1. Which of the following statement(s) is true about HDI?

1. Since 2010, UNDP began using the new method of

(a) Only 1
1
Which of the statement(s) given above is/are correct?
(b) Only 2
calculating HDI. (c) Both 1 and 2 (d) Neither 1 nor 2
2. It is based on life expectancy, per capita income mean 7. Consider the following regarding the functions of
years of schooling and expected years of schooling. WTO
3. HDI is the arithmatic mean of the Life Expectancy Index, 1. To provide facilities for implementation, administration
Education Index and Income Index. and operation of multilateral agreements of the World
Select the correct answer using the codes given below Trade.
(a) Only 1 (b) 2 and 3 2. To provide a platform to member countries to decide
(c) 1 and 2 (d) All of these future strategies related to trade and tariff.
2. Deficit financing leads to inflation in general, but it can Which of the statement(s) given above is/are correct?
be checked if (a) Only 1 (b) Only 2
(a) government expenditure leads to increase in aggregate (c) Both 1 and 2 (d) Neither 1 nor 2
supply in ratio of aggregate demand 8. Consider the following statements
(b) only aggregate demand is increased 1. Geographical indication is granted to a community or
(c) all the expenditure is devoted to the payment of national group or an institution that represents the interests of
debt the world.
(d) All of the above
2. It is given to a product for a specific period of time
3. Name the bank announced to be set-up in the budget (10 years in India).
for regulating and refinancing all Micro-Finance Which of the statement(s) given above is/are correct?
Institutions (MFI) which are in the business of lending (a) Only 1 (b) Only 2
to micro/small business entities engaged in (c) Both 1 and 2 (d) Neither 1 nor 2
manufacturing, trading and services activities?
9. The GST Bill comprises -
(a) Micro Bank (b) MUDRA Bank
(c) SIDBI Bank (d) Micro-Finance Bank 1. The CGST Bill - The Central Goods and Services Tax
Bill, 2017
4. Which of the following are the main causes of slow rate 2. The IGST Bill - The Integrated Goods and Services Tax
of growth of per capita income in India? Bill, 2017
1. High level of fiscal deficits. 3. The UTGST Bill- The Union Territory Goods and
2. High capital output ratio. Services Tax Bill, 2017
3. High rate of household savings. 4. The Compensation Bill - The Goods and Services Tax
4. High rate of growth of population. (Compensation to the States) Bill, 2017
5. High rate of capital formation. Select the correct answer using the codes given below
Select the correct answer using the codes given below (a) Only 1 (b) 1 and 2
(a) 1, 2 and 4 (b) 2 and 4 (c) 3 and 4 (d) 2, 3 and 5 (c) 1,2 and 3 (d) 1, 2 , 3 and 4

5. Which of the following statements are true regarding 10. After a gap of over 20 years, ` 1 note has been
the TRIPS agreement of the WTO? released in the country on 6th March, 2015 by
1. TRIPS is related to protecting the intellectual property Finance Secretary Rajiv Mehrishi. The new ` 1 note
rights. bears the signature of
2. Developing countries were supposed to pass TRIPS (a) Finance Minister (b) RBI Governor
Practice Set 1

