Prelims Practice Test - Economy Set 01

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QUESTION BOOKLET
PRELIMS PRACTICE TEST
ECONOMY - 1
Time Allowed: 2 Hours Maximum Marks: 200

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Prelims Practice Test - Economy Set 01

1. Consider the following statements with 3. Which one of the following components
respect to 15th finance commission: will not form a part of India’s internal
debt?
1. The 15th finance commission
increased vertical devolution around 1. Loans raised from commercial
10% than the 14th commission’s banks
recommendation. 2. treasury bills issued to State
Governments
2. Among the criteria for horizontal 3. non-negotiable, non-interest-
devolution, demographic bearing rupee securities issued to
performance carries highest International Financial Institutions
weightage. 4. loans issued by Asian Development
Bank
Which of the statements given above 5. Borrowings from International
are not correct? Monetary Fund
a) 1 only
b) 2 only a) 3, 4 and 5 only
c) Both 1 and 2 b) 4 and 5 only
d) Neither 1 nor 2 c) 1, 2 and 3 only
d) 1, 3, 4 and 5 only
2. With reference to the Direct Tax Code,
which of the following statements 4. Consider the following statements:
is/are correct? 1. Out of the total revenue receipts
received by Government of India in
1. Direct tax code helps to bring a last financial year, Direct taxes
consolidated law on direct taxes, outweigh Indirect taxes in their
such as income tax, dividend contribution.
distribution tax, fringe benefits tax, 2. Government has proposed updated
and goods and service tax. return window to correct income tax
omissions within 1 year from the
2. Direct tax code covers all taxes that assessment years.
are under the present Income Tax Act
except corporate income tax. Which of the statements given above
is/are correct?
3. Direct tax code proposals included a) 1 only
increasing the income tax slabs. b) 2 only
c) Both 1 and 2
a) 2 only d) Neither 1 nor 2
b) 3 only
c) 1 only
d) 2 and 3 only

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Prelims Practice Test - Economy Set 01
5. Which one of the following statementsis
not correct with respect to Indirect
taxes?
a) Incidence and impact of the tax falls
on different persons.
b) They are Progressive in nature.
c) Objective of this tax is only
economical and impact is generally
inflationary.
d) Examples of indirect tax include
VAT, Service tax, GST, Excise duty,
Entertainment tax and Customs
duty.
6. Consider the following statements
about cesses and surcharge
1. Cess and surcharges are mentioned
in the constitution of India.
2. Surcharge amount decreases as the
income of the tax payer increases.
3. A larger pool of cesses and
surcharges increases the overall
amount of the divisible taxes.
Which of the statements given above
is/are correct?
a) 1 only
b) 2 & 3 only
c) All of the above
d) None of the above
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7. In the context of Goods and Services
tax, consider the following statements:
1. Since the introduction of GST, there
has been a consistent increase in
number of registered tax payers.
2. GST Suvidha providers (GSP) are
tasked with finding the malpractices
and its punishment under GST
network.
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
8. Which among the following statements
is correct with respect to GST regime in
India?
a) GSTN is a not-for-profit organisation
with Government owning 51% of the
stake.
b) Cesses and surcharges levied by the
Union are always kept out of the
purview of GST Council.
c) Currently there are four tax slabs
under GST which are of 5%, 12%,
18%, and 28%.
d) Revenue neutral rate is the rate of
tax that allows the Government to
receive the less amount of money
despite changes in the tax laws.
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Prelims Practice Test - Economy Set 01

9. Consider the following statements with
respect to MGNREGA:
1. If work is not provided within 15 days
of applying, applicants are entitled to
an unemployment allowance.
2. e-Saksham is the digital learning
platform for MGNREGA.
3. GeoMGNREGA is a compulsory
software solution to Photo Geo-
tagging of all completed assets
under MNREGA.
11. Consider the following statements with
respect to National List of Essential
Medicines (NLEM).
1. Drugs and Cosmetics Act empowers
the Government to regulate prices of
drugs that are considered essential.
2. National Pharmaceutical Pricing
Authority that fixes the prices of
controlled drugs and formulations
is a statutory body under the
Ministry of Chemicals and
fertilisers.

Which of the statements given above Which of the statements given above
is/are correct? is/are correct?
a) 1 and 2 only
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
10. Consider the following statements with
respect to Deen Dayal Upadhyaya 12. Extended Fund Facility is related to the
Grameen Kaushalya Yojana provisions of lending by which of the
following:
1. DDU-GKY is only focused on rural
youth between the ages of 15 and a) World Bank
35 years from Below Poverty Line b) IMF
(BPL) families. c) Asian Development Bank
d) New Development Bank
2. DDU-GKY ensures minimum
recommended monthly salary of INR
6,000 varying based on training
acquired.

