INSTA 75 DAYS REVISION PLAN

FOR UPSC CSE PRELIMS 2024

INSTA TEST: DAY - 5

SUBJECT : THE INDIAN ECONOMY

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1. Consider the following: sign
1. Leverage ratio How many of the above are eligible for regis-
2. Net stable funding ratio tration as a trademark in India?
3. Market capitalization (a) Only one
4. Liquidity coverage ratio (b) Only two
5. Credit-to-GDP gap (c) Only three
6. Deposit insurance coverage (d) None of the above
7. Operational risk capital
Under Basel III regulatory framework, the Ba- 5. In the context of economic systems, which
sel Committee on Banking Supervision does of the following best explains the concept
NOT include how many of the above as prima- of “Embedded Liberalism”?
ry regulatory standards? (a) A system where market forces operate
a) Only one within strong regulatory frameworks to
b) Only two ensure social welfare
(b) An economy characterized by close inte-
c) Only three
gration of political and corporate inter-
d) Only four ests
(c) An economic model emphasizing com-
2. Which of the following statements accu- plete state control over production and
rately describes the relationship between distribution
currency values and economic indicators? (d) A theory proposing minimal government
1. Increasing demand for a country’s goods intervention in free markets
tends to increase demand for its currency.
2. A strengthening currency generally 6. Which of the following factors are most
makes a country’s exports more compet- likely to contribute to demand-pull infla-
itive. tion in an economy?
3. Changes in currency exchange rates can 1. Increased consumer confidence leading
significantly impact a country’s GDP. to higher spending
Select the correct answer using the code given 2. Reduction in income tax rates across all
below: brackets
a) 1 and 3 only 3. Sharp increase in government infrastruc-
b) 2 only ture spending
c) 1 and 2 only 4. Expansion of credit availability through
d) 1, 2 and 3 lower interest rates
Select the correct answer using the code giv-
3. With reference to the Financial Stability en below:
Board (FSB), consider the following state- (a) 1 and 3 only
ments: (b) 2 and 4 only
1. It was established after the 2008 financial (c) 1, 2 and 3 only
crisis to coordinate financial regulation (d) 1, 2, 3 and 4
among G20 countries.
2. From India, both the Reserve Bank of In- 7. Which one of the following statements best
dia and the Ministry of Finance are mem- describes a key constitutional aspect of
bers of the FSB. cess and surcharge in India?
Which of the statements given above is/are (a) Both cess and surcharge are discussed
correct? under Article 270 of the Constitution.
a) 1 only (b) States receive a fixed percentage of pro-
b) 2 only ceeds from both cess and surcharge.
c) Both 1 and 2 (c) Cess can be levied only for temporary
d) Neither 1 nor 2 purposes, while surcharge can be perma-
nent.
(d) Unlike surcharge, funds collected from
4. With reference to the trademarks, consider
cess must be allocated separately and
the following: used only for its specific purpose
1. Unique signature of the person
2. Shape of goods or their packaging
8. Regarding the composition of India’s for-
3. Marks constituting only a two-dimensional

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 eign exchange reserves, as maintained by Which of the following is correct in respect of
the Reserve Bank of India (RBI), consider the above statements ?
the following elements: (a) Both Statement -I and Statement -II are
1. Foreign Currency Assets (FCAs) correct and Statement -II explains State-
2. Gold Holdings ment -I
(b) Both Statement -I and Statement -II are
3. Special Drawing Rights (SDRs) alloca-
correct but Statement -II does not explain
tion by the IMF Statement -I
4. Reserve Position in the IMF (c) Statement- I is correct but Statement -II is
5. Government Securities denominated in incorrect
foreign currencies (d) Statement- I is incorrect but Statement -II
How many of the above elements are iden- is correct
tified as components of India’s foreign ex-
change reserves? 12. Consider the following statements regard-
(a) Only Two ing Securities and Exchange Board of India
(b) Only Three :
(c) Only four 1. It is a statutory body to regulate Foreign
(d) All five Institutional Investors.
2. The National Institute of Securities Market
9. The Reserve Bank of India’s “SCALE” works under SEBI.
framework is designed to: 3. The Securities Appellate Tribunal under
(a) Measure the systemic resilience of the SEBI has the same powers as that of a
banking sector Civil Court.
(b) Regulate digital lending platforms and How many of the statements given above is/
loan aggregators are correct?
(c) Monitor non-performing assets of (a) Only one
scheduled commercial banks (b) Only two
(d) Assess climate-related financial risks in (c) All three
the banking system (d) None

10. With reference to unemployment in In- 13. Which of the following best describes the
dia, consider the following statements: term Fiscal Prudence ?
1. Frictional unemployment is consid- (a) A situation when government spending
ered beneficial for an economy to some exceeds it’s earning in a given fiscal year.
extent. (b) The Ratio of the government’s outstand-
2. Seasonal unemployment is mainly found ing debt to its Gross Domestic Product
in urban areas rather than rural areas. (c) A ratio that compares the percentage
3. Higher cropping intensity is desirable change in tax revenue to the percentage
for reducing unemployment in rural change in National Income
economies. (d) Management of public finances in a re-
Which of the statements given above are sponsible manners to ensure sustainable
economic growth
correct?
(a) 1 and 2 only
(b) 2 and 3 only 14. Consider the following statements regard-
(c) 1 and 3 only ing Nidhi Companies :
(d) 1, 2 and 3 1. These are governed by rules framed by the
Ministry of Finance without requiring
11. Consider the following statements: licence of the RBI.
2. No minimum capital is required to open a
Statement – I :
Nidhi company.
Quantitative Easing encourages lending and 3. It can land money only to a member.
investment in the economy. Which of the statements given above is/are
Statement – II : correct?
Under Quantitative Easing policy, a central (a) 1 and 3 only
bank purchases Securities in the open mar- (b) 2 only
ket. (c) 3 only
(d) 1, 2 and 3

