PRELIMS 2017 REVISION TEST 32

Solution: b

BoP deficit can be caused from both current account side as well as capital account side.
Statement 1: If imports are high, it causes trade deficit and tends to cause a BoP deficit as the case be. Restricting them will certainly improve BoP.
Statement 2: The way is devaluation, not appreciation. When currency appreciates, our exports become costlier to the world and thus uncompetitive.
Statement 3: Export promotion would reduce trade deficit.
Statement 4: Borrowing abroad would increase capital account deficit and further inflate BoP deficit

Solution: b

Statement 1: At lower altitudes, greater biodiversity is found due to ambient temperature, sufficient rainfall and absence of frost. As one moves higher, biodiversity starts shrinking.
Statement 2: At lower latitudes, solar insolation is abundant and temperature conditions are ideal for growth of vegetation. Higher latitudes suffer from insufficient sunlight, low temperatures and frost.

Solution: d

Statement 1: These are driven mainly by wind, temperature gradient and gravity. For e.g. water level at equator is slightly higher which leads to ocean currents flowing from equator to other areas under the influence of gravity.

Statement 2: They are produced mainly by tectonic movements such as earthquakes in the ocean. A strong tectonic force creates a surge of large waves which transforms into Tsunami

Solution: c

A person holds his wealth in different forms such as land, bonds, money etc.
When they invest in bonds, different people have different expectations regarding the future movements in the market rate of interest based on their private information regarding the economy.
When the interest rate is very high everyone expects it to fall in future and hence anticipates capital gains from bond-holding. Hence people convert their money into bonds. Thus, speculative demand for money is low.
When interest rates are low, everyone expects them to rise in future which prompts them to increase their money holdings in view of capital loss from existing bonds. So, speculative money demand is high.

Solution: b

Statement 1: As per a ICSE textbook, Rig Veda seems to the earliest record on the use of plants as medicines.
Statement 2: Charaka was a physician in the court of Kanishka. His book influenced European medical knowledge as well as Ayurveda.
Statement 3: The NMPB set-up in 2000 by the Government of India also support policies and programmes for growth of trade, export, conservation and cultivation. The Board is located in the Department of AYUSH of the Ministry of Health & Family Welfare.
Statement 4: The domestic trade of the AYUSH industry is of the order of Rs. 80 to 90 billion dollars. The Indian medicinal plants and their products also account of exports in the range of Rs. 10 billion.
In India, several states have setup centres for study of Ayruvedic and Unani medicines.

Solution: c

Quantum communication uses subatomic particles to securely communicate between two points. These subatomic particles are mainly quantum entanglement of photons. It ensures that nobody taps into the line as a photon can be neither separated nor duplicated.
Thus tapping the network will inevitably corrupt the signal. It has the ability to inform the two communicating users of the presence of any third party trying to eavesdrop. At the same time, the information being intercepted will self-destruct. So, A is correct.
Why reason is invalid:Earlier in 2016, China had successfully launched the world’s first quantum satellite.
The quantum satellite will be connected with the Beijing-Shanghai quantum communication line through the line’s station in Beijing.
It will enable the space-to-Earth highly secure hack-proof quantum communication network. So, R is wrong

Solution: a

The ground water behaviour in the Indian sub-continent is highly complicated due to the occurrence of diversified geological formations with considerable difference in tectonic and lithological framework.
Broadly two groups of rock formations have been identified depending on characteristically different hydraulics of ground water, Viz. Porous Formations and Fissured Formations.
Porous Formationshave been further subdivided into Unconsolidated and Semi – consolidated formations.
Unconsolidated Formations
The areas covered by alluvial sediments of river basins, coastal and deltaic tracts constitute the unconsolidated formations. These are by far the most significant ground water reservoirs for large scale and extensive development. The hydro-geological environment and ground water regime in the Indo-Ganga-Brahmaputra basin indicate the existence of potential aquifers having enormous fresh ground water reserve.
Semi-Consolidated Formations
The semi-consolidated formations normally occur in narrow valleys or structurally faulted basins. The Gondwanas, Lathis, Tipams, Cuddalore sandstones and their equivalents are the most extensive productive aquifers in this category.
Fissured Formations (Consolidated Formations)
The consolidated formations occupy almost two-thirds of the country. These formations, except vesicular volcanic rocks have negligible primary porosity and thus low groundwater extraction potential.

