Depreciation
43. With respect to inflation in India, consider
the following statements:
1. Decline in fuel prices leads to sharper
reduction in the Wholesale Price Index (WPI) as
compared to the Consumer Price Index (CPI).
2. Increase in food prices leads to sharper
increase in the Consumer Price Index (CPI) as
compared to Wholesale Price Index (WPI).
Which of the statements given above is/are
correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
44. With reference to Indian economy, consider
the following:
1. Increase in Bank rate
2. Increase in rates of income tax
3. Decrease in expenditure on healthcare
4. Open Market Operations by the RBI
Which of the above is/are fiscal policy
measures?
(a) 1 only
(b) 2 and 3 only
(c) 1, 2 and 3 only
(d) 1, 2, 3 and 4
45. While computing national income, income
of only normal residents of a country is
included. In this context, which of the following
is an example of 'normal residents
of India'?
(a) Ambassador in India from rest of the world.
(b) Ambassador for India in rest of the world.
(c) A foreigner working in the office of WHO
located in India for a period of less than one
year.
(d) A foreign technical expert working in India
for a period of less than one year.
46. With reference to Gross Domestic Product
accounting of a country, consider the following
statements:
1. The ownership status of goods and services
play important role while accounting for GDP.
2. An oil company spills oil in Ocean causing
the damage in tune of billions. This cost of
damage is not accounted in
GDP calculation.
3. GDP accounts for the opportunity cost.
Which of the statements given above is/are not
correct?
(a) 1 only
(b) 1 and 3 only
(c) 2 only
(d) 1, 2 and 3
47. Consider the following statements regarding
'Import Substitution':
1. It aims to encourage domestic industries gain
self-sufficiency in merchandise as well as
services.
2. Import control and tariffs are methods for
import substitution.
3. Defense Indigenisation in India is an example
of import substitution.
Which of the statements given above is/are
correct?
(a) 1 only
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1, 2 and 3
48. Consider the following statements with
reference to Cash Reserve Ratio (CRR) and
Statutory Liquidity Ratio (SLR):
1. CRR is the fraction of the total Net Demand
and Time Liabilities maintained by bank with
itself in form of cash
deposits.
2. SLR is the fraction of the total Net Demand
and Time Liabilities maintained by bank with
RBI in form of specified liquid assets.
3. CRR and SLR are part of Liquidity
Adjustment Facility (LAF).
Which of the statements given above is/are
correct?
(a) 1 and 2 only
(b) 3 only
(c) 1, 2 and 3
(d) None
49. In Economics, what does the term Usual
Principal Status indicate?
(a) Comparison of GDP of two different nations
(b) Employment status of a worker
(c) Principal amount invested by a person in
the bank on a particular interest
(d) Status of Non-performing assets
50. Which of the following factors is/are
responsible for informalisation of labour force?
1. Pressure to cut cost of production
2. Rigid labour laws
3. Demand - supply imbalance of labour force
Select the correct answer using the code given (a) 1, 2 and 3 only
below. (b) 1, 3 and 5 only
(a) 1 only (c) 2, 3, 4 and 5 only
(b) 1 and 2 only (d) 1, 2, 4 and 5 only
(c) 2 and 3 only
(d) 1, 2 and 3 54. Which of the following programmes aim at
improving the food and nutritional status of the
poor?
1. Public Distribution System
51. Consider the following statements: 2. Integrated Child Development Scheme
1. Deflation is the persistent fall in the general 3. Midday Meal Scheme
price level of goods and services. Select the correct answer using the code given
2. Disinflation is a decrease in the rate of below.
inflation. (a) 1 and 2 only
Which of the statements given above is/are (b) 2 and 3 only
correct? (c) 1 and 3 only
(a) 1 only (d) 1, 2 and 3
(b) 2 only
(c) Both 1 and 2 55. In an economy, head count ratio is the
(d) Neither 1 and 2 measure of:
(a) Unemployment
52. Which among the following is/are the (b) Poverty
qualitative tools to control credit creation by (c) Literacy
RBI? (d) Malnutrition
1. Open Market Operations
2. Repo Rate 56. Consider the following statements regarding
3. Margin Requirements Employment Elasticity of Growth:
4. Credit Rationing Policy 1. It is the percentage change in employment of
Select the correct answer using the code given labour force in response to percentage change in
below: population
(a) 1 and 2 only growth.