3
15. Consider the following statements : (c) Statement- I is correct but Statement -II is
1. The Gross Fixed Capital Formation (GFCF) incorrect
measures the level of investment to (d) Statement- I is incorrect but Statement -II
enhance productive capacity of an econ- is correct
omy..
2. GFCF represents investment portions of 19. Which of the following International
the Gross Domestic Product of a country. groupings is associated with the ‘Global
Which of the statements given above is/are Alliance Against Hunger and Poverty’ ?
correct? (a) G7
(a) 1 only (b) NATO
(b) 2 only (c) G20
(c) Both 1 and 2 (d) QUAD
(d) Neither 1 nor 2
20. Consider the following statements re-
16. Which of the following best describes the garding Domestic Systemically Important
term Stablecoins ? Banks (D-SIBs):
(a) The digital currency issued by the central 1. Criteria for D-SIBs is announced by the
bank of a country World bank annually.
(b) A digital currency issued by an interna- 2. Banks with size greater than 2% of GDP
tional grouping to facilitate trade within are assessed for the inclusion as D-SIBs.
the members 3. Under RBI guidelines 2014, State Bank of
(c) A cryptocurrency whose value does not India is the only D-SIB in India.
fluctuate depending on demand and How many of the statements given above is/
supply are correct?
(d) A cryptocurrency whose value is tied to (a) Only one
another currency or financial instrument (b) Only two
(c) All three
17. Consider the following statements : (d) None
1. The Food Corporation of India is responsi-
ble for fixing buffer stock norms thrice a With reference to Cold Lava (Lahar), consider
year, based on production. the following statements
2. The Small Farmers Agri-Business Consor-
tium (SFAC) is involved in procurement of 1. It is formed when rainwater mixes with
pulses for buffer stock. volcanic materials such as ash, sand, and
pebbles.
Which of the statements given above is/are 2. It moves at a much slower pace than
correct? traditional lava flows, allowing sufficient
(a) 1 only time for evacuation.
(b) 2 only 3. Lahars can occur even in the absence of
(c) Both 1 and 2 an ongoing volcanic eruption.
(d) Neither 1 nor 2 Which of the statements given above is/are
correct?
18. Consider the following statements : (a) 1 and 3 only
Statement – I : (b) 2 and 3 only
In case of Inflationary gap, the real GDP re- (c) 1 and 2 only
mains higher than the potential GDP. (d) 1, 2, and 3
Statement – II :
22. The Pantanal Wetlands, the world’s larg-
Inflationary gap is created when government
est tropical wetland, span across which of
spending remains below the National Income.
the following countries?
Which of the following is correct in respect of (a) Brazil, Argentina, Bolivia
the above statements ? (b) Brazil, Bolivia, Paraguay
(a) Both Statement -I and Statement -II are (c) Brazil, Peru, Paraguay
correct and Statement -II explains State- (d) Brazil, Colombia, Bolivia
ment -I
(b) Both Statement -I and Statement -II are 23. With reference to the Pro-tem Speaker in
correct but Statement -II does not explain India, consider the following statements
Statement -I