Solution: c

Statement 1: Fiscal stimulus means a package of large government spending. It boosts aggregate demand, revives consumer spending and increases investment via creation of infrastructure.
Statement 2:High tax rates would reduce disposable income and further reduce demand for consumer goods leading to an even pronounced slowdown. So, 2 is incorrect.
Statement 3: Lower interest rates will encourage investors to borrow and invest in new projects thereby enhancing aggregate demand and employment uplifting the economy.

Solution: d

Statement 1: A Constitution for Europe (TCE) treaty, ungratified, intended to create a consolidated constitution for the European Union (EU). It would have replaced the existing European Union treaties with a single text. But it was rejected by the French and Dutch voters.
Statement 2: Eurozone has a common currency, not European Union which is larger than the Eurozone. For e.g. crotian currency is different from that of the Eurozone.
Statement 3: All states are not NATO members. Twelve countries were part of the founding of NATO: Belgium, Canada, Denmark, France, Iceland, Italy, Luxembourg, the Netherlands, Norway, Portugal, the United Kingdom, and the United States. In 1952, Greece and Turkey became members of the Alliance, joined later by West Germany (in 1955) and Spain (in 1982).

Solution: a

NDP is essentially the GDP discounted for the total value of the ‘wear and tear’ (depreciation) that happened in the assets while the goods and services were being produced. It means GDP minus depreciation is NDP.
Depreciation is caused due to wear and tear of capital or due to poor technological growth that fails to cut down levels of depreciation.
Higher the depreciation, higher will be the difference between GDP and NDP.

Solution: c

It is Service Tax that is levied by the Centre but Collected and Appropriated by the Centre and the States (Article 268-A). For the centre, it is called Central tax, for the states, it is called SALES TAX (which is asked in the Q above).
Sales tax is levied when goods are sold or bought within a country or a state. There are two major types of sales taxes – central sales tax, levied by the Union Government and sales taxes, which are charged by the state governments. Central sales taxes are applied when a dealer sells goods during interstate commerce or trade. These taxes are also implemented when a product is sold outside a state or when it is exported or imported. Sales tax is Levied and Collected and Retained by the States. These taxes belong to the states exclusively. They are enumerated in the state list. For e.g. land revenue; taxes on agricultural income, succession and estate duties in respect of agricultural land; taxes on lands and buildings, on mineral rights, on animals and boats, on road vehicles etc.

Solution: a

Statement 1:  Under the Constitution, the jurisdiction of each state is confined to its own territory. Hence, it is possible that the acts and records of one state may not be recognised in another state.

To remove any such difficulty, the Constitution contains the “Full Faith and Credit” clause which lays down that Full faith and credit is to be given throughout the territory of India to public acts, records and judicial proceedings of the Centre and every state.
The expression ‘public acts’ includes both legislative and executive acts of the government. The expression ‘public record’ includes any official book, register or record made by a public servant in the discharge of his official duties.
Statement 2: Final judgements and orders of civil courts in any part of India are capable of execution anywhere within India (without the necessity of a fresh suit upon the judgement). The rule applies only to civil judgements and not to criminal judgements. In other words, it does not require the courts of a state to enforce the penal laws of another state. So, 2 is partially wrong.

Solution: b

Statement 1: An FCNR account is a term deposit account that can be maintained by NRIs and PIOs in foreign currency. Thus, FCNRs are not savings accounts but fixed deposit accounts.
These accounts can be opened jointly with other NRIs.
Opening of FCNR (B) in the name of individuals/ entities of Bangladesh/ Pakistan nationality/ ownership requires prior approval of Reserve Bank of India.
Statement 2: The account is held in the currency in which the deposits are made.
Statement 3: These accounts are exempt from Income Tax in India.
Statement 4: With the rupee continuing to remain volatile, the Foreign Currency Non Resident (FCNR) account can be a good option for Non Resident Indians (NRIs) looking to invest in India without worrying about currency risks.

Solution: c

Statement 1: Frictional heating is caused by denser core material sinking to the center of the planet caused due to gravitation.
As material slides against each other, heat generated is retained deep within the earth and temperature remains high.
Statement 2: It is estimated that about 50% of the heat given off by the Earth is generated by the radioactive decay of elements such as uranium and thorium, and their decay products.

