INSIGHTS REVISION TEST for Preliminary Exam 2018: Test – 59 (Economy)

Answer C

If the net result is that money is coming in the circular flow than it is treated as exports. In this case Air India is an Indian Company and a foreigner will be contributing money towards his travel. Therefore, overall there would be foreign exchange inflow and thus we can classify it as an export.

Ans: B

Cross elasticity of demand or cross–price elasticity of demand measures the responsiveness of the quantity demanded for a good to a change in the price of another good,

Ans: B

In WTO terminology, subsidies in general are identified by “Boxes” which are given the colours of traffic lights:

Amber box — All domestic support measures considered to distort production and trade fall into the amber box. These include measures to support prices, or subsidies directly related to production quantities.

Blue box

• This is the “amber box with conditions” — conditions designed to reduce distortion. Any support that would normally be in the amber box, is placed in the blue box if the support also requires farmers to limit production.
• At present there are no limits on spending on blue box subsidies.

Green box — Subsidies that not distort trade, or at most cause minimal distortion. They have to be government-funded (not by charging consumers higher prices) and must not involve price support.

• They also include environmental protection and regional development programmes.

https://www.wto.org/english/tratop_e/agric_e/negs_bkgrnd13_boxes_e.htm

Ans: A

skill development would enable wider participation of the workers in trade and industry and help in reaping the rewards of demographic dividend.

Ans:  A

The rationale and details of the Wage-Goods Strategy was explained in ‘Planning for an Expanding Economy’, published in 1956. But this strategy was rejected and instead, the Mahalanobis strategy was accepted by the Planning Commission for the second plan and the third plan as well. The Wage-Goods strategy mainly emphasizes on employment expansion, poverty eradication, reduction in income inequalities, etc. It insists on more investment in the Wage-Goods sector. It focuses mainly on the poor sections of society. (Hence statement 2 is incorrect.)

The Planning Commission has defined the Community Development Programme in these words: “Community development is an attempt to bring about a social and economic transformation of village life through the efforts of the people themselves.”  (Hence statement 1 is correct).

Ans: C

http://www.nafed-india.com/Home/CommonContentPage/5

http://cotcorp.org.in/AboutUs.aspx

NAFED — National Agricultural Cooperative Marketing Federation of India Ltd.(NAFED) 

• It was established in1958. Nafed is registered under the Multi State Co-operative Societies Act. Its object is to promote Co-operative marketing of Agricultural Produce to benefit the farmers.
• Under Price Stabilization Fund (PSF) Scheme NAFED took initiative for buffer stocking of  pulses.
• Nafed is one of the central Nodal Agencies for procurement of 16 notified agricultural commodities of Oilseeds, Pulses and Cotton under Price Support Scheme (PSS) and continues to be the sole central Nodal Agency for procurement of Milling, Ball Copra and De-husk Copra under Price Support Scheme.

Hence statement 1 is correct.

Cotton corporation of India

It extending necessary marketing support to the cotton growers in selling their kapas produce at most competitive prices in the various market yards in all cotton growing States through timely intervention.

Hence statement 2 is correct

Ans: A

Private coal mines do exist but only for captive purposes such as in the case of ultra-mega power projects.

Hence statement 2 is incorrect.

http://www.thehindu.com/business/Industry/government-clears-opening-up-of-commercial-coal-mining-to-private-firms/article22806187.ece

Ans: B

The RBI has extended the transitional period for full implementation of Basel III Capital Regulations in India upto March 31, 2019, instead of as on March 31, 2018. This will also align full implementation of Basel III in India closer to the internationally agreed date of January 1, 2019.

Hence statement 1 is incorrect.

The Reserve Bank of India has deferred the adoption of Indian Accounting Standards (Ind AS) by banks, for a year, due to unpreparedness of banks to migrate to the new accounting system.

Hence statement 2 is correct.

https://www.moneycontrol.com/news/business/rbi-defers-ind-as-adoption-by-1-year-as-banks-found-to-be-unprepared-2543523.html

Ans: d

http://www.insightsonindia.com/2014/11/27/e-technology-aid-farmers/

The Sandesh Pathak application, developed jointly by C-DAC Mumbai, IIT-Madras, IIIT Hyderabad, IIT Kharagpur, and C-DAC Thiruvananthapuram will enable SMS messages to be read out loud, for the benefit of farmers who may have difficulty in reading. It is usable by people who cannot read. A large population of farmers belongs to this category. So when they receive an SMS message either containing agriculture-related advice or some other thing, this app will read aloud the content.

The app which is available for download from the Appstore of the Mobile Seva Project of government of India, is an Indian language SMS Reader.

The app is part of the project launched by the Indian Government to help farmers read messages which may be of the following types: advice to solve farming problems — insect, disease, fertilizer or weed management; information on weather — such as forecasts; and updates on latest technology — for improving yield and much more.

Ans: d

‘Round tripping FDI’. Here, money from a country (eg. India) flows to a foreign country (Mauritius) and comes back as foreign direct investment to India.

Money Laundering: PNs are becoming a favourite with a host of Indian money launderers who use them to first take funds out of country through hawala and then get it back using PNs.

Ans: b

Agreement on agriculture is based on three pillars and supported by a fourth through the SPS Standards.

1. Market access is about allowing foreign agri products.
2. Domestic support is about green box, blue box and amber box subsidies.
3. Export subsidies

Codex standard are the food standards prescribed by the FAO and WHO.