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 1. The Pro-tem Speaker is appointed by the borrow funds from the RBI at the repo
President for the Lok Sabha and by the rate.
Governor for the State Legislative Assem- (d) A fiscal policy tool used by the govern-
bly. ment to regulate inflation in the economy.
2. The Constitution of India explicitly men-
tions the term ‘Pro-tem Speaker.’ 26. Once upon a time there were two friends
3. The primary duty of the Pro-tem Speaker called Afzal and Imanullah. One day Afzal
is to administer the oath to newly elected visited Imanullah, in his home in Kashmir.
members and oversee the election of the Imanullah, who was richer of the two, lived
Speaker.
4. The office of the Pro-tem Speaker ceases in a lovely house with latticed windows and
to exist immediately after the Speaker is pretty flowers on the rooftop. He wanted to
elected. impress his friend with his hospitality. He
How many of the above statements are cor- wished to treat him to the most delicious
rect? dishes of Kashmir. So, he got a grand feast
(a) Only one prepared. The cooks and the women of the
(b) Only two house spent a whole day preparing roasts,
(c) Only three breads, and curries for their guest.
(d) All four ‘I’m sure Afzal will be highly impressed with
this feast,’ he told his wife.
24. Consider the following statements Afzal arrived. He was shown his room, and a
Staement-I: servant stood patiently to attend to his needs.
The National Health Claim Exchange (NHCX) After a while, lunch was announced and the
is a digital platform launched to streamline men sat down to eat. Dish after dish was
health insurance claims processing and facili- served on simple earthenware plates. Afzal
tate seamless transactions between hospitals, ate with relish as Imanullah waited eagerly
insurers, and policyholders. upon him. He was anxious to know what Afzal
Statement-II: felt about the grand feast that had been laid
The NHCX aims to replace all existing health out.
insurance claim settlement mechanisms Surely he’ll appreciate the lovely dishes after
in India and make the system fully govern- the dessert, he thought to himself.
ment-operated. When the meal was over, Afzal merely said,
Which one of the following is correct in re- ‘Though the meal was well cooked, it comes
spect of the above statements? nowhere near the feast served in Punjab.’ For
(a) Both Statement-I and Statement-II are this was the place where he lived.
correct and Statement-II is the correct Imanullah wondered how grand the feasts
explanation for Statement-I of Punjab could be. But he felt that he could
(b) Both Statement-I and Statement-II are
surely match them. He asked his cooks to put
correct and Statement-II is not the cor-
rect explanation for Statement-I together a bigger feast. All the cookbooks
(c) Statement-I is correct but Statement-II is were taken out, and the delicacies of Kashmi-
incorrect ri wazwan were prepared carefully. This time
(d) Statement-I is incorrect but Statement-II vegetables were added to the menu. What a
is correct hustle and bustle there was in his kitchen!
Imanullah smiled to himself. ‘This time Afzal
25. Which of the following best describes will surely be delighted,’ he said.
the purpose of Ways and Means Advances The grand fare was set before Afzal. He tasted
(WMA)? each dish as it arrived on beautiful plates. He
(a) A long-term borrowing facility for the ate slowly, relishing every mouthful. Imanul-
Central and State Governments to fund lah was certain that Afzal would give a com-
infrastructure projects.
pliment this time.
(b) A short-term borrowing facility to help
the Central and State Governments man- The meal over, Afzal stretched out on the car-
age temporary mismatches in receipts pet, and began to speak. Imanullah waited           
and expenditures. ‘This is indeed food fit for a king, but still, it
(c) A mechanism for commercial banks to does not match the feasts I have at home.’

5
 Imanullah was disappointed and vowed to 30. City A to City B is a downstream journey on
find out for himself what the feast of Punjab a stream which flows at a speed of 5km/
contained. hr. Boats P and Q run a shuttle service
1. Imanullah goes out of his way to impress between the two cities that are 300 kms
Afzal with his hospitality. apart. Boat P, which starts from City A has
2. Afzal considers the Kashmiri feast to be a still-water speed of 25km/hr, while boat
unmatched. Q, which starts from city B at the same
Which of the above statements, if false, could time has a still-water speed of 15km/hr.
be seen as supporting the passage? When will the two boats meet for the first
a. 1 only time? (this part is easy) When and where
b. 2 only will they meet for the second time?
c. Both 1 and 2 a. 7.5 hours and 15 hours
d. Neither 1 nor 2 b. 7.5 hours and 18 hours
c. 8 hours and 18 hours
27. A cyclist leaves A at 10 am and reaches B d. 7.5 hours and 20 hours
at 11 am. Starting from 10:01 am, every
minute a motorcycle leaves A and moves
towards B. Forty-five such motorcycles
reach B by 11 am. All motorcycles have the
same speed. If the cyclist had doubled his
speed, how many motorcycles would have
reached B by the time the cyclist reached
B?
a. A 22
b. 23
c. 15
d. 20

28. If the upstream speed of a boat is 50%

less than the downstream speed of the
boat and if a object is thrown in the river
it covers 100m in 50 sec, then how much
distance boat can cover in still water in 5
hours?
a. 900 km
b. . 100 km
c. 120 km
d. 108 km

29. Anil, Sunil, and Ravi run along a circu-

lar path of length 3 km, starting from the
same point at the same time, and going
in the clockwise direction. If they run at
speeds of 15 km/hr, 10 km/hr, and 8 km/
hr, respectively, how much distance in km
will Ravi have run when Anil and Sunil
meet again for the first time at the starting
point?
a. 4.8 km
b. 4.6 km
c. 5.2 km
d. 4.2 km