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

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Prelims Practice Test - Economy Set 01

13. With respect to Social Stock Which of the statements given above
Exchanges, consider the following is/are correct?
statements: a) 1 only
b) 2 only
1. On the model of the BSE and NSE, c) Both 1 and 2
the Social Stock Exchanges would d) Neither 1 nor 2
be established as independent
exchanges. 15. With reference to issuing of currency
in India, consider the following
2. The Social Stock Exchanges would statements:
be subject to RBI regulation, as
opposed to BSE and NSE. 1. Central Government has the
authority to decide the
3. Companies are eligible to raise denomination of new currency in
funds through the Exchanges for India.
social obligations. 2. Currency notes are guaranteed by
the Reserve Bank of India (RBI).
Which among the statements given Which of the statements given above
above is/are not correct?
is/are correct?
a) 1 and 2 only a) 1 only
b) 2 only b) 2 only
c) 2 and 3 only c) Both 1 and 2
d) 1, 2 and 3 d) Neither 1 nor 2

14. Consider the following statements 16. With respect to India’s external trade,
about Financial Services Institutions consider the following statements:
Board:
1. China is India’s top trading partner
1. It is a statutory organisation with consistently for the last 5 years.
the authority to appoint senior 2. India enjoys a trade surplus with
management in public sector the US.
financial institutions such as 3. Among the top ten countries for
banks, insurance companies, and import origin, China, UAE and USA
financial institutions. were the top import sources for
India in 2021.
2. The mission of the organisation is
to Promote excellence in Corporate Which of the statements given above
Governance in Public Sector is/are correct?
Financial Institutions.
a) 1 and 2 only
b) 2 only
c) 2 and 3
d) All of the above

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Prelims Practice Test - Economy Set 01

17. Which of the following clearly defines 1. Infrastructure investment Trusts

the term ‘shrinkflation’ that you come (InvITs)
across the news recently? 2. Real Estate Investment Trusts
(REITs)
a) Downsizing of a product while 3. Masala bond
maintaining the retail price. 4. Government securities
b) Tampering of a product along with
increasing the retail price. a) 1 only
c) Downsizing of a product along b) 1 and 2 only
with decreasing the retail price c) 1, 2 and 3 only
d) Upsizing of a product while d) 1, 2, 3 and 4
maintaining the retail price.
20. Which of the following groups of people
18. Consider the following statements with is/are classified as ‘churning poor’?
respect to Trademark:
1. A trademark is a sign capable of 1. Small farmers
distinguishing the goods or services 2. Formal workers
of one enterprise from those of 3. Seasonal workers
other enterprises.
2. In India, trademarks are governed
under Competition Commission Select the correct answer using the
Act,2002, under aegis of code given below:
Department of Industrial Policy &
a) 1 only
Promotion (DIPP), Ministry of
b) 2 and 3 only
Commerce
3. Madrid protocol is an international c) 1 and 3 only
agreement for registration of trade d) 1, 2 and 3
marks
21. With respect to Interest rate growth
Which of the statements given above differential (IRGD), consider the
is/are correct? following statements:
a) 1 and 3 only
b) 1 only 1. Positive IRGD shows economic
c) 1 and 2 only prosperity of a country
d) All of the above 2. India maintained a negative IRGD
in the last financial year due to low
19. Recently, SEBI has set up a 20- interest rates
member committee under K V Kamath
on Hybrid Securities. In this context, Which of the statements given above
select the hybrid securities from the is/are correct?
options given below
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2

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Prelims Practice Test - Economy Set 01

22. For a country, a higher Incremental 25. In India, economic activities occurring
Capital Output Ratio shows: in which of the following is/are taken
into consideration while calculating
a) Increased inflation persisting in the Gross Domestic Product?
economy.
b) Decreased exchange of domestic 1. Offshore oil rig owned by OVL in
currency. the Persian Gulf
c) Inefficient production 2. Tata motors producing Car in
d) Highly efficient production United Kingdom
3. India’s military station in Bhutan
23. In which of the following context, these 4. India’s Embassy in the United
terms ‘accommodative’, ‘neutral’, States
‘hawkish’ are recently seen in news?
Select the correct answer using the
a) World Bank’s fund disbursal code given below:
formula
b) Monetary Policy of RBI a) 1 and 2 only
c) Availability status of crypto b) 3 and 4 only
currency for mining c) 1, 2 and 3 only
d) Oil production by OPEC+ countries d) 4 only

24. Consider the following statements with 26. Consider the following statements:
respect to the Rural Infrastructure
Development Fund (RIDF): 1. Adjusted Net Bank Credit (ANDC) is
the net bank credit plus investment
1. Rural Infrastructure Development made in non-SLR bonds.
Fund is maintained by NABARD. 2. Scheduled commercial banks,
2. Road Over Bridge (ROB) on Railways Regional rural banks and
Crossings is one of the eligible cooperative banks are mandated to
activities under the RIDF. set aside 40% of their Adjusted Net
3. Panchayat Raj Institutions can Bank Credit (ANDC) for priority
independently avail funding from sector lending.
RIDF.
Which of the above given statements
Which of the statements given above is/are not correct?
are correct?
a) 1 only
a) 1 and 3 only b) 2 only
b) 2 and 3 only c) Both 1 and 2
c) 1 and 2 only d) Neither 1 nor 2
d) 1, 2 and 3