Complaint National Legislation by 2005. While (c) Finance Secretary (d) Home Secretary
for developed countries the time limit was till 1995. 11. The capital account convertibility of the Indian
Select the correct answer using the codes given below Rupee implies
(a) Only 2 (b) Only 1 (a) that the Indian Rupee can be exchanged by the
(c) Both 1 and 2 (d) Neither 1 nor 2 authorised dealers for travel
6. Consider the following statements regarding the OPEC (b) that the Indian Rupee can be exchanged for any major
currency for the purpose of trade in goods and
1. At present, OPEC has a total 14 members countries.
services
2. The objective of OPEC was to control production and
(c) that the Indian Rupee can be exchanged for any major
price of petroleum so as to safeguard the interests of oil
currency for the purpose of trading financial assets
exporting countries.
(d) None of the above
 182 Magbook ~ Indian Economy
12. World Bank provides long-run capital to member (b) An index showing the rising and falling prices of
countries for economic reconstruction and development. shares and equities in the Baltic region
World Bank provides capital mainly for the following (c) An assessment showing the prices of the crude oil
purposes produced in the Baltic region
1. To rehabilitate war ruined economics. (d) None of the above
2. To finance productive efforts according to peacetime 19. Which one of the following items has the highest
requirements. share of India in the world exports?
3. To develop resources and production facilities in (a) Coffee, Tea, Mate, Spices etc
underdeveloped countries. (b) Pearls, Precious stones, Metals, Coins etc
Which of the statement(s) given above are correct? (c) Lac, Gums, Resins, Vegetable Saps and extracts etc
(a) 1 and 2 (b) 2 and 3 (c) 1 and 3 (d) All of these (d) Vegetable Plaiting Materials, Vegetable Products etc
13. Consider the following statements 20. The fair and remuneration price of sugarcane is
1. Ministerial conference is the highest decision-making approved by the
body of the WTO, which usually meets once every 2 years. (a) Cabinet Committee on Economic Affairs
2. Its headquarters is in Geneva. (b) Commission for Agricultural Costs and Prices
Which of the statement(s) given above is/are correct? (c) Directorate of Marketing and Inspection, Ministry of
(a) Only 1 (b) Only 2 Agriculture
(c) Both 1 and 2 (d) Neither 1 nor 2 (d) Agricultural Produce Market Committee
14. Consider the following statement(s) regarding the 21. Which one of the following factors is taken account
International Monetary fund to calculate the Balance of Payment (BOP), of a
1. IMF is controlled and managed by a Board of Governors. country?
2. Each Governor has the right of 250 votes on the basis of (a) Current account
membership and one additional vote for each SDR 1 lakh (b) Changes in the foreign exchange reserves
quota. (c) Errors and omissions (d) All of these
Which of the statement(s) given above is/are correct? 22. Which one of the following international organisations
(a) Only 1 (b) Only 2 (c) Both 1 and 2 (d) Neither 1 nor 2 offers political risk insurance guarantees to help
15. Consider the following statements investors to protect foreign direct investments made
in developing countries against political risk?
1. General agreement on trade in services is a treaty of the
World Trade Organisation (WTO) that entered into force in (a) IDA (b) IFC (c) IMF (d) MIGA
January, 1995. 23. Examine the following statements in the context of
2. All members of the WTO are signatories to the general the Base Rate system of interest rates
agreement on trade in services. 1. Corporate entities were able to get loans at
Which of the statement(s) given above is/are correct? interest rates lower than PLR while it is not
(a) Only 1 (b) Only 2 possible with Base Rate.
(c) Both 1 and 2 (d) Neither 1 nor 2 2. Monetary policy is transmitted better through Base
Rate system.
16. IMF was established to meet which of the following
3. Base Rate is applicable only to loans given after 1st
objectives?
July, 2010.
1. Promoting International Monetary Co-operation. Which of the statement(s) given above is/are correct?
2. Expanding International Trade.
(a) Only 1 (b) 2 and 3 (c) Only 2 (d) All of these
3. Lessening the disequilibrium in balance of trade.
4. Avoiding competitive exchange depreciations. 24. Consider the following statements
Select the correct answer using the codes given below 1. Regional Rural banks were set-up in 1975, under an
(a) 3 and 4 (b) 1, 2 and 3 (c) 2 and 3 (d) All of these Act of Parliament to exclusively cater to the credit
needs of rural population.
17. Consider the following statements about ‘Mega Food Park’ 2. The sponsor banks have the largest share in the
1. To provide good infrastructure facilities for food equality of Regional Rural banks.
processing industries. Which of the statement(s) given above is/are correct?
Practice Set 1