(b) 3 only 2. Additional labour force can be suitably
(c) 1, 2 and 3 only employed only when employment elasticity of
(d) 3 and 4 only growth is high.
3. In India, employment elasticity has shown a
53. Which of the following functions can be declining trend in the past decade.
performed by a Payment bank? Which of the statements given above is/are
1. Opening current deposit accounts correct?
2. Opening Demand deposit accounts (a) 3 only
3. Accept NRI deposits (b) 1 and 2 only
4. Distribution of insurances. (c) 2 and 3 only
5. Utility bill payments (d) 1, 2 and 3
Select the correct answer using the code given
below.
57. With reference to Gross National Product particular good depends on which of the
(GNP), following factors?
consider the following statements: 1. price of the good
1. It represents the monetary value of all goods 2. price of other goods
and services produced within a nation's 3. consumer preference
geographic borders over a specified period of Select the correct answer from the code given
time. below.
2. It is always greater than Gross domestic (a) 1 only
product. (b) 2 and 3 only
Which of the statements given above is/are (c) 1 and 2 only
correct? (d) 1, 2 and 3
(a) 1 only
(b) 2 only 61. Aggregate demand for final goods in an
(c) Both 1 and 2 economy is generated though which of the
(d) Neither 1 nor 2 following?
1. Consumption expenditure
58. Consider the following statements regarding 2. Investment expenditure
'Substitutes' and 'Complementary' goods? 3. Government expenditure
1. Demand for a good moves in opposite Select the correct answer using the code given
direction of the price of its complementary below.
goods. (a) 1 and 2 only
2. Demand of a good usually moves in the (b) 2 and 3 only
direction of the price of its substitutes. (c) 1 only
Which of the statements given above is/are (d) 1, 2 and 3
correct?
(a) 1 only 62. Microeconomics deals with which of the
(b) 2 only following parameters?
(c) Both 1 and 2 1. Behavior of consumers in the markets for
(d) Neither 1 nor 2 different goods and services.
2. Employment and aggregate price level.
59. The term "Escrow account" generally refers 3. The way prices and quantities of goods and
to: services are determined in market.
(a) the money held in a third-party account on Select the correct answer using the codes given
behalf of transacting parties. below.
(b) the bank accounts that could be maintained (a) 1 and 2 only
without or with very low minimum balance. (b) 1 and 3 only
(c) the bank account on which no restrictions on (c) 2 and 3 only
the number of times deposit in cash/cheque can (d) 1, 2 and 3
be made.
(d) the bank accounts for senior citizens and 63. With reference to the value added method
disabled persons. for national income accounting, consider the
following statements:
60. As per the law of demand, with all other 1. Gross Value Added (GVA) at factor cost does
factors being constant, the demand of any not include any taxes.
2. GVA at basic prices excludes production 66. Which of the following is/are the
taxes and includes production subsidies characteristics of recession?
available on the commodity. 1. General fall in demand
Which of the statement given above is/are 2. High inflation
correct? 3. Fall in employment rate
(a) 1 only Select the correct answer using the code given
(b) 2 only below.