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Prelims Practice Test - Economy Set 01

27. With reference to Automated Teller 29. In the context of Development Finance
Machine (ATM), consider the following Institutions (DFIs), consider the
statements: following statements:

1. Micro ATMs are like modified point 1. DFIs are only owned and operated
of sales terminals that can connect by government and offer funds for
to banking network to perform large-scale projects and
banking transactions. infrastructure.

2. White label ATMs are used for E- 2. NABARD and SIDBI are
commerce and it is owned and development finance institutions.
operated by National Payment
Corporation of India. 3. DFIs raise their capital by accepting
deposits from individuals,
Select the correct answer using the borrowing from states and
code given below: sovereign reserves.

a) 1 only Which of the above given statements

b) 2 only is/are correct?
c) Both 1 and 2
d) Neither 1 nor 2 a) 2 only
b) 1 and 2 only
28. Consider the following statements: c) 2 and 3 only
d) 1, 2 and 3
1. Malus is a contract signed between
employee and employer where the 30. Promotion of which of the following can
variable pays including incentives be considered as the steps taken to
and bonus is taken back by the achieve financial inclusion in India?
company.

2. Claw back is an arrangement which 1. Indian post payments banks

empowers banks to prevent vesting 2. Privatisation of banks
of deferred remuneration. 3. Crony capitalism
4. Non bank financial companies
Which of the following statements (NBFCs)
is/are not correct?
Select the correct answer using the
a) 1 only code given below:
b) 2 only
c) Both 1 and 2 a) 1, 2 and 4
d) Neither 1 nor 2 b) 1, 2 and 3
c) 2, 3 and 4
d) 1, 2, 3 and 4

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Prelims Practice Test - Economy Set 01

31. Rajesh a young entrepreneur who took 33. In the context of share markets,
loan from a bank and delayed the consider the following statements:
repayment up to 8 months. Which ofthe
following category will it belongs: 1. In Offer For Sale (OFS), any
existing shareholder can dilute
a) Doubtful asset their stake through the primary
b) Substandard asset market.
c) Special mention account
d) None of the above 2. Through Initial Public Offering
(IPO) and Follow-on Public Offering
32. Consider the following statements (FPO) new shares are issued by a
about cooperative banks: company.
Which of the statements given above
1. Urban cooperative banks (UCBs) are
is/are correct?
registered and governed under the
a) 1 only
co-operative societies acts of the
b) 2 only
respective states only.
c) Both 1 and 2
d) Neither 1 nor 2
2. The managerial aspects of UCBs
banks are under the dual control of
34. In the context of Deposit Insurance
both union and state
and Credit Guarantee Corporation
governments, while the matters
(DICGC), consider the following
related to banking are regulated by
statements:
RBI.
1. Deposits made by central and state
3. SARFAESI act is applicable to all the
government.
cooperative banks and commercial
2. Fixed deposits.
banks.
3. Inter-bank deposits.
4. Deposits of foreign Governments.
Which of the statements given above
is/are not correct?
Which of the above deposits are
insured by Deposit Insurance and
a) 1 and 2
Credit Guarantee Corporation
b) 1 and 3
(DICGC)?
c) 3 only
d) 1, 2 and 3
a) 1 and 3 only
b) 2 only
c) 2 and 4 only
d) 1, 2, 3 and 4

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Prelims Practice Test - Economy Set 01

35. Golden handshake is a term often seen 37. Consider the following statements:
in news. What do you understand by
the term: 1. Under G-sec Acquisition
Programme (GSAP), the RBI would
a) Payment made by the company toits be selling and purchasing G secs.
employees after retirement. 2. Under Open Market Operation, RBI
purchase G-secs but does not sell
b) Payment made by the company toits them.
employees for quitting prior totheir
retirement. Which of the following statements
is/are not correct?
c) Payment made by the employees to
the company as a bond prior to their a) 1 only
joining. b) 2 only
c) Both 1 and 2
d) Payment made by the employees as d) Neither 1 nor 2
savings during their service.
38. With reference to Indian economy,
36. With reference to Indian economy consider the following statements:
consider the following statements:
1. Economic growth is quantitative in 1. Banks earn some interest on the
nature whereas economic government securities they keep as
development is qualitative in SLR.
nature. 2. MSF is used by bank and financial
2. Economic growth is a continuous institutions for borrowing overnight
funds from the RBI.
process whereas Economic
3. Increase in Reverse Repo Rate
development in a certain period of
Increases the liquidity in the
time. market.
3. Economic growth might not require
government aid whereas Economic Which of the statements given
development requires government above is/are correct?
aid.
a) 1 only
Which of the above statements is/are b) 1 and 3 only
correct? c) 2 only
d) 2 and 3 only
a) 1 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3