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 SOLUTIONS
1. Solution: C This is NOT included as a primary regulatory
standard under Basel III. Deposit insurance is
The Basel III regulatory framework, developed typically a separate regulatory mechanism oper-
by the Basel Committee on Banking Supervision ated at the national level.
(BCBS), aims to strengthen regulation, supervi-
sion, and risk management within the banking
sector. Introduced in response to the 2007-2008 7. Operational Risk Capital
financial crisis, Basel III enhances the resilience This is a component of Basel III. Basel III in-
of banks by setting comprehensive standards for cludes requirements for operational risk
capital adequacy, leverage, and liquidity. capital, with specific methods for calculat-
1. Leverage Ratio ing capital charges for operational risk. The
This is a primary component of Basel III. It framework provides options for computing
serves as a non-risk-based measure to supple- capital requirements for operational risk
ment the risk-based capital requirements. The
leverage ratio is calculated by dividing Tier 1
capital by the bank’s total leverage exposure and 2. Solution: A
aims to limit excessive leverage in the banking
system. It is specifically mentioned as one of the Understanding the relationship between curren-
three main pillars of Basel III. cy values and economic indicators is essential in
international economics.
When a country’s goods and services are
2. Net Stable Funding Ratio (NSFR) in higher demand internationally, foreign
This is a primary component of Basel III. The buyers need to exchange their currencies for
NSFR requires banks to maintain a stable the exporting country’s currency to complete
funding profile in relation to their assets and transactions. This increased demand for the
off-balance sheet activities. It is defined as currency can lead to its appreciation. This rela-
the ratio of available stable funding to re- tionship aligns with the basic principles of sup-
quired stable funding over a one-year hori- ply and demand in foreign exchange markets.
zon. The NSFR was introduced as part of the Hence statement 1 is correct
liquidity requirements pillar.
A stronger (appreciating) currency makes a
country’s exports more expensive for for-
3. Market Capitalization eign buyers, potentially reducing demand
This is NOT included as a primary regulato- for these exports. Consequently, exports may
ry standard under Basel III. Basel III focuses on become less competitive in international
capital adequacy, leverage, and liquidity mea- markets. Conversely, a weaker (depreciating)
sures rather than market valuation metrics. currency can make exports cheaper and more
competitive abroad.
Hence statement 2 is incorrect.
4. Liquidity Coverage Ratio (LCR)
Exchange rate fluctuations influence the
This is a primary component of Basel III. relative prices of imports and exports, affect-
The LCR requires banks to hold sufficient ing trade balances. A depreciated currency
high-quality liquid assets to cover total net can boost exports by making them cheaper
cash outflows over a 30-day stress period. It internationally, potentially increasing GDP.
was introduced alongside the NSFR as part of Conversely, an appreciated currency can
Basel III’s liquidity requirements to ensure that reduce export competitiveness, potentially
banks maintain adequate liquidity buffers. decreasing GDP. These dynamics are central to
models like the Mundell–Fleming model, which
5. Credit-to-GDP Gap analyzes the interplay between exchange rates
and economic output.
This is NOT included as a primary regulatory
standard under Basel III. Hence statement 3 is correct

6. Deposit Insurance Coverage

7
3. Solution: C particular goods or service.
The Financial Stability Board (FSB) is an interna- • Devices, including fancy devices or sym-
tional body that monitors and makes recommen- bols
dations about the global financial system. It was • Monograms
established in April 2009 as the successor to the • Combination of colours or even a single
Financial Stability Forum (FSF), with an expand- colour in combination with a word or
ed mandate to promote financial stability. device
In response to the 2008 financial crisis, the G20 • Shape of goods or their packaging.
nations recognized the need for a more robust Hence Statement 2 is correct.
mechanism to oversee and coordinate interna-
tional financial regulation. Consequently, at the • Marks constituting a 3- dimensional
G20 summit in April 2009, the Financial Stability sign. Hence Statement 3 is incorrect.
Board was established as the successor to the • Sound marks when represented in con-
Financial Stability Forum, with an expanded ventional notation or described in words
membership and a strengthened mandate to by being graphically represented.
promote financial stability.
Hence statement 1 is correct The Controller General of Patents, Designs and
The FSB includes representatives from major Trade Marks heads the TRADE MARKS Registry
economies, and India’s representation compris- offices and functions as the Registrar of TRADE
es both the Reserve Bank of India (RBI) and the MARKS.
Ministry of Finance. This dual representation
ensures that both monetary and fiscal perspec-
tives are considered in discussions pertaining to 5. ​Solution: A
global financial stability.
Embedded liberalism refers to the post-
Hence statement 2 is correct
World War II global economic system that
sought to combine the benefits of free trade
with the ability of states to provide welfare
4. Solution B and regulate their economies to reduce un-
employment. This system aimed to integrate
Trademark is a visual symbol which may be a market forces within a framework that allowed
word signature, name, device, label, numerals or national governments the autonomy to pursue
combination of colours used by one undertaking interventionist and welfare-based domestic
on goods or services or other articles of com- policies.
merce to distinguish it from other similar goods
or services originating from a different under-
taking. Hence, option (a) is correct.

Different types of trademarks that may be

registered in India: 6. Solution: D
• Any name (including personal or All statements given above are correct.
surname of the applicant or predeces- Demand-pull inflation occurs when aggregate
sor in business or the signature of the demand in an economy outpaces aggregate
person), which is not unusual for trade supply, leading to a general rise in price levels.
to adopt as a mark. Hence Statement 1 This phenomenon is often summarized as “too
is correct. much money chasing too few goods.” Key factors
• An invented word or any arbitrary dic- contributing to demand-pull inflation include in-
tionary word or words, not being directly creased consumer spending, expansionary fiscal
descriptive of the character or quality of policies, and enhanced credit availability.
the goods/service.
• Letters or numerals or any combination • When consumers feel optimistic about
thereof. their financial future, they are more
• The right to proprietorship of a trade- likely to increase their spending on
mark may be acquired by either registra- goods and services. This surge in con-
tion under the Act or by use in relation to sumption elevates aggregate demand,
potentially leading to demand-pull