Solution: d

About GAAR:GAAR provisionsare targeted at arrangement or transactions made specifically to avoid taxes.
Evolution: In 2007, Vodafone entered the Indian market by buying Hutchison Essar. The deal took place in Cayman Islands. The Indian government claimed over US$2 billion were lost in taxes.
Later, a notice was sent to Vodafone. Vodafone claimed that the transaction was not taxable as it was between two foreign firms. The government claimed that the deal was taxable as the underlying assets involved were located in India. Then came the provisions of GAAR in India.
Provisions: The regulation allows tax officials to deny tax benefits, if a deal is found without any commercial purpose other than tax avoidance.
It allows tax officials to target participatory notes. Under GAAR, the investor has to prove that the participatory note was not set to avoid taxes. It also allows officials to deny double taxation avoidance benefits, if deals made in tax havens like Mauritius were found to be avoiding taxes
Statement 1: Therefore, clearly it does not apply to all such transactions. Only if the speculation was done in order to specifically avoid taxes, it will come under the radar of GAAR.
Statement 2: The same applies to real estate transactions. The time period of sale/purchase is not the issue; it is the purpose with which it is done matters

Solution: d

This special category of Punishment for the first time was mentioned in the Swami Shraddananda versus State of Karnataka judgment of the Supreme Court in 2008.
The Supreme Court has moved away from death penalty (capital punishment) after it commuted the death sentence of a youth for raping and killing a seven-year-old girl with the Special Category of Punishment. Actual life imprisonment is only 14 years of imprisonment. The SC in its judicial innovation awarded the convict 25 year jail term considering it appropriate punishment between death sentence and life imprisonment in heinous crimes

Solution: b

Statement 1: Ibn Battuta was a Moroccan traveler. When travelling in India, he was attacked by bands of robbers several times. In fact he preferred travelling in a caravan along with companions, but this did not deter highway robbers. While travelling from Multan to Delhi, his caravan was attacked and many of his fellow travellers lost their lives.
Statement 2:His account of India says that “Coconut trees looked like date palms. It resembles a man’s head. Inside of it looks like a brain. Its fibre looks like human hair. Its fibre used for making rope which is used for pulling ships.”
Statement 3:He also noted that the subcontinent was well integrated with inter-Asian networks of trade and commerce, with Indian manufactures being in great demand in both West Asia and Southeast Asia, fetching huge profits for artisans and merchants. Indian textiles, particularly cotton cloth, fine muslins, silks, brocade and satin, were in great demand.
Statement 4:Further, almost all trade routes were well supplied with inns and guest houses. Ibn Battuta was also amazed by the efficiency of the postal system(by horse and human runners) which allowed merchants to not only send information and remit credit across long distances, but also to dispatch goods required at short notice.

Solution: a.

The global vision of the UNiTE campaign is a world free from violence against all women and girls.
Some of its goals are:
Adoption and enforcement of national laws to address and punish all forms of violence against women and girls, in line with international human rights standards.
Establishment of data collection and analysis systems on the prevalence of various forms of violence against women and girls.

Solution: c

NFIA is the difference between the aggregate amount that a country’s citizens and companies earn abroad, and the aggregate amount that foreign citizens and overseas companies earn in that country.
The NFIA level is generally not substantial in most nations, since factor payments earned by their citizens and those paid to foreigners more or less offset each other.
Statement 1: If gulf workers send more remittances, India’s NFIA will rise. This is because labour is a ‘factor’ of production which has been deployed in a foreign nation.
Statement 2: Capital (machinery, investment) is another factor of production. The income coming from this factor becomes a part of NFIA, if either foreign investors invest in India or Indian investors invest abroad.

Solution: b

Statement 1: The Crop Trust is an established independent organization under international law.
The Crop Trust was founded in 2004 in Rome, Italy by the Food and Agriculture Organization and Bioversity International on behalf of the CGIAR international agricultural research consortium.
Throughout its 10-year history, the Crop Trust has made significant leaps in ensuring the conservation and availability of crop diversity for food security world-wide.
Statement 2 and 3: In 2006, the Crop Trust entered into an agreement with the governing body of the International Treaty on Plant Genetic Resources for Food and Agriculture.
The agreement recognises the Crop Trust as an “essential element” of the treaty’s funding strategy in regards to the ex situ conservation and availability of plant genetic resources for food and agriculture.
It also confirms the autonomy of the Crop Trust as a scientific organization in raising and disbursing funds.