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Prelims Practice Test - Economy Set 01

39. Consider the following statements: 41. With reference to Indian economy,
consider the following statements
1. Veblen good is a good for which related to fiscal drag:
demand increases as the price
increases, because of its exclusive 1. It is normally associated with
nature and appeal as a status progressive tax rates.
symbol.
2. Giffen good refers to those poor 2. It denotes increase in government
man’s goods that are not preferred receipts, but reduction in demand in
the economy.
by consumers if they were to have
an alternative.
3. It can be seen as an automatic
fiscal stabilizer as it acts naturally
Which of the statements given above to keep demand stable.
is/are correct?
Which of the statements given above
a) 1 only is/are correct?
b) 2 only
c) Both 1 and 2 a) 1 and 3 only
d) Neither 1 nor 2 b) 2 and 3 only
c) 1 and 2 only
d) 1, 2 and 3
40. Consider the following statements
about Non-Banking Financial 42. Consider the situation when RBI is
institutions: swapping its rupees with dollar in the
market. Then which of the following are
1. NBFCs need to maintain Capital likely to happen:
Adequacy Ratio (CAR) norm as
prescribed by the RBI. 1. Increase in the Forex reserves held
by the RBI.
2. Nidhi Companies works on the
principle of mutual benefits that 2. Decrease in the rate of interest and
are regulated by the Ministry of consequently higher credit
Finance. creation.

Which of the statements given 3. Increase in the fund availability

above is/are correct? with the cash starved NBFCs.

a) 1 only 4. Rupee depreciation.

b) 2 only
c) Both 1 and 2 Select the correct answer using the
d) Neither 1 and 2 code given below:

a) 1, 2 and 3 only
b) 1, 2 and 4 only
c) 2, 3 and 4 only
d) 1, 2, 3 and 4

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Prelims Practice Test - Economy Set 01

43. With reference to Money market,
consider the following statements:
1. Money market instruments have
long term maturities.
2. Money market instruments in India
are regulated by RBI and SEBI.
3. Money market helps the
government to meet its deficits
through non-inflationary financial
sources.
45. With reference to the causes for
demand pull inflation, consider the
following statements:
1. Increase in population and
therefore rise in demand.
2. Increase in income levels and
therefore purchasing power.
3. Consumerist culture
4. Appreciation of Rupee

Which of the statements given above Select the correct answer using the
is/are not correct? code given below:

a) 2 and 3 only a) 1, 2 and 3

b) 1 and 3 only b) 2, 3 and 4
c) 1 and 2 only c) 1, 3 and 4
d) 1, 2 and 3 d) 1, 2, 3 and 4

44. With reference to balance of payment, 46. Which of the following instruments is
consider the following statements: not a part of the money market?

1. It records the transactions in goods, 1. Commercial paper

services and assets between 2. Index bond
citizens of a country with the rest of 3. Shares
the world for a specified time period 4. Treasury bills
typically a year.
2. Current account records exports Select the correct answer using the
and imports in goods and services code given below:
and transfer payments.
3. Capital account records all a) 1, 2 and 3 only
international purchases and salesof b) 2 and 3 only
assets such as money, stocks, c) 1 and 4 only
bonds, etc. d) 1, 2, 3 and 4

Which of the statements given above

is/are not correct?

a) 2 only
b) 2 and 3 only
c) 1 only
d) None of the above

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Prelims Practice Test - Economy Set 01

47. With reference to angel investor, 49. With reference to Indian economy,
consider the following statements: consider the following statements:

1. Angel investor is a high-net-worth 1. Effective Revenue Deficit’ is defined

individual who provides financial by the Fiscal Responsibility and
backing for small start-ups. Budget Management Act, 2003.

2. They are focused on making return 2. A higher revenue deficit is more

on investment, rather than helping dangerous than a higher fiscal
the business succeed. deficit in the economy.

3. A corporate with a net worth of at Which of the statements given above

least 100 crore is eligible for angel is/are correct?
investor.
a) 1 only
Which of the statements given above b) 2 only
is/are correct? c) Both 1 and 2
d) Neither 1 and 2
a) 1 only
b) 1 and 3 only 50. With reference to GST, consider the
c) 2 and 3 only following statements:
d) 1, 2 and 3
1. International practice is one of the
48. Which of the following sets of pair(s) reasons behind keeping multiple
is/are correctly matched? GST Rates.