(c) Both 1 and 2 (a) 1 and 2 only
(d) Neither 1 nor 2 (b) 1 and 3 only
(c) 2 and 3 only
(d) 1, 2 and 3
64. Consider the following statements with
regard to depreciation: 67. The Reserve Bank of India performs which
1. It refers to that portion of the capital goods of the following functions?
which goes in maintenance and replacement of 1. Regulation and supervision of the non-
existing goods due to banking financial institutions.
wear and tear. 2. Management of foreign exchange reserves
2. It takes into account unexpected and sudden 3. Banker to banks
destruction caused due to natural calamities. 4. Banker to the Central and State Governments
3. To obtain gross investment in an economy, Select the correct answer using the code given
depreciation is subtracted from the net below.
investment. (a) 1, 2 and 3 only
Which of the statements given above is/are (b) 1, 2 and 4 only
correct? (c) 3 and 4 only
(a) 1 and 2 only (d) 1, 2, 3 and 4
(b) 2 and 3 only
(c) 1 only 68. Consider the following statements with
(d) 1 and 3 only reference to relative and absolute poverty:
1. Relative poverty is defined as the condition
65. Which of the following problems is/are under which one cannot afford 'the minimum
associated with the barter system of exchange? provision needed to
1. It requires the double coincidence of wants. maintain health and working efficiency'.
2. It is difficult to use in large economies. 2. Absolute poverty is the condition in which
3. It is difficult to carry forward perishable people lack the minimum amount of income
wealth under barter system. needed in order to maintain the average standard
Select the correct answer using the code given of living in the society in which they live.
below. Which of the statements given above is/are
(a) 1 and 2 only correct?
(b) 2 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
69. Consider the following statements with
reference to Consumer Price Index (CPI) and
GDP Deflator:
1. GDP deflator includes all goods and services
produced in the country, while CPI does not.
2. CPI includes imported goods, while GDP
deflator does not.
3. Weights assigned to each good is constant in
CPI, while it changes in GDP Deflator.
Which of the statements given above is/are
correct?
(a) 1 only
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1, 2 and 3
70. Which of the following is correct regarding
Giffen goods?
(a) The demand of Giffen goods decreases with
an increase in their prices.
(b) The demand of Giffen goods increases with
an increase in their prices.
(c) The demand of Giffen goods does not change
with a change in their prices.
(d) The demand of Giffen goods increases with a
decrease in their prices.
71. With reference to Capital Adequacy Ratio
(CAR), consider the following statements:
1. It is the ratio of banks capital to its risk-
weighted credit exposure (loans).
2. A bank with lower CAR is considered safe.
Which of the statements given above is/are
correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
72. Consider the following statements with
regard to Price Elasticity of Demand of a good:
1. It is the ratio of percentage change in the
demand of a good to the percentage change in its
price.
2. For an inelastic good the Price Elasticity of
Demand is less than 1.
Select the correct answer using the code given
below.
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
73. In an economy a situation of liquidity trap is
characterized by which of the following?
1. Low savings rate
2. High demand for bonds
3. Expansionary monetary policy
Select the correct answer using the code given
below.
(a) 1 and 2 only
(b) 2 and 3 only
(c) 3 only
(d) 1, 2 and 3
74. Which one of the following statement
regarding Factor of Production is correct?
(a) It is the input that a firm uses in the
production process.
(b) It is the output which is produced in the
production process.
(c) It is the additional input that is required to
achieve the maximum output.
(d) It is the ratio of the output to that of the input
of the production process.
75. Which among the following represents the
effective monetary policy transmission?
(a) Banks increasing the lending rate, when RBI
reduces the Repo rate.
(b) Banks reducing the lending rate, when RBI
reduces the Repo rate.
(c) Banks increasing lending rate, when RBI
reduces the Reverse Repo rate.
(d) Banks increasing the lending rate and deposit
rates, when RBI reduces both Repo and Reverse
Repo rate.
 79. Consider the following statements:
76. Consider the following statements: 1. Headline inflation excludes those
1. According to Laffer curve, tax revenues commodities from its basket which are volatile
always increase with increase in tax rate. in short-term.
2. According to Philips curve, there exist inverse 2. Core inflation is a correct measure of inflation
relationship between rate of unemployment and in long term.
rate of inflation. 3. Consumer Price Index (CPI) is the measure of
3. Lorenz curve is a graph showing the degree of headline inflation in India.
inequality in income in a given population or an Which of the following statements given above
economy. is/are correct?