2. To increase processing perishable items and reduce (a) Only 1 (b) Only 2
wastage. (c) Both 1 and 2 (d) Neither 1 nor 2
3. To provide emerging and eco friendly food processing
technology to entrepreneurs. 25. Which of these statements is true regarding the
Special Drawing Rights (SDRs) of IMF?
Which of the statement(s) given above are correct?
(a) 2 and 3 (b) 1 and 2 (c) 1 and 3 (d) All of these 1. The SDRs are equivalent to a currency and represent
a claim on the IMF.
18. Which one of the following is related with the Baltic Dry 2. The value of SDRs in terms of its component
index? currencies is fixed annually.
(a) An assessment of the price of moving the major raw 3. The basket of currencies of SDRs which presently
materials by sea consist of US Dollar, Euro, the chinese renminbi,
Pound and Yen is revised every 5 years.
Magbook ~ Practice Set 1 183
Select the correct answer using the codes given below 32. Which of the following statements is true regarding a
(a) Only 3 (b) Only 1 Non-Banking Financial Company (NBFC)?
(c) Both 1 and 2 (d) All of these 1. NBFC cannot accept demand deposits.
26. Which of the following statements are true regarding 2. For a NBFC financial assets must be 50% more than its
Hedge Funds? total assets.
1. Hedge funds are open to only select group of investors. 3. Normal banks do all of the activities normally done by an
2. Hedge funds have been allowed to function in India NBFC.
recently after registering with SEBI. Select the correct answer using the codes given below
Select the correct answer using the codes given below (a)Only 1 (b) 2 and 3
(a) Only 1 (b) Only 2 (c) 1 and 2 (d) All of these
(c) Both 1 and 2 (d) Neither 1 nor 2 33. The Competition Commission of India (CCI) wants the
27. Consider the following statements rules tightened to bring a larger number of Mergers
and Acquisitions (M and As) under its scrutiny. In this
1. NABARD is the nodal agency for implementing the
context, consider the following statements about CCI
schemes in respect of co-operative credit and RRBs.
1. Competition Commission of India (CCI) was established
2. NABARD was the nodal agency for implementing the
with effect from14th October, 2003.
agricultural debt waiver and Debt Relief Scheme, 2008.
2. The goal is to curtail the monopoly tendencies and
Which of the statement(s) given above is/are correct?
foster the competition among public sector enterprises.
(a) Only 1 (b) Only 2
Which of the statement(s) given above is/are correct?
(c) Both 1 and 2 (d) Neither 1 nor 2
(a) Only 1 (b) Only 2
28. Which of the following statements are true regarding (c) Both 1 and 2 (d) Neither 1 nor 2
the Agreement on Agriculture of the WTO?
34. Which of the following statements is true regarding
1. Green box, blue box and amber box refer to domestic
the innovation index measure?
subsidies in agriculture.
1. It is developed by INSEAD, France.
2. There is no limit on green box subsidies for both
developing and developed economies. 2. Japan is the top country in this index.
3. In the long-run, the agreement on agriculture is 3. The National Innovation Council (NIC) was formed to
expected to benefit the developing countries. foster innovation in India especially in the area of
growth.
Select the correct answer using the codes given below
Select the correct answer using the codes given below
(a) Only 1 (b) Only 2
(c) Both 1 and 2 (d) All of these (a) 2 and 3 (b) 1 and 2
(c) 1 and 3 (d) All of the above
29. Which State Government launched ‘Bhagyashree’
scheme in place of the Sukanya scheme which caters 35. Examine these statements in the context of the
to girls from Below Poverty Line (BPL) families? financial instruments known as futures.
(a) Gujarat (b) Kerala (c) Maharashtra (d) 1. Futures are agreements between two parties to buy or
Haryana sell shares at a future date.
2. Options are a class of futures where there is a right, but
30. Which of the following are the objectives of the not the obligation to buy or sell at a future date.
Commission for Agricultural Costs and Prices 3. Forwards are a particular class of futures.
(CACP)?
Which of the statement(s) given above is/are correct?
1. To stabilise agricultural prices. (a) 1 and 3 (b) Only 1
2. To ensure meaningful real income levels to the (c) Only 2 (d) All of these
farmers.
3. To protect the interest of the consumers by providing 36. Which one of the following is likely to the most
essential agricultural commodities at reasonable rate inflationary, in it’s effect?
through PDS. (a) Repayment of public debt
Select the correct answer using the codes given below (b) Borrowing from the public to finance a budget deficit
(a) 1 and 2 (b) 2 and 3 (c) Borrowing from banks to finance a budget deficit
(c) 1 and 3 (d) All of the above (d) Creating new money to finance a budget deficit
Practice Set 1