Committee Recommendations 2. Introduction of GST is making

1.Tarapur Revenue neutral Indian products more competitive
committee rate and structure in the domestic and international
of rates for GST markets.
2.Vijay Kelkar Tax reform
task force 3. Centre has extended the time for
3.Ramesh Roadmap for switch levy of GST compensation cess till
Chand over from WPI to PPI 2026.
Committee
4.Mahendra Linking MGNERGA Which of the statements given above
Dev Verman to CPI-RL are correct?
Committee
a) 2 and 3 only
5.GV On disinvestment
b) 1 and 3 only
Ramakrishna
c) 1 and 2 only
committee
d) 1, 2 and 3
a) Only one pair
b) Only two pairs
c) Only three pairs
d) Only four pairs

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Prelims Practice Test - Economy Set 01

51. Consider the following statements
regarding the Importance of Fiscal
Policy in India.
1. It gives adequate incentives to the
private sector to expand its activities.
53. Arrange the following according to
their Descending order of ‘liquidity’:
1. Saving deposits with the banks.
2. Currency and coins with the public.
3. Demand deposits with the banks.
4. Term deposits with the banks.

2. It also aims to minimize the Select the correct answer using the
imbalance in the dispersal of income code given below:
and wealth. a) 4-3-2-1
b) 3-2-4-1
3. It contributes to raising the savings by c) 2-3-1-4
providing incentives. d) 1-2-3-4

Which of the statements given above 54. Which of the following statements
are correct? correctly defines the term ‘Deflation’?

a) 2 and 3 only a) It refers to the slow decrease of

b) 1 and 3 only inflation rate of economy.
c) 1 and 2 only
d) 1, 2 and 3 b) It refers to the drop in prices of
commodities in the market.

52. With reference to Indian economy, c) It refers to process of reducing

consider the following statements: inflation without creating
unemployment.
1. GDP Per capita reflect economic
inequalities. d) It refers to the process of recovering
from the price fall.
2. Personal Income is the part of the
aggregate income which completely 55. With reference to Indian economy,
belongs to the households. consider the following statements:

3. Gross Value Added (GVA) includes 1. Inflation and Balance of Payments

gross value of the output produced crisis are part of the ‘Twin Balance
by the firm including the value of Sheet’ problem in India.
intermediate goods.
2. ‘Tax Shift’ is change of tax rates to
Which of the above statements is/are higher rate to generate more
not correct? revenue by the government.

a) 1 only Which of the statements given above

b) 2 and 3 only are correct?
c) 1 and 3 only
d) 1, 2 and 3 a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 and 2

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Prelims Practice Test - Economy Set 01

56. With reference to “Washington 58. With reference to Inequality in Indian

Consensus”, consider the following economy, consider the following
statements: statements?

1. Washington Consensus has cut 1. Laffer Curve is a graphical

down the role of the State in the representation of income
economy. inequality.

2. It aims at reducing trade 2. Lowering of Gini coefficient proves

restrictions. inequalities decrease in nation.
3. Washington Consensus aims at
Which of the statements given above
reducing corporate taxes by
is/are correct?
accelerating global coordination.

Which of the above statements is/are a) 1 only

correct? b) 2 only
c) Both 1 and 2
a) 1 only d) Neither 1 nor 2
b) 2 and 3 only
c) 1 and 2 only 59. With reference to Indian economy,
d) 1, 2 and 3
consider the following statements:
57. With reference to Indian economy,
1. Recession is a deep and long-
consider the following statements:
lasting period of negative economic
growth, with output falling for at
1. Poverty line estimation in India is least 12 months.
based on income level of household.
2. There is general decrease in
2. Tendulkar committee determined interest rate during recession.
poverty line based on adult daily
calories intake. 3. During recession, helicopter money
can be a counter cyclical policy.
3. Dadabhai Naoroji was the first to
discuss the concept of a ‘Poverty Which of the statements given above
Line’ in India. is/are correct?

a) 1 and 3 only
Which of the statements given above
b) 2 and 3 only
is/are not correct?
c) 2 only
d) 3 only
a) 1 and 2 only
b) 2 only
c) 1 and 3 only
d) 2 and 3 only

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Prelims Practice Test - Economy Set 01

60. With reference to Indian economy, 62. Consider the following statements
consider the following statements regarding Factors which led to 1991
reforms:
1. Unemployment rate is the
percentage of the total labour force 1. Rise in Fiscal Deficit
to unemployed but actively seeking 2. Increase in Adverse Balance of
employment and willing to work. Payments
3. Iraq War
2. Frictional unemployment arises 4. Dismal Performance of PSUs
when there is a mismatch between
5. Rise in Foreign Exchange Reserves
the worker’s skills and availability
of jobs in the market.
Choose the correct answer from the
codes given below:
Which of the statements given above
is/are correct?
a) 1, 2, 4 and 5 only
b) 2, 3, 4 and 5 only
a) 1 only
c) 1, 3 and 4 only
b) 2 only
d) 1, 2, 3 and 4 only
c) Both 1 and 2
d) Neither 1 nor 2
63. With reference to Gross Fixed capital
61. With reference to condition of various formation (GFCF), consider the
sectors on the eve of independence, following statements?
consider the following statements
1. It is a component of expenditure
1. Productivity and output per hectare approach to calculating Gross
of Agricultural land were very low. Domestic Product (GDP).

