Insights Static Quiz -445, 2019
Economy
INSIGHTS STATIC QUIZ 2019
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Question 1 of 5
1. Question
Consider the following statements regarding Inflation indexed bonds.
- The main objective of Inflation Indexed Bonds is to provide a hedge and to safeguard the investor against macroeconomic risks in an economy.
- Inflation indexed bonds provide inflation protection only to principal and not to interest payment.
- In India, inflation indexed bonds are linked to Wholesale price index (WPI).
Which of the above statements is/are correct?
Correct
Solution: a)
Inflation Indexed Bond (IIB) is a bond issued by the Sovereign, which provides the investor a constant return irrespective of the level of inflation in the economy. The main objective of Inflation Indexed Bonds is to provide a hedge and to safeguard the investor against macroeconomic risks in an economy.
Inflation indexed bonds are linked to consumer price index (CPI).
A predecessor of Inflation Indexed Bonds (IIBs) was Capital Indexed Bonds (CIBs) issued during 1997. However, the CIBs issued in 1997 provided inflation protection only to principal and not to interest payment. IIBs provide inflation protection to both principal and interest payments.
Incorrect
Solution: a)
Inflation Indexed Bond (IIB) is a bond issued by the Sovereign, which provides the investor a constant return irrespective of the level of inflation in the economy. The main objective of Inflation Indexed Bonds is to provide a hedge and to safeguard the investor against macroeconomic risks in an economy.
Inflation indexed bonds are linked to consumer price index (CPI).
A predecessor of Inflation Indexed Bonds (IIBs) was Capital Indexed Bonds (CIBs) issued during 1997. However, the CIBs issued in 1997 provided inflation protection only to principal and not to interest payment. IIBs provide inflation protection to both principal and interest payments.
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Question 2 of 5
2. Question
Why ‘Indirect Tax’ is considered as regressive taxation
Correct
Solution: d)
- Indirect taxes make the distribution of income more unequal because of their regressive effects. The poor will get taxed a higher proportion of their income than the rich, making it a regressive tax.
- Higher indirect taxes can cause cost-push inflation which can lead to a rise in inflation expectations.
Incorrect
Solution: d)
- Indirect taxes make the distribution of income more unequal because of their regressive effects. The poor will get taxed a higher proportion of their income than the rich, making it a regressive tax.
- Higher indirect taxes can cause cost-push inflation which can lead to a rise in inflation expectations.
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Question 3 of 5
3. Question
Consider the following statements about India Brand Equity Foundation (IBEF).
- IBEF is a private company.
- Its objective is to promote and create international awareness about the Made in India label in overseas markets.
- It is more focused on the trade side rather than on the investment side.
Which of the above statements is/are correct?
Correct
Solution: c)
India Brand Equity Foundation (IBEF) is a Trust established by the Department of Commerce, Ministry of Commerce and Industry, Government of India as an Investment Promotion Agency for creating the “brand India”.
Set up in 1996, IBEF is fully funded, owned and controlled by Union Government, unlike Invest India which is a private company.
IBEF’s primary objective is to promote and create international awareness about the Made in India label in overseas markets and to facilitate dissemination of knowledge of Indian products and services.
IBEF works with a network of stakeholders – domestic and international – to promote Brand India.
IBEF is registered as the Investment Promotion Agency of India with the World Association of Investment Promotion Agencies (WAIPA).
However, IBEF functions more like a trade promotion body as it is more focused on the trade side rather than on the investment side.
Incorrect
Solution: c)
India Brand Equity Foundation (IBEF) is a Trust established by the Department of Commerce, Ministry of Commerce and Industry, Government of India as an Investment Promotion Agency for creating the “brand India”.
Set up in 1996, IBEF is fully funded, owned and controlled by Union Government, unlike Invest India which is a private company.
IBEF’s primary objective is to promote and create international awareness about the Made in India label in overseas markets and to facilitate dissemination of knowledge of Indian products and services.
IBEF works with a network of stakeholders – domestic and international – to promote Brand India.
IBEF is registered as the Investment Promotion Agency of India with the World Association of Investment Promotion Agencies (WAIPA).
However, IBEF functions more like a trade promotion body as it is more focused on the trade side rather than on the investment side.
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Question 4 of 5
4. Question
Which of the following statements best describes ‘Hard Currency’
Correct
Solution: c)
HARD CURRENCY refers to money that is issued by a nation that is seen as politically and economically stable. HARD CURRENCIES are widely accepted around the world as a form of payment for goods and services and may be preferred over the domestic CURRENCY.
Incorrect
Solution: c)
HARD CURRENCY refers to money that is issued by a nation that is seen as politically and economically stable. HARD CURRENCIES are widely accepted around the world as a form of payment for goods and services and may be preferred over the domestic CURRENCY.
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Question 5 of 5
5. Question
Which of the following statements best describes ‘External Debt’?
Correct
Solution: c)
Incorrect
Solution: c)