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 inflation. mercial banks.
• Lower income tax rates boost individ- • Holdings of foreign government and cor-
uals’ disposable income, encouraging porate bonds.
higher consumer spending. This increase • Other financial instruments denominated
in consumption can drive up aggregate in foreign currencies.
demand, contributing to demand-pull
inflation. Gold Holdings: The RBI maintains gold re-
serves as part of its forex reserves.
• Significant government expenditure on
infrastructure projects injects substan- Special Drawing Rights (SDRs): SDRs are
tial funds into the economy, stimulating international reserve assets allocated by the In-
demand for materials, labour, and related ternational Monetary Fund (IMF) to its member
services. This heightened demand can countries. They can be exchanged among gov-
lead to demand-pull inflation. ernments for freely usable currencies in times of
need.
• Reducing interest rates makes bor-
rowing more affordable for consumers Reserve Position in the IMF: This represents
and businesses, leading to increased India’s quota contribution to the IMF, which can
spending and investment. This escalation be utilized for drawing financial assistance from
in aggregate demand can result in de- the IMF
mand-pull inflation. Hence, statement 1, statement 2 and state-
ment 3 are correct.
Government securities denominated in foreign
currencies are not part of India’s foreign ex-
7. Solution: D change reserves
Hence, statement 4 is incorrect.
In India’s taxation system, cess and surcharge
represent two distinct types of taxes imposed by
the Central Government, each with specific con-
stitutional provisions governing their collection 9. Solution: A
and utilization. The Reserve Bank of India (RBI) introduced
Cess and surcharge are levied by the Central the Scale-Based Regulation (SBR) framework
Government under different constitutional arti- as a comprehensive approach to regulate
cles. Surcharge is primarily governed by Article Non-Banking Financial Companies (NBFCs)
271 of the Constitution, which allows Parliament based on their size, activities, and potential
to increase taxes through additional surcharges. systemic impact. This framework represents
Meanwhile, cess is mentioned in Article 270(1) a significant shift in how NBFCs are regulated
as one of the exceptions to taxes that must be in India’s financial ecosystem.
shared with states The RBI published the Scale-Based Regulation
Unlike surcharge, funds collected from cess must framework on October 22, 2021, and it came
be allocated separately and used only for its into effect on October 1, 2022. The framework
specific purpose was developed in response to the growing sig-
Hence, option (d) is correct. nificance of NBFCs in India’s financial system
and the contagion risks they posed following the
credit default crisis of 2018. As NBFCs grew sub-
stantially in size and complexity, becoming sys-
8. Solution: C temically significant, there was a need to align
India’s foreign exchange reserves are assets regulations with their changing risk profiles.
held by the Reserve Bank of India (RBI) to back • Base Layer (NBFC-BL): Includes non-de-
liabilities and influence monetary policy. These posit-taking NBFCs with an asset size be-
reserves provide a cushion against economic low ₹1,000 crore and specific types such
shocks and ensure the country can meet its in- as Peer-to-Peer (P2P) lending platforms
ternational financial obligations. and Account Aggregators.
Foreign Currency Assets (FCA): These are the • Middle Layer (NBFC-ML): Comprises all
largest component and include investments deposit-taking NBFCs, regardless of size,
in foreign currencies like the U.S. dollar, euro, and non-deposit-taking NBFCs with as-
pound sterling, and yen. FCA comprises: sets of ₹1,000 crore and above, including
• Deposits with foreign central and com- entities like Housing Finance Companies

9
 (HFCs) and Infrastructure Finance Com- 11. Solution : A
panies (IFCs).
• Quantitative Easing or QE refers to
• Upper Layer (NBFC-UL): Consists of injecting money into the economy by
NBFCs identified by the RBI as systemi- purchasing financial assets by the cen-
cally significant based on a set of parame- tral bank.
ters, including the top 10 NBFCs by asset
size. • Under QE policy this Central Bank pur-
chases Government bonds and other
• Top Layer (NBFC-TL): Ideally remains financial instruments such as mortgage
empty but can include NBFCs if the RBI backed Securities
perceives a substantial increase in sys-
• It is one of the tools of monetary policy
temic risk from specific entities.
along with Open market operations, Cash
Reserve Ratio Bank Rate, Repo and Re-
Hence, option (a) is correct. verse Repo rate that a central bank ap-
plies to regulate money supply and foster
economic growth in the country.
10. Solution: C • It is a types of expansionary monetary
policy that encourages borrowing and
Unemployment remains a significant economic investment as well as stimulates eco-
challenge in India, with various types affecting nomic activity.
different segments of the population. India expe-
• QE creates new Bank reserves, providing
riences several forms of unemployment includ-
banks with more liquidity and encourag-
ing frictional, seasonal, structural, and disguised
ing lending and investment.
unemployment, each with distinct characteris-
tics and economic implications. • QE is typically implemented when in-
terest rates are near Zero and economic
Frictional unemployment occurs when indi- growth is stalled
viduals are temporarily unemployed while
transitioning between jobs or entering the Hence both statements 1 and 2 are correct
workforce. This type of unemployment is nat- and statement 2 correctly explains statement
ural and indicates a dynamic labor market 1
where workers seek better opportunities,
leading to improved job matches and produc-
tivity. Therefore, a certain level of frictional 12. Solution: C
unemployment is considered beneficial.
• SEBI is the regulatory body for security
Hence statement 1 is correct and commodity market in India under the
Seasonal unemployment arises when work- Ministry of Finance.
ers face unemployment during certain sea- • It was established in 1988 as an execu-
sons due to fluctuations in demand or activi- tive body but was given statutory powers
ties. In India, this is predominantly observed through the SEBI Act 1992.
in rural areas, especially in the agricultural
• SEBI is the primary regulatory authority
sector, where employment depends on sow-
governing foreign institutional investors
ing and harvesting seasons. Urban areas expe-
in Indian stock market.
rience less seasonal unemployment as jobs are
less dependent on seasonal factors. • It is responsible for regulating and super-
vising security market in the country
Hence statement 2 is incorrect
• SEBI grants registrations to FII invest-
Cropping intensity refers to the number of crops ment in stocks and monitoring their
grown on the same land during a year. Higher activities.
cropping intensity implies multiple cropping
cycles, leading to more continuous employment Hence statement 1 is correct
opportunities for agricultural workers. This re- • The National Institute of Securities Mar-
duces seasonal unemployment in rural areas by ket is a public trust established in 2006
providing consistent work throughout the year. by SEBI.
Hence statement 3 is correct • The institute carries out a wide range
of capacity building activities at various
levels with an aim to enhance quality
standards in securities market.