2. Demand for the handicrafts 2. It refers to a net increase in physical

industry began to witness a sudden assets and changes in stocks of
increase. inventories throughout the
enumeration amount.
3. Prices of manufactured goods and
services in India are higher than 3. GFCF accounts for the
international prices. depreciation of fixed capital.

Which of the statements given above Select the correct answer using the
codes given below:
is/are correct?

a) 1 and 3 only a) 2 and 3 only

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

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Prelims Practice Test - Economy Set 01

64. With reference to Purchasing power 3. Change in the way value addition
parity, consider the following in agriculture was captured.
statements?
4. Change in data used to measure
1. PPP allows economists to compare manufacturing sector growth.
economic productivity and
standards of living between 5. Broadening of data pool and
countries. coverage of financial
corporations.
2. India has retained its position asthe
third-largest economy in the world Choose the correct answer from the
in terms of PPP. codes given below:

Which of the statements given above a) 1, 2, 3 and 5only

is/are not correct? b) 2, 4, 1 and 5 only
a) 1 only c) 3, 4 and 5 only
b) 2 only d) 1, 2, 3 and 4only
c) Both 1 and 2
d) Neither 1 nor 2 67. With reference to drawback of
measuring economic growth, consider
65. With reference to Indian economy, the following statements?
consider the following statements
1. Rising GDP of a country does not
1. GDP per capita provides a more necessarily mean the rise in the
realistic comparison of income welfare of citizens
levels than GDP comparison. 2. Economic inequality is not
revealed by GDP figures.
2. The per capita income of India 3. GDP does not value
remains high as compared to all intangibles like leisure, quality of
neighbouring countries. life
4. GDP does not take into account
Which of the statements given above the economic value of the
is/are correct? environment.
a) 1 only 5. Gender disparities are not
b) 2 only reflected through GDP measure.
c) Both 1 and 2
d) Neither 1 nor 2 Choose the correct answer from the
codes given below:
66. With reference to changes brought in
GDP Calculations, consider the a) 1, 2, 3, 4 and 5
following statements? b) 1, 2, 4, 5 only
c) 1, 2, 3, 4 only
1. Change of base year from 2011- d) 1, 3, 4 only
2012 to 2017-2018.

2. GDP is calculated with factor cost

instead of Market Prices.

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Prelims Practice Test - Economy Set 01

68. With reference to ‘Light House Project’, 71. Consider the following pairs
consider the following statements:
1. Under this project, LED bulbs at Types of Characteristics
highly subsidized rate will be inflation
provided to households of urban 1. Stagflation high
poor. unemployment
2. The project is implemented by plus inflation
Ministry of Housing and Urban 2. Deflation rate of inflation
Affairs. at slower rate
3. Hyperinflation very low rate of
Which of the statements given above inflation
is/are correct?
a) 1 only
b) 2 only Which of the pairs given above is/are
c) Both 1 and 2 correctly matched?
d) Neither 1 nor 2
a) One pair
69. Consider the following statements: b) Two pair
1. Demand pull inflation takes place c) Three pair
when increase in production lags d) None
behind the increase in money
supply. 72. Wholesale Price Index (WPI) measures
2. Increase in black money brings cost the average change in the prices of
push inflation. commodities for bulk sale at the level
of early stage of transactions. In this
Which of the statements given above context, consider the following
is/are correct? statements:
a) 1 only
b) 2 only 1. The base year of the WPI is 2004-
c) Both 1 and 2 05.
d) Neither 1 nor 2 2. The primary articles hold the major
weightage.
70. Who among the following is/are not 3. For agricultural commodities, the
benefitted during the period of mandi prices are tracked.
inflation? 4. Services are not included in it.
1. Creditors
2. Fixed income group Which of the statements given above
3. Equity holders are correct?

Select the correct Answer: using the a) 1 and 2 only

code given below: b) 1, 2 and 3 only
a) 1 and 2 only c) 1, 2 and 4 only
b) 2 and 3 only d) 3 and 4 only
c) 1 and 3 only
d) 1, 2 and 3

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Prelims Practice Test - Economy Set 01