31. Which of these statements is true regarding the 37. Consider the following statements regarding Reserve
lending provisions of the IMF? Bank of India
1. IMF lends to only member countries. 1. It is a banker to the Central Government.
2. IMF lends only to help with Balance of Payments (BoP) 2. It formulates and administers monetary policy.
problems. 3. It acts as an agent of the government in respect of India.
3. IMF lending is also possible for specific projects 4. It handles the borrowing programme of Government of
relating to economic restructuring of an economy. India.
Select the correct answer using the codes given below Which of the statement(s) given above are correct?
(a) 1 and 3 (b) Only 1 (a) 1 and 2 (b) 2, 3 and 4
(c) 1 and 2 (d) Only 3 (c) 3 and 4 (d) All of the above
 184 Magbook ~ Indian Economy
38. Consider the following regarding World Trade organisation 45. Hawala transactions relate to payments
1. The Uruguay round of GATT (1986-93) gave birth to WTO. (a) received in rupees against overseas currencies
2. WTO was officially constituted as a permanent body on 1st and vice versa without going through the official
January,1995 as an effective formal organisation. channels
Which of the statements given above is/are correct? (b) received for sale or transfer of shares without
(a) Only 1 (b) Only 2 going through the established stock exchanges
(c) Both 1 and 2 (d) Neither 1 nor 2 (c) received as commission for services rendered to
overseas investors, buyers or sellers in assisting
39. Under the WTO agreement, Agreement on Agriculture them to get over the red tape and in getting
(AoA), developing countries won over with some preferential treatment
concessional features and flexibilities. Its three pillars are (d) made to political parties or to individuals for
1. domestic support 2. export subsidies meeting election expenses
3. market access 4. non-tariff barriers
46. The Reserve Bank of India (RBI) cancelled the
Which of the statement(s) given above are correct? certificate of registration of the 26 Non- Banking
(a) 1, 2 and 3 (b) 2, 3 and 4 Financial Companies (NBFCs) including
(c) 1, 3 and 4 (d) All of the above
(a) Mathura Financial Services Limited
40. Consider the following regarding WTO (b) SJ Finance & Consultants Private Limited
1. WTO negotiations proceed not by consensus of all members, (c) Modern Vintrade Private Limited
but by a process of informal negotiations between small (d) All of the above
groups.
47. The main cause of cyclical unemployment is that
2. Such negotiations are often called green room.
(a) firms engage in race, gender and sex
Which of the statement(s) given above is/are correct?
discrimination in their hiring practices
(a) Only 1 (b) Only 2 (b) some individuals do not have marketable job skills
(c) Both 1 and 2 (d) Neither 1 nor 2 (c) the level of overall economic activity fluctuates
41. Personal Income Tax limit was not changed in Union (d) workers often voluntarily quit a job look for a better
Budget 2016-17. What is the present Personal I-T job
exemption limit? 48. If the Cash Reserve ratio is lowered by the RBI, its
(a) ` 2.5 lakh (b) ` 2.75 lakh (c) ` 3 lakh (d) ` 5 lakh impact upon credit creation will be to
42. Which one of the follwing items has gained the highest (a) decrease it (b) increase it
growth rate in the import composition of the Indian (c) no impact (d) None of these
economy in the last decade? 49. Which of the following is true about money
(a) Pearls, precious and semiprecious stones market in India?
(b) Gold and silver 1. The most active segment of money market is
(c) Oil-cake and other solid residues overight call market.
(d) None of the above 2. The money market instruments have maturity of
43. Consider the following regarding the objectives of WTO less than 1 year.
1. To improve the standard of living of people in member 3. The money market instruments in India are
countries. regulated by RBI and SBI.
2. To ensure full employment and increase in effective demand. Select the correct answer using the codes given below
3. To enlarge production and trade of goods and services. (a) 1 and 2 (b) Only 2
Which of the statement(s) given above are correct? (c) 2 and 3 (d) All of the above
(a) 1 and 2 (b) 2 and 3 (c) 1 and 3 (d) All of these 50. With regard to proposed GST, which of the
44. The Indian banking system consists of following is correct?
1. 26 public sector banks 2. 20 private sector banks 1. Taxes on items containing alcohol and petroleum
3. 43 foreign banks 4. 56 regional rural banks product are kept out of GST.
5. 1589 urban cooperative banks 2. Entertainment tax, luxury tax and taxes on
6. 93550 rural cooperative banks gambling are part of GST.
Practice Set 1

Select the correct option from the codes given below : Select the correct answer using the codes given below
(a) 1, 2 and 3 (b) 3, 4 and 5 (a) Only 1 (b) Only 2
(c) 1 ,2, 3, 4 and 5 (d) All of these (c) Both 1 and 2 (d) Neither 1 nor 2

Answers
1. (c) 2. (a) 3. (b) 4. (b) 5. (c) 6. (c) 7. (c) 8. (c) 9. (d) 10. (c)
11. (c) 12. (d) 13. (c) 14. (c) 15. (c) 16. (b) 17. (d) 18. (a) 19. (c) 20. (a)
21. (d) 22. (d) 23. (d) 24. (b) 25. (a) 26. (c) 27. (d) 28. (c) 29. (d) 30. (a)
31. (a) 32. (c) 33. (c) 34. (c) 35. (c) 36. (d) 37. (a) 38. (c) 39. (a) 40. (c)
41. (a) 42. (b) 43. (d) 44. (d) 45. (a) 46. (d) 47. (c) 48. (b) 49. (d) 50. (c)