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Hence statement 2 is correct Hence statement 1 is incorrect
• The Securities Appellate Tribunal (SAT) • Nidhi companies are easy to form requir-
has been constituted by SEBI. ing a minimum capital of Rs.10 lakh
• It has been established to protect interest and at least 7 members of which three
of entities that feel aggrieved by SEBI’s must be directors.
decision. Hence statement 2 is incorrect
• SAT consists of a presiding officer and • The operations of Nidhi companies are
two other members ; it has the same restricted to their members.
power as vested in a civil court. • These companies are not allowed to en-
Hence statement 3 is correct gage in activities like chit funds, leasing
finance or insurance business.
• There are specific rules regarding the
13. 13. Which of the following best describes type and amount of deposit and loans
the Solution : D these companies can offer.
• Fiscal prudence implies management of • These companies cannot take deposits
government finances in a responsible from Or lend to any individual who is
and sensible manner to ensure sus- not a member.
tainable growth stability and welfare Hence statement 3 is correct
of the nation.
• Fiscal prudence helps to maintain fiscal
sustainability and macroeconomic stabil- 15. Solution: C
ity and promotes economic growth and
• Gross Fixed Capital Formation refers to
social welfare.
the total value of a country’s investments
• It can help avoid fiscal crisis and also in in fixed assets during a specific period
reduction of public debt and improving
• These assets include infrastructure, ma-
the quality of public spending in general.
chinery, equipment and buildings.
RBI has taken initiative to achieve fiscal pru-
• It is an essential indicator of economic
dence in India :
growth and development as it reflects
• State specific fiscal responsibility legisla- the level of investment made to enhance
tions productive capacity.
• Monitoring off budget borrowing • The most important factors affecting
• Encouraging counter-cyclical fiscal pol- GFCF are interest rate, business confi-
icies- avoiding expenditure and savings dence, government policies and regula-
based on economic cycles tions, economic stability, availability of
• Subsidy rationalization - programs to credit and foreign direct investment.
optimise welfare expenditures • GFCF is a component of a country’s Gross
Hence option D is correct Domestic Product; it represents the
investment portion of GDP.
Hence statements 1 and 2 are correct
14. Solution: C
• Nidhi Company is a type of Non Banking 16. Solution : D
Financial Company.
• It does not require to receive licence • Stablecoins are cryptocurrencies
from the Reserve Bank; hence it is easy whose value is pegged to that of anoth-
to form. er currency commodity or financial
instrument
• It is registered as a public company and
should have ‘Nidhi Limited’ as the last • These aim to provide an alternative to the
words of its name. high volatility of the most popular cryto-
currencies including Bitcoin which has
• Nidhi companies are governed by Section made crypto investments less suitable for
4 of the Companies Act 2013 ; these are everyday transactions.
overseen by the Ministry of Corporate
Affairs. • Stablecoins maybe pegged to a curren-
cy like US dollar or the price of a com-