73. Which one of the following statements 76. Consider the following pairs.
regarding the Consumer Price Index Monetary Usage during
(Combined) is correct? tool inflationary
available period
a) Food and beverages account the 1. Bank rate Keeps high
more than 50 per cent weight in the 2. CRR Keeps low
CPI. 3. MSF Keeps high
4. Open Selling of G-Secs.
b) CPI will not be affected by increase Market
in customs duty on natural gas. Operation

c) It is the statutory obligation on

How many pairs given above are
reserve bank of India to maintain
correctly matched?
CPI inflation within a range.
a) Only one pair
b) Only two pairs
d) Both (a) and (b)
c) Only three pairs
d) All four pairs
74. Consider the following statements
regarding ‘GDP deflator’.
77. Which of the following come/ comes
1. It encompasses the entire spectrum
under the fiscal policy tool/ tools
of economic activities including
available for controlling the credit in the
services.
economy?
2. It gives the total inflation in the
1. Public expenditure
economy which is equivalent to sum
2. Taxation
of CPI (combined) and WPI.
3. Regulation of consumer credit
Which of the statements given above
Select the correct answer using the
is/are correct?
code given below:
a) 1 only
a) 1 and 2 only
b) 2 only
b) 3 only
c) Both 1 and 2
c) 2 only
d) Neither 1 nor 2
d) 1, 2 and 3
75. Consider the following statements.
78. Recently, as a fall out from the Russia
1. The recent imposition of wind fall
– Ukraine war, the inflation rate in
tax impacts headline inflation.
Zimbabwe jumped to 131.7 percent.
2. If fuel price crosses ₹110 in India,
This type of inflation is termed as:
then core inflation will reflect its
increase.
a) Running inflation
Which of the statements given above
b) Trotting inflation
is/ are not correct?
c) Galloping inflation
a) 1 only
d) Creeping inflation
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2

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Prelims Practice Test - Economy Set 01

79. Which of the following indices are not
published by the Office of the
Economic Advisor, DPIIT?
1. Wholesale Price Index
2. Index of Industrial Production
3. Service Price Index
82. Consider the following statements with
respect to Regional Rural Banks:
1. The share capital of RRBs was
subscribed by the Central
Government (50%), the state
government concerned (35%), and
the sponsoring commercial bank
(15%).

Select the correct answer using the 2. Under existing regulations, RRBs
code given below: which maintain a minimum
statutory capital to risk-weighted
a) 2 only assets ratio (CRAR) of more than
b) 2 and 3 only 10% are allowed to offer internet
c) 1 and 3 only banking.
d) None of the above
3. Prathama Bank, sponsored by
80. Which of the following phenomena is Syndicate Bank is the first RRB to
clearly explained in ‘Philips Curve’? open in India

a) Inflation Which of the following statements

b) Stagflation is/are correct?
c) Reflation
d) None of the above a) 1 and 2 only
b) 1 and 3 only
81. Money multiplier of the Indian c) 2 and 3 only
economy decrease under which of the d) 1, 2 and 3
following circumstances?
83. The term ‘Grey Market’, recently seen
a) Decrease in Cash Reserve Ratio in the news is related to

b) Decrease in deposit insurance limit a) Crypto currency

b) Issue of shares
c) Decrease in Statutory Liquidity c) Sovereign wealth fund
Ratio d) Carbon trade

d) Increasing Long term Repo

operation by RBI

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Prelims Practice Test - Economy Set 01

84. With reference to bank rate, consider Which of the above statements is/are
the following statements: correct?

1. It is the interest rate at which RBI a) 1 and 3 only

provides a short-term credit facility b) 2 only
to commercial banks using c) 1 and 2 only
government securities as collateral. d) 1, 2 and 3

2. It is one of the quantitative tools at the 86. Consider the following statements:
hands of the RBI and is solely decided
by the Monetary Policy Committee 1. Insurance penetration is the ratio of
(MPC). premiums written in a given year to
the Gross Domestic Product(GDP) in
3. It acts as the penal rate charged on percentage terms.
banks for shortfalls in meeting their
reserve requirements - CRR and SLR. 2. Insurance density is defined as the
ratio of premiums underwritten in
4. It has been aligned with the policy a given year to the population of the
rate and changes automatically as country.
and when the policy rate changes.
Which of the above statements is/are
Which of the following statements not correct?
is/are correct?
a) 1 only
a) 2 and 3 only b) 2 only
b) 1, 2 and 4 only c) Both 1 and 2
c) 2, 3 and 4 only d) Neither 1 or 2
d) 1 and 4 only
87. Consider the following pairs:
85. With reference to call money market, Financial Ownership
consider the following statements: Institutions
1. NABARD 99% GoI& 1% RBI
1. It is also called inter-bank market 2. SIDBI Fully owned by RBI
where funds are exchanged 3. NHB Fully owned by GoI
between banks to meet their short- 4. EXIM 51% RBI & rest
term liquidity requirements. with GoI

2. RRBs and cooperative banks are How many pairs are wrongly
not allowed to participate in the call matched?
money market. a) Only one pair
b) Only two pairs
3. Payment banks, small finance c) Only three pairs
banks are eligible to participate in d) All four pairs
call money market.