Which of the statements given above is/are (a) 1 only
correct? (b) 1 and 2 only
(a) 1 and 3 only (c) 2 and 3 only
(b) 2 only (d) 1, 2 and 3
(c) 2 and 3 only
(d) 1, 2 and 3
80. In an economy, base effect refers to:
77. Which of the following banks can be (a) the impact of rise of increased per capita
classified as universal banks? income on direct tax revenue.
1. Small Finance banks (b) the impact of rise in price level in the
2. Payment banks previous year over the corresponding rise in
3. Non-Banking Financial companies price levels in current year.
Select the correct answer using the code given (c) the impact on lending capacity of the banks
below. due to slowdown in the economy.
(a) 1 only (d) the impact on exchange rate due to lower
(b) 1 and 2 only growth in the economy.
(c) 1, 2 and 3
(d) None 81. Consider the following differences between
Marginal Cost of Funds based Lending Rate
78. Which of the following can be considered as (MCLR) and Base Rate:
legal tenders? 1. Unlike base rate calculation, Cash Reserve
1. Currency notes issued by the RBI Ratio (CRR) cost is considered in the calculation
2. Coins issued by the Government of MLCR.
3. Cheques issued by a private person 2. Unlike base rate calculation, Repo rate is
Select the correct answer using the code given mandatory in the calculation of MCLR.
below. Which of the statements given above is/are
(a) 1 and 2 only correct?
(b) 2 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
82. Consider the following factors: (d) 1, 2 and 3
1. Increase in government expenditure
2. Rising population and household consumption 85. Consider the following statements with
3. Buying and selling of real estate in urban regard to proportional taxation:
areas 1. The rate of taxation does not change as the
4. Fluctuations in output and supply taxable amount increases or decreases.
5. Increase in administered prices 2. It makes consumer spending less sensitive to
Which of the above is/are attributed to the fluctuations in GDP.
demand-pull factors of inflation? Which of the statements given above is/are
(a) 1, 2 and 3 only correct?
(b) 1, 3 and 5 only (a) 1 only
(c) 2, 3 and 4 only (b) 2 only
(d) 4 and 5 only (c) Both 1 and 2
(d) Neither 1 nor 2

86. Which among the following employment are

83. With reference to Inflation Targeting, part of unorganized sector in India?
consider the following statements: 1. Sweeper working in PWD department on
1. It indicates the primacy of price stability as contract basis
the key objective of fiscal policy by the 2. Household industry with 8 employees
government. 3. Rickshaw puller
2. It aims to target wholesale price index. 4. Domestic servant
3. It was recommended by Nachiket More Select the correct answer using the code given
Committee. below.
Which of the statements given above is/are (a) 1, 2 and 4 only
correct? (b) 1 and 3 only
(a) 1 and 2 only (c) 2, 3 and 4 only
(b) 1 and 3 only (d) 1, 2, 3 and 4
(c) 2 and 3 only
(d) None 87. Which of the following inflation indices are
released by Central Statistical Office (CSO)?
84. Which of the following is/are the likely 1. CPI (Combined)
impacts of salary hike on a market in 2. Wholesale Price Index (WPI)
equilibrium? 3. Consumer Food Price Index (CFPI)
1. There will be higher demand for goods. 4. CPI (Industrial Worker)
2. Consumers will spend less on an inferior good Select the correct answer from the code given
and shift to superior goods. below.
3. Suppliers will increase supply owing to higher (a) 1 and 3 only
demand, with no impact on equilibrium. (b) 1, 3 and 4 only
Select the correct answer using the code given (c) 1, 2 and 4 only
below. (d) 2 and 3 only
(a) 1 only
(b) 1 and 2 only
(c) 2 and 3 only
88. With reference to monetary aggregates M1 91. Consider the following statements with
and M2, also known as narrow money, consider regard to the Gini Coefficient:
the following statements: 1. It depicts the economic inequalities prevailing
1. M1 is the most liquid part of the money in the country.
supply. 2. Its value ranges from 0 to 1, with 0
2. M2 is obtained by excluding Savings with representing high inequality and 1 representing
Post offices from M1. that there is no income
Which of the statements given above is/are inequality in the country.
correct? Which of the above statement/statements is/are
(a) 1 only correct?