11
 modity such as gold. Hence statement 1 is correct
• These crytocurrencies pursue price • Deflationary gap occurs when govern-
stability by maintaining reserve assets as ment spends below the national income
collateral or through algorithmic formu- - a situation of fiscal surplus.
las that are supposed to control supply. • It is a situation when the real GDP is
Hence option D is correct lower than the potential GDP
• This indicates an economics slow down
and can be reversed by increasing gov-
17. Solution: B ernment spending, cutting taxes and in-
terest rates and increasing money supply
• Buffer stock is the Reserve of a commod- in the economy.
ity that is used to meet price fluctuations
and unforeseen emergencies. Hence statement 2 is incorrect
• A buffer stock of food grains is main-
tained by the government of India for
meeting the prescribed minimum buffer 19. Solution : C
stock norms for food security as well as • The Global Alliance against Hunger and
monthly release of food grains for supply Poverty has been launched by the G20
through Targeted Public distribution sys- group of nations.
tem and other welfare schemes.
• The G20 leaders Summit held in Rio de
• The Cabinet Committee on Econom- Janeiro Brazil was headline by the official
ic Affairs fixes the minimum buffer launch of the Global Alliance against Hun-
norms on a quarterly basis ger and Poverty.
• The buffer stock figures and normally • The initiative will serve as a platform for
reviewed after every 5 years. connecting countries in need of assis-
Hence statement 1 is incorrect tance with public policies targeted to-
• The government procures pulses from wards eradicating hunger and poverty
the farmers at the minimum support with partners willing to offer expertise or
price. financial support.
• The government has engaged National • It is a voluntary coalition of Governments,
Agricultural Cooperative Marketing International Organisations, NGO and
Federation of India Limited, Small other stake holders working to eradicate
Farmers Agri-Business Consortium hunger, poverty reduce inequalities and
and Food Corporation of India to pro- support other related sustainable devel-
cure pulses for buffer stock. opment goals.
Hence statement 2 is correct • The Alliance is an important step towards
implementation of the Deccan High
Level Principles on Food Security and
Nutrition that was adopted at the G20
New Delhi Summit 2023.
18. Solution : C Hence option C is correct
• When the government spends over an
above the national income, it creates
inflationary gap in the economy. 20. Solution: A
• This is often deliberately done by the • Global Systemically Important Banks are
government in the process of promoting identified by the Financial Stability Board
growth. in consultation with Basel Committee on
• It is a situation when the real GDP is Banking Supervision.
higher than the potential GDP • In India the RBI first announced the
• This indicates higher economic activities. Framework dealing with D-SIBs in 2014.
• The gap can be checked by cutting gov- Hence statement 1 is incorrect
ernment spending, raising taxes and in- Selection criteria for D-SIBs:
terest rates, as well as decreasing money
supply. • Banks with size >2% of GDP are as-
sessed

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 • A composite score is calculated based on 22. Solution: B
size, cross- jurisdiction a activity, substi-
tutability and interconnectedness
• Banks above a threshold score are classi- Pantanal wetlands:
fied as D-SIBs. It is the world’s largest tropical wetland, span-
Hence statement 2 is correct ning across Bolivia, Brazil, and Paraguay. Fed
by the Paraguay River and its tributaries, it
There are three D-SIBs in India at present: covers an estimated area of 140,000 to 195,000
• State Bank of India (2015) square kilometres. During rainy seasons, about
• ICICI Bank (2016) 80% of the floodplains are submerged, fostering
a diverse range of aquatic plants and supporting
• HDFC Bank (2017) numerous animal species. Designated as a Na-
Hence statement 3 is incorrect tional Heritage in Brazil, it faces threats from
activities like cattle grazing, pollution, and infra-
structure development. Despite its ecological sig-
nificance, less than 5% of the Pantanal is pro-
tected, with most of it under private ownership.
21. Solution: A
Cold Lava (Lahar):
• Lahar (Indonesian term) refers to cold
lava, a fast-moving mixture of rainwater
and volcanic materials (ash, sand, and
pebbles).
• It resembles wet concrete and causes
widespread destruction.
Formation & Movement:
• Formed when rainwater mixes with
volcanic debris.
• Can be triggered during or even without
an eruption (heavy rainfall on volcanic
deposits).
• Travels rapidly, reaching hundreds of
km/h (faster than traditional lava).
• Can extend up to 60 km from the volca-
no.
• Picks up debris and sediment, increas-
ing in volume and destructive power.
Destructive Impact:
• More deadly than regular lava due to high
speed and density.
• Causes massive damage to buildings,
bridges, and roads.
• Internally hot due to chemical reac-
tions, but externally behaves like mud-
flow.
https://edition.cnn.com/2024/06/14/ameri-
• Serious threat to human life and infra-
cas/brazil-pantanal-wetland-fires-intl-latam/
structure in volcanic regions. index.html

https://www.standard.co.uk/news/world/
philippines-cold-lava-video-flow-erup- 23. Solution: C
tion-b1162597.html
Pro-tem Speaker:
• The Pro-tem Speaker is a temporary
Speaker appointed to conduct the first