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Prelims Practice Test - Economy Set 01

88. With reference to non-scheduled 90. Consider the following statements:

banks, consider the following
statements:
1. Non- scheduled banks are those
which are not included in the
second schedule of the Banking
Regulation Act, 1949.
2. Similar to Scheduled Banks, Non-
scheduled banks are subjected to
CRR regulations.
3. Non-Scheduled banks are eligible
for loans from the Reserve Bank of
India at bank rate.
1. Small finance banks have to
allocate 75% to Priority Sector
Lending.
2. Payments banks are registered
under Companies Act, 2013 while
small finance banks are registered
under RBI Act 1934.
3. Payments banks cannot accept
time deposits.
Which of the following statements
is/are correct?

Which of the above statements is/are a) 1 and 2 only

correct? b) 2 and 3 only
c) 1 and 3 only
a) 1 only d) 1, 2 and 3
b) 1 and 3 only
c) 2 and 3 only 91. Consider the following statements:
d) None of the above
1. Broad money (M3) has high
89. Which one of the following best liquidity and Narrow money (M1)
describes the term ‘Blue bonds’? has low liquidity.

a) bonds issued by island nations to 2. Reserve money is currency in

raise funds to mitigate the impact of circulation plus deposits of
climate change. commercial banks with RBI.

b) a debt instrument to support Which of the following statements

investments in healthy oceans and is/are correct?
blue economies.
a) 1 only
c) bonds issued by the government to b) 2 only
support investment in hydroelectric c) Both 1 and 2
projects. d) Neither 1 nor 2

d) a debt instrument to raise funds to

boost the production of blue
hydrogen.

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Prelims Practice Test - Economy Set 01

92. With reference to Tokenisation ofCard,
consider the following statements:
1. Tokenisation is a process by which
card details in a Card-on-File
transaction are replaced by a
unique code.
2. Tokenisation and de-tokenisation
can be performed only by the card
issuing bank or authorised card
networks.
3. Under tokenisation, online players
or merchants are allowed to store
card number, CVV and expiry date
of cards.
Which of the following statements
is/are correct?
94. With reference to Monetary Policy
Committee, consider the following
statements:
1. Monetary policy committee is
created through an executive order
and has no statutory backing.
2. The chairman of Monetary policy
committee will be selected by a
search-cum-selection committee
under Cabinet Secretary.
Which of the following statements
is/are not correct?
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2

a) 1 and 2 only 95. Consider the following statements:

b) 1 only 1. As interest rate increases, bond
c) 2 and 3 only price also increases.
d) 3 only 2. Action of the United States Federal
Reserve can influence Indian
93. Consider the following statements: Government bond yields.
1. Only scheduled commercial banks
can bid in Marginal Standing Which of the following statement is/are
Facility (MSF). correct?
2. In Liquidity Adjustment Facility a) 1 only
(LAF), banks cannot sell b) 2 only
Government securities to RBI that c) Both 1 and 2
is part of bank’s SLR quota. d) Neither 1 nor 2
3. Bank can borrow any amount of
money through LAF as long as ithas 96. Consider the following statements
the securities to sell to the RBI. about European eels:
1. Its IUCN status is critically
Which of the following statements endangered.
is/are correct? 2. It is found in the continent's
freshwaters and estuarine
a) 1 and 2 only habitats.
b) 2 and 3 only
Which of the following statements
c) 1 and 3 only
given is/are correct?
d) 1, 2 and 3
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2

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Prelims Practice Test - Economy Set 01

97. Consider the following statements
about National Pension Scheme
1. Any individual citizen of India
except NRIs can join the scheme.
2. It was mandatory for all newrecruits
joining government service.
3. Implemented and regulated by the
employees provident
organisation (EPFO).
99. Consider the following statements
about the Bureau of Indian Standards:
1. It is a statutory body established
under the Bureau of Indian
Standards Act, 2016.
2. It is regulated under the Ministry
of Industries and Commerce.
fund Which of the statements given above
is/are correct?

a) 1 only
Which of the statements given above b) 2 only
is/are correct? c) Both 1 and 2
a) 2 only d) Neither 1 nor 2
b) 2 and 3 only
c) 1 and 2 only 100. Consider the following statements:

d) 1, 2 and 3 1. It was declared a biosphere

reserve by the Government of
India in 1994.
98. Consider the following statements:
2. It has been part of the UNESCO
1. Polyvinyl chloride is one of the most World Network of Biosphere
common plastics actively used in Reserve.
the packaging industry.
3. It lies in the eastern end of the
2. Polymers do not melt, and they eastern ghat.
change state from crystalline to
semi-crystalline. 4. It is a part of Mayurbhanj
Elephant Reserve.
Which of the statements given above
is/are correct? The above statements refer to which
National Park?
a) 1 only
b) 2 only a) Bhitarkanika
c) Both 1 and 2 b) Simlipal
d) Neither 1 nor 2 c) Hadgarh
d) Lakhari

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