(b) 2 only (a) 1 only
(c) Both 1 and 2 (b) 2 only
(d) Neither 1 nor 2 (c) Both 1 and 2
(d) Neither 1 nor 2
89. Consider the following statements with
regard to private and public goods: 92. Which among the following correctly
1. Private goods are rivalrous in nature which describes skewflation in an economy?
means that its consumption by one individual (a) It refers to a situation of inflation combined
prevents another with a slow growth rate and a relatively high
individual from consuming it. unemployment rate.
2. Public goods are non-excludable in nature (b) It refers to a sustained, across-the-board
which means there is no feasible way of price increase in the market.
excluding anyone from enjoying (c) It refers a price rise in one or a small group
the benefits of the good. of commodities over a sustained period of time
Which of the statements given above is/are along with decreasing prices in others.
correct? (d) None of the above
(a) 1 only
(b) 2 only 93. Which among the following sectors is/are
(c) Both 1 and 2 covered under the Index of Industrial Production
(d) Neither 1 nor 2 (IIP)?
1. Mining
90. Consider the following statements with 2. Manufacturing
reference to 'Economically Active Population': 3. Electricity
1. It is the population in the age group of 15-59 Select the correct answer using the code given
years. below.
2. It has increased in the last two decades in (a) 1 and 2 only
India. (b) 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 94. With reference to the Demographic
(c) Both 1 and 2 Dividend, consider the following statements:
(d) Neither 1 nor 2
1. A country with a high population between 15- 2. Large business houses required permission
64 years is considered to have a high from the government to expand their business
demographic dividend. operations.
2. Focus on providing skill development and 3. Rate of taxation was kept minimum to
education will help in effective utilization of encourage faster growth.
demographic dividend. Which of the statements given above is/are not
Which of the statements is/are correct? correct?
(a) 1 only (a) 1 and 2 only
(b) 2 only (b) 2 only
(c) Both 1 and 2 (c) 1 and 3 only
(d) Neither 1 nor 2 (d) 1, 2, and 3

95. Which of the following was/were features of 98. Which of the following is/are characteristics
the Mahalanobis growth model? of a capitalist system of economy?
1. Emphasis on Self-Reliance 1. Income equality
2. Indicative planning 2. Production for profit
3. Emphasis on heavy goods industries 3. Minimal government intervention
Select the correct answer using the code given Select the correct answer using the code given
below. below.
(a) 1 and 2 only (a) 1 and 2 only
(b) 1 and 3 only (b) 2 and 3 only
(c) 3 only (c) 3 only
(d) 1, 2 and 3 (d) 1, 2 and 3

96. With reference to Incremental Capital 99. Which of the following factors can be
Output Ratio (ICOR), consider the following attributed to growth of unemployment in India?
statements: 1. Slow growth in agricultural and industrial
1. It refers to the additional capital required to productivity.
generate additional output in the economy. 2. Slow expansion of manufacturing sector
2. A higher value of ICOR represents higher 3. Concentration of investment in capital goods
efficiency of investment in the economy. industry.
Which of the statements given above is/are Select the correct answer using the code given
correct? below.
(a) 1 only (a) 1 and 2 only
(b) 2 only (b) 1 and 3 only
(c) Both 1 and 2 (c) 2 and 3 only
(d) Neither 1 nor 2 (d) 1, 2 and 3

97. Consider the following statements, regarding
India's economic policy before 1991 reforms:
1. Private industries were allowed in every field
but license was mandatory.
100. Consider the following statements:
1. Only the companies having the Navratna
status are eligible for obtaining Maharatna
status.
2. To be eligible for Miniratna status a company
should have profits continuously for three years.
3. Coal India Limited and Steel Authority of
India Limited are Maharatna companies.
Which of the statements given above is/are
correct?
(a) 1 and 2 only
(b) 1 only
(c) 2 and 3 only
(d) 1, 2 and 3