Insights Static Quiz -276, 2019
Economy
INSIGHTS STATIC QUIZ 2019
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Question 1 of 5
1. Question
Consider the following statements about GDP deflator.
- GDP deflator reflects the prices of all domestically produced goods and services in the economy.
- The GDP deflator also includes the prices of investment goods, government services and exports.
- Monthly change in inflation cannot be tracked using GDP deflator.
Which of the above statements is/are correct?
Correct
Solution: d)
The Gross Domestic Product (GDP) deflator is a measure of general price inflation. It is calculated by dividing nominal GDP by real GDP and then multiplying by 100.
There are other measures of inflation too like Consumer Price Index (CPI) and Wholesale Price Index (or WPI); however, GDP deflator is a much broader and comprehensive measure. Since Gross Domestic Product is an aggregate measure of production, being the sum of all final uses of goods and services (less imports), GDP deflator reflects the prices of all domestically produced goods and services in the economy whereas, other measures like CPI and WPI are based on a limited basket of goods and services, thereby not representing the entire economy.
The GDP deflator also includes the prices of investment goods, government services and exports, and excludes the price of imports.
While WPI and CPI are available on monthly basis whereas deflator comes with a lag (yearly or quarterly, after quarterly GDP data is released). Hence, monthly change in inflation cannot be tracked using GDP deflator, limiting its usefulness.
Incorrect
Solution: d)
The Gross Domestic Product (GDP) deflator is a measure of general price inflation. It is calculated by dividing nominal GDP by real GDP and then multiplying by 100.
There are other measures of inflation too like Consumer Price Index (CPI) and Wholesale Price Index (or WPI); however, GDP deflator is a much broader and comprehensive measure. Since Gross Domestic Product is an aggregate measure of production, being the sum of all final uses of goods and services (less imports), GDP deflator reflects the prices of all domestically produced goods and services in the economy whereas, other measures like CPI and WPI are based on a limited basket of goods and services, thereby not representing the entire economy.
The GDP deflator also includes the prices of investment goods, government services and exports, and excludes the price of imports.
While WPI and CPI are available on monthly basis whereas deflator comes with a lag (yearly or quarterly, after quarterly GDP data is released). Hence, monthly change in inflation cannot be tracked using GDP deflator, limiting its usefulness.
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Question 2 of 5
2. Question
Which of the following are released by Central Statistics Office (CSO)?
- Index of Industrial Production (IIP)
- CPI(Rural)
- CPI for Industrial workers CPI(IW)
- Wholesale Price Index (WPI)
Select the correct code:
Correct
Solution: b)
The all India index of Industrial Production (IIP) is compiled and published monthly by the Central Statistical Organization (CSO).
CPI(Urban) and CPI(Rural) are compiled by Central Statistical Organisation.
CPI for Industrial workers CPI(IW) compiled by Labour Bureau.
In India, Office of Economic Advisor (OEA), Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry calculates the Wholesale Price Index (WPI).
Incorrect
Solution: b)
The all India index of Industrial Production (IIP) is compiled and published monthly by the Central Statistical Organization (CSO).
CPI(Urban) and CPI(Rural) are compiled by Central Statistical Organisation.
CPI for Industrial workers CPI(IW) compiled by Labour Bureau.
In India, Office of Economic Advisor (OEA), Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry calculates the Wholesale Price Index (WPI).
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Question 3 of 5
3. Question
Consider the following statements about National Small Savings Fund (NSSF).
- NSSF is setup to account all the monetary transactions under small savings schemes of the Union Government under one umbrella.
- It is set up in the Public Account of India.
- The Fund is administered by the RBI.
Which of the above statements is/are correct?
Correct
Solution: c)
Small Saving schemes have been always an important source of household savings in India. Small savings instruments can be classified under three heads.
These are:
- postal deposits [comprising savings account, recurring deposits, time deposits of varying maturities and monthly income scheme (MIS)];
- savings certificates [(National Small Savings Certificate (NSC) and Kisan Vikas Patra (KVP)]; and
- social security schemes [(public provident fund (PPF) and Senior Citizens‘ Savings Scheme(SCSS)].
NSSF was set up on 1 April, 1999 with an objective to account all the monetary transactions under small savings schemes of the Union Government under one umbrella. It was set up in the Public Account of India.
The Fund is administered by the Government of India, Ministry of Finance. Since NSSF operates in the public account, its transactions do not impact the fiscal deficit of the Centre directly.
Incorrect
Solution: c)
Small Saving schemes have been always an important source of household savings in India. Small savings instruments can be classified under three heads.
These are:
- postal deposits [comprising savings account, recurring deposits, time deposits of varying maturities and monthly income scheme (MIS)];
- savings certificates [(National Small Savings Certificate (NSC) and Kisan Vikas Patra (KVP)]; and
- social security schemes [(public provident fund (PPF) and Senior Citizens‘ Savings Scheme(SCSS)].
NSSF was set up on 1 April, 1999 with an objective to account all the monetary transactions under small savings schemes of the Union Government under one umbrella. It was set up in the Public Account of India.
The Fund is administered by the Government of India, Ministry of Finance. Since NSSF operates in the public account, its transactions do not impact the fiscal deficit of the Centre directly.
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Question 4 of 5
4. Question
Fair and Remunerative Price for sugarcane is determined based on which of the following factors?
- cost of production
- domestic and international prices
- inter-crop price parity
- terms of trade prices of primary by-products
Select the correct code:
Correct
Solution: d)
The FRP has been determined on the basis of recommendations of Commission for Agricultural Costs and Prices (CACP) and after consultation with State Governments and other stake-holders. Recommended FRP has been arrived at by taking into account various factors such as cost of production, overall demand-supply situation, domestic and international prices, inter-crop price parity, terms of trade prices of primary by-products, and likely impact of FRP on general price level and resource use efficiency.
Incorrect
Solution: d)
The FRP has been determined on the basis of recommendations of Commission for Agricultural Costs and Prices (CACP) and after consultation with State Governments and other stake-holders. Recommended FRP has been arrived at by taking into account various factors such as cost of production, overall demand-supply situation, domestic and international prices, inter-crop price parity, terms of trade prices of primary by-products, and likely impact of FRP on general price level and resource use efficiency.
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Question 5 of 5
5. Question
Which of the following measures by the government will lead to reduction in inflation?
- Reducing government tax collection
- Reducing government spending
- Banning the export of essential items
Which of the above statements is/are correct?
Correct
Solution: b)
Inflation can be controlled by increasing the supplies of goods and services and reducing money incomes in order to control aggregate demand.
Fiscal measures to control inflation:
- The government should reduce unnecessary expenditure on non-development activities in order to curb inflation. (Statement 2)
- To cut personal consumption expenditure, the rates of personal, corporate and commodity taxes should be raised (Statement 1)
- Some protectionist measures (such as banning the export of essential items such as pulses, cereals and oils to support the domestic consumption, encourage imports by lowering duties on import items etc.). (Statement 3)
Incorrect
Solution: b)
Inflation can be controlled by increasing the supplies of goods and services and reducing money incomes in order to control aggregate demand.
Fiscal measures to control inflation:
- The government should reduce unnecessary expenditure on non-development activities in order to curb inflation. (Statement 2)
- To cut personal consumption expenditure, the rates of personal, corporate and commodity taxes should be raised (Statement 1)
- Some protectionist measures (such as banning the export of essential items such as pulses, cereals and oils to support the domestic consumption, encourage imports by lowering duties on import items etc.). (Statement 3)