13
 sitting of the newly elected Lok Sabha or • It is designed to streamline health in-
State Legislative Assembly until a new surance claims processing and improve
Speaker is elected. coordination among hospitals, insurers,
• The term “Pro-tem” is derived from Lat- and policyholders.
in, meaning “for the time being.” • The system supports paperless, secure,
• The Constitution does not explicitly and seamless claim settlements in In-
mention the term ‘Pro-tem Speaker’, dia’s diverse healthcare ecosystem.
but it is a parliamentary convention. • Aligns with IRDAI’s goal of ‘Insurance
• Appointed by: for All by 2047’ to expand insurance
coverage.
o President of India (for Lok
Sabha) • NHCX does not replace all existing
claim mechanisms; rather, it functions
o Governor (for State Legislative as a digital exchange to standardize
Assembly) and improve coordination among
• Oath Administered by: stakeholders in the healthcare and insur-
o President (for Lok Sabha) ance ecosystem.
o Governor (for State Assembly) Objectives:
• Selection Process: • Facilitate cashless health insurance
claims across different hospitals and
o The senior-most member of the
insurers.
House is usually appointed as the
Pro-tem Speaker. • Reduce administrative burden by
eliminating multiple portals and manual
o The appointment is made in con-
paperwork.
sultation with the ruling gov-
ernment. • Standardize healthcare pricing through
uniform data presentation and central-
• Duties: ized validation.
o Presides over the first sitting of
• Enhance fraud detection by verifying
the House. claim data.
o Administers the oath to newly
Advantages of NHCX:
elected MPs/MLAs.
• Faster Claims Processing: Simplifies
o Conducts the election for the
and expedites the cashless claims pro-
Speaker and Deputy Speaker. cess, reducing waiting times and out-of-
o Can conduct a floor test if re- pocket expenses.
quired to prove the government’s • Improved Transparency: Ensures data
majority. standardization across stakeholders.
• The office of the Pro-tem Speaker ceas- • Efficiency in Healthcare System: Reduc-
es to exist immediately after the new es paperwork and operational costs for
Speaker is elected. hospitals and insurers.
• Ensures a smooth transition for the • Prevention of Fraud: Uses data verifi-
newly elected House. cation to detect fraudulent claims and
enhance the integrity of the system.
https://indianexpress.com/article/explained/
everyday-explainers/pro-tem-speaker-lok- https://www.thehindu.com/sci-tech/health/
sabha-9399861/ what-is-the-national-health-claim-exchange-ex-
plained/article68267419.ece
24. Solution: C
National Health Claim Exchange (NHCX): 25. Solution: B
• The National Health Claim Exchange Ways and Means Advances (WMA):
(NHCX) is a digital platform launched • Ways and Means Advances (WMA) is a
by the National Health Authority (NHA) short-term borrowing facility provided
and the Insurance Regulatory and De- by the Reserve Bank of India (RBI) to
velopment Authority of India (IRDAI). the Central and State Governments to

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 manage temporary mismatches in their re- 28. Correct Option : D
ceipts and expenditures.
Justification :
• Introduced in 1997, WMA allows govern-
ments to borrow funds immediately, Answer D) 108 km
which must be repaid within 90 days. Let the speed of boat in still water be s m/sec
• It is authorized under Section 17(5) of As the object covers 100m in 50 sec , so the
the RBI Act, 1934. distance travelled by the object will be with the
• If the WMA exceeds 90 days, it turns into help of the speed of the stream only.
an overdraft and attracts an interest rate
Speed of stream = 100/50 = 2 m/s
2 percentage points higher than the
repo rate. Given that, (s – 2) = (s + 2) – 50 (s + 2)/100
(s – 2) = (s + 2)(1 – 1/2)
s = 6 m/sec
s = (6 × 18)/5 = 108/5 km/hr
26. Correct Option : B
Distance covered by the boat in still water in 5
Justification : hours = 108 = 5/5 × 108 km
Justification: Hence, option D is correct
The first statement is true based on the passage
as it shows how Imanullah takes a lot of effort
to impress his friend by preparing two grand 29. Correct Option : A
feasts. Thus if this statement were false, it would
not support the passage. Justification :
The second statement does not support the Answer A) 4.8 km
passage as Afzal believes that the Kashmiri feast Anil and Sunil will meet at a first point after LCM
is no match for a feast from Punjab. Thus if the (3/15 , 3/10 ) = 3/5 hr
statement is seen as false, it will support the pas- In the mean time, distance travelled by Ravi = 8 *
sage. Hence, B. 3/5 = 4.8 km

27. Correct Option : C 30. Correct Option : D

Justification : Justification :
Explanation: Answer D) 7.5 hours and 20 hours
It is given that starting from 10:01 am, every Understanding relative speed would help.
minute a motorcycle leaves A and moves to-
Boat P starts from city A and Q starts from city B.
wards B.
When boat P travels downstream, it will effec-
Forty-five such motorcycles reach B by 11 am.
tively have a speed to 30kmph. Likewise, Q will
It means that the forty-fifth motorcycle starts at have an effective speed of 10kmph. The relative
10:45 AM at A and reaches B by 11:00 AM i.e 15 speed = 40kmph. So, the two boats will meet for
minutes. the first time after 300/40 hours (Distance/rela-
Since the speed of all the motorcycles is the tive speed) = 7.5 hours (Actually, for this part we
same, all the motorcycles will take the same du- do not need the speed of the stream)
ration i.e 15 minutes. The second part is more interesting, because
If the cyclist doubles the speed, then he will the speed of the boats change when they change
reach B by 10:30 AM. (Since if the speed is dou- direction. Boat P is quicker, so it will reach the
bled, time is reduced by half) destination sooner. Boat P will reach City B in 10
Since each motorcycle takes 15 minutes to reach hours 300/30. When boat P reaches city B, boat
B, 15 motorcycles would have reached B by the Q will be at a point 100kms from city B.
time the cyclist reaches B After 10 hours, both P and Q will be travelling
upstream,
P’s speed = 20 km/hr

15
Q’s speed = 10 km/hr
Relative speed = 10km/hr
Q is ahead of P by 100 kms

P will catch up with Q after 10 more hours (Dis-

tance/Relative Speed)− (100/10)
So, P and Q will meet after 20 hours at a point
200 kms from city B
Hence, the answer is 7.5 hours and 20 hours
Choice D is the correct answer.

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