Ans: B

If a company exports a product at a price lower than the price it normally charges on its own home market, it is said to be “dumping” the product.

WTO allows companies to protect themselves though anti-dumping as part of its safeguard mechanisms.

Ans: B

Capitalism —  economic system based upon private ownership of the means of production and their operation for profit. Characteristics central to capitalism include private property, capital accumulation, wage labor, voluntary exchange, a price system, and competitive markets

Socialism — economic and social systems characterised by social ownership and democratic control of the means of production.  Social ownership may refer to forms of public, collective or cooperative ownership, or to citizen ownership of equity.

Communism — Economic and social system in which all (or nearly all) property and resources are collectively owned by a classless society and not by individual citizens.

Ans: A

Loan recoveries are the money, which the government had lent out in past, their capital comes back to the government when the borrowers repay them as capital receipts. long-term capital accruals to the government through the Provident Fund (PF), Postal Deposits, various small saving schemes (SSSs) and the government bonds sold to the public (as Indira Vikas Patra, Kisan Vikas Patra, Market Stabilization Bond, etc.) are also capital receipts.

Grants are revenue receipts.

Ans: D

Gross capital formation, in simple terms is equivalent to investment made. It was earlier called gross domestic investment. The part of GDP that is used is called gross domestic consumption, while the part that is saved is gross domestic savings (GDS). Some part of this GDS will be re-invested back, and that is called gross capital formation. Now, an increase in GDP or GDS will not necessarily lead to an increase in capital formation. Because how much in invested back will depend on many other factors.

Ans: C

Value Added Method:

This is also called output method or production method. In this method the value added by each enterprise in the production goods and services is measured. Value added by an enterprise is obtained by deducting expenditure incurred on intermediate goods such as raw materials, unfinished goods (purchased from other firms from the value of output produced by an enterprise.

Income Method:

This method approaches national income from distribution side. In other words, this method measures national income at the phase of distribution and appears as income paid and or received by individuals of the country. Thus, under this method, national income is obtained by summing up of the incomes of all individuals of a country. Individuals earn incomes by contributing their own services and the services of their property such as land and capital to the national production.

Expenditure Method:

Expenditure method arrives at national income by adding up all expenditures made on goods and services during a year. Income can be spent either on consumer goods or capital goods. Again, expenditure can be made by private individuals and households or by government and business enterprises.

Ans: A

Flagship schemes of the government of India are those schemes which are declared so by the union cabinet or the Development Evaluation Advisory Committee (DEAC) of Planning Commission. The list of flagship programmes can be modified by the DEAC or the Government from time to time.

http://www.arthapedia.in/index.php?title=Flagship_Programmes

Ans: A

Narrow money-money in forms that can be used as a medium of exchange, generally notes, coins, and certain balances held by banks.

Broad Money-money in any form including bank or other deposits as well as notes and coins.

High Powered Money– the total liability of the monetary authority of a nation

https://www.investopedia.com/terms/m/moneysupply.asp

Ans: A

The second goal in the United Nations Millennium Development Goal is to achieve Universal Primary Education, more specifically, to “ensure that by 2015, children everywhere, boys and girls alike will be able to complete a full course of primary schooling.”

It means giving everyone an equal opportunity in education, regardless of their social class, gender, ethnicity background or physical and mental disabilities.

Also sarva shiksha Abhiyaan aimed at universal primary education.

Ans: B

In economics, a public good is a good that is both non-excludable and non-rivalrous in that individuals cannot be effectively excluded from use and where use by one individual does not reduce availability to others.

Hence statement 2 and 3 are correct.

Free rider problem is a situation where some individuals consume more than their fair share or pay less than their fair share of the cost of a shared resource. Since public goods are non rivalrous and non excludable there is no free rider problem associated with public good.

Hence statement 1 is  correct.

Economists use the term Public Goods to refer to products (goods or services) that are difficult to keep nonpayers from consuming (no excludability), and of which anyone can consume as much as desired without reducing the amount available for others (no rival consumption).

Solution: d

Justification:

E should be immediately followed by C i.e. the order EC should be followed.

D should be immediately followed by B i.e. the order DB should be followed.

Since D and E should be within Tuesday to Thursday, the possible order from Tuesday to Friday is

DBEC or ECDB

Since one play is staged between A and B, the possible arrangement from Monday to Friday is

ADBEC.

Hence, option (d) is correct.

Directions for questions 22 and 23:

Read the following information carefully and answer the questions that follow.

1. P, Q, R, S, T and U are six students procuring their Master’s degree in six different subjects- English, History, Philosophy, Physics, Statistics and Mathematics.
2. Two of them stay in hostel; two stay as paying guest (PG) and the remaining two stay at their home.
3. R does not stay as PG and studies Philosophy.
4. The students studying Statistics and History do not stay as PG.
5. T studies Mathematics and S studies Physics.
6. U and S stay in hostel. T stays as PG and Q stays at home.

Solution: a

Justification:

Solution: b

Justification:

Refer the explanation for previous question.

S stays in hostel and R stays at home.

Hence, option (b) is correct

Solution: b

Justification:

When the hour hand moves by 18 degrees, the minute hand is moves 12 times 18 degrees i.e. 216 degrees.

1 minute = 6 degrees

So, 216 degrees = (216/6) minutes = 36 minutes.

Hence, option (b) is correct.

Solution: a

Justification: