Class Room Daily Dose Booklet: DDB No: Economics Set 02 Answers and Explanations

 

MAGME SCHOOL OF BANKING 

Class Room - Daily Dose Booklet
 DDB NO: Economics 02

Answers & Explanations

1. C. Devaluation is a deliberate downward adjustment to the value of a country’s currency, relative to another currency, group of currencies. Since it is relative to other currency so internal price remains unchanged. It causes a country’s exports to become less expensive and imports more expensive. Devaluation is monetary policy tool used by countries that have a fixed exchange rate or semi fixed exchange rate. It is often confused with Depreciation and is the opposite of revaluation.

2. A. Supply side economics lays greater emphasis on the point of view of the producer whereas the demand side economics lays emphasis on the interest of the consumer.

3. B. The price at which the Government purchases foodgrains for maintaining the public distribution system and for building up buffer stocks are known as procurement prices. Minimum support price: It is a form of market Intervention by Govt. of India to insure agricultural producers against any sharp fall in farm price. M.S.P. were announced by Govt of India.
Issue price: It is the price at which shares are offered to retail investors in IPO issue.

4. B. In Order to help the farmers in getting remunerative prices for their produce with a view to encourage higher investment and as also to increase production and productivity of a commodity, the government declares Minimum Support Price (MSPs) for 25 notified agricultural commodities for each Kharif & Rabi crop season. National Agricultural cooperative Marketing Federation of India Ltd (NAFED) is one of the Central Nodal Agencies which implements PSS.

5. C. CACP was set up in 1985 and recommends for MSP, issue prices as well as procurement prices.

6. D. The base of CPI for industrial worker is being shifted from 1982 to 2001.

7. B. This rise in wholesale food prices was not captured by WPI as the weightage for food articles is just 14.3% compared to 65% for manufactured products in this index. On the other hand, the weightage for food is 57% in CPI items which captures the impact of food prices better. Further, wholesale prices do not take into account the substantial margins at the retail level, which tend to rise when there are shortages.

8. A. An increase in purchase by the federal Gov. causes the aggregate demand curve to shift to the right.

9. B. The Laffer Curve says that, if marginal tax rates fall, tax revenues will rise, and the budget deficit will decrease.
Supply side economics is a macro economic theory that gives economic growth can be most effectively created by investing in capital and by lowering barriers on the production of goods and services.

10. A. Electricity is not public good but it is club good including roads, bridges, gas, sewage, wires, telecom.

11. B. When different consumers pay different prices for the same product, this situation is known as price discrimination.

12. B. Public good means a commodity or service which is given without profit to everyone in a society by government or any organisation.

13. A. Generally Kerosene is used as fuel by the poor, as they get prosperity, they use little of this fuel.

14. A. Brent Crude is a major trading classification of sweet light crude oil that serves as a major benchmark price for purchases of oil worldwide. Brent Crude is extracted from the North Sea and comprises Brent Blend, Forties Blend, Oseberg and Ekofisk crudes .The Brent Crude oil marker is also known as Brent Blend, London Brent and Brent petroleum. The index represents the average price of trading in the 25 day Brent Blend, Forties, Oseberg, Ekofisk (BFOE) market in the relevant delivery month as reported and confirmed by the industry media.

15. A. In the short run insurance premium are fixed costs because they are independent of the level of production.

16. B. Inferior goods have a negative(less than 0) income elasticity of demand meaning that demand falls as income rises.

17. A. Total fixed costs are constant, so the average fixed cost curve diminishes with the output. Thus, the average fixed cost curve is a rectangular hyperbola.

18. A. When marginal cost is less than average cost, average cost must be falling. When marginal cost exceeds average cost must be rising. The marginal cost and average cost curves are related to each other.

19. D.

20. D.
21. D. The demand for a commodity at a given price is the quantity that will be purchased at a unit of time and at a unit price. Demand has the following features; Demand refers to the quantity at a given price, Demand must be defined per unit time.

22. B. When the curve slopes downwards from left to right; higher prices reduce the quantity demanded.

23. B. When the price level rises, each unit of currency buys fewer goods and services. So rise in the price of a commodity means fall in the value of currency only.

24. D.

25. A. Fiscal stimulus - Government measures, normally involving increased public spending and lower taxation are aimed at giving a positive jolt to economic activity.

26. B. Hedging is used in limiting or offsetting probability of loss from fluctuations in the prices of commodities, currencies or securities.

27. D. Inflation is increased in the prices of commodities. It is caused due to decrease in supply and increase in demand of commodities.
So when money supply in the economy increases it means people have more purchasing capacity and thus demand increases which results in inflation.

28. C. The process of curing inflation by reducing money supply is called disinflation. Disinflation is a decrease in the rate of inflation – a slowdown in the rate of increase of the price level of goods and services in GDP.
Cost pull inflation - It is caused by an increase in prices of inputs like Labour, raw material etc. The increased price of the factors of production leads to the decreased supply of Goods.
Demand pull inflation - It is asserted to rise when Aggregate demand in an economy outpaces aggregate supply. It involves inflation rising as real GDP rises and unemployment falls.

29. D. Stagflation occurs when the economy isn’t growing but prices are increasing, which is not a good situation for a country to be in.
Stagflation - Persistant high inflation combined with high unemployment and stagnant demand in a country’s economy.

30. A. During inflation interest rates should increase so that the investor invests more in lieu of higher interest earning thus money supply reduce which can reduce inflation. Similarly higher interest rates means credit becomes costly so that again supply of money reduces which helps in curbing inflation.
31. C. In the parlance of economy, Gilt-edged market is called market of safe securities. “Gilt-edged” denotes high-grade securities, consequently carrying low yields.

32. D. Inflation in India is measured on the Wholesale Price Index (WPI). The wholesale price index (WPI) is based on the wholesale price of a few relevant commodities of over commodities available.
Cost of Living Index - It is a theoretical price index that measures relative cost of living over time or regions.
Consumer Price Index - It is a measure that examines the weightest average of prices of a basket of consumer goods & services such as transportation food and medical care.

33. B. When the prices of commodities, goods and services start declining consistently, the phenomenon is known as deflation.
Deflation is because of fall in the aggregate level of demand. That is, there is a fall in how much the whole economy is willing to buy and the price for goods.
Negative Growth - It refers to a contraction in business sales or earning. It is also used to refer to a contraction in country’s economy as evidenced by a decrease in its GDP during any quarter of a given year.
Market Capitalism - An economic system which supports private enterprise within a free market, the means of production being privately owned.

34. B. The basis of determining dearness allowance (D.A.) to government employees in India is consumer price index. Dearness Allowance (DA) is an allowance paid to employees to compensate them for erosion of real income / wage due to inflation. The increase in the cost of living and the consequent erosion of income is measured in terms of a consumer price index number and, DA to be sanctioned to employees is determined on the basis of the percentage increase in that index.
Dearness Allowance - D.A. is calculated as a percentage of an Indian citizen’s basic salary to mitigate the impact of inflation on people.

35. B. With increase in GDP, aggregate demand increases, because more production means people have more disposable income, which means more consumer spending. As a result, prices rise in response, and in conclusion because aggregate demand grows faster than long-term aggregate supply, economic growth will be coupled with inflation.
Hyper inflation - In economic, hyper inflation occurs when a country experience very high and usually actuarially rates of inflation. Economic growth is usually coupled with inflation.
36. C. The money market consists of financial institutions and dealers in money or credit who wish to either borrow or lend. Participants borrow and lend for short periods of time, typically up to twelve months. Money market trades in short-term financial instruments commonly called “paper.”

37. D. Inflation is a persistent increase in the general price level of goods and services in an economy over a period of time . When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value .High inflation means excessive supply of money and thus leads to rise in the cost of credit and interest rates. Higher inflation leads to reduction in economic growth, decrease in cost of credit, increase in spending rather than saving as the value of money is declining.

38. B. Deflation may be caused by a combination of the supply and demand for goods and the supply and demand for money, specifically the supply of money going down and the supply of goods going up.

39. B. Headline inflation also called as WPI inflation is a measure of the total inflation within an economy and is affected by areas of the market which may experience sudden inflationary spikes such as food or energy. As a result, headline inflation may not present an accurate picture of the current state of the economy as it doesn’t take account of service sector.

40. B. In order to curb inflation if CRR is increased, then it may take liquidity from markets as banks will have to deposit more money with RBI. Moreover inflation may also be curbed by Permitting Central/State agencies to import duty free pulses and sugar. However, Decreasing SLR will leave more money with banks to give loans, which in turn will lead to inflation.

41. A. In India, inflation is measured by the wholesale price Index . The wholesale prices of commodities of base year are compared with wholesale prices of current year to compute inflation.

42. B. Inflation redistributes wealth from creditors to debtors i.e., lenders suffer and borrowers benefit out of inflation. Bond holders = this person has lend money (to debtors) and received bond in return.
So he is lender, he suffers, by the way they haven’t specifically used the word – “inflation indexed bonds”, hence we cannot say inflation benefits the bond-holders.

43. A. When economic development takes place, specialization increases. Economic development typically involves improvements in a variety of indicators such as literacy rates, life expectancy and poverty rates. GDP does not take into account other aspects such as leisure time, environmental quality, freedom, or social justice; alternative measures of economic well-being have been proposed.

44. A. The factors which are responsible for an industry are capital investment, labour force and power consumption. However, nature and size of business is not determined by the turnover of business.
45. B. Disinvestment is a process in which off-loading of government shares is done to private companies. A company or government organization will divest an asset or subsidiary as a strategic move for the company, planning to put the proceeds from the divestiture to better use that garners a higher return on investment.

46. D. The money supply or money stock, is the total amount of monetary assets available in an economy at a specific time. It includes currency in circulation and demand deposits.
Near money : assess which can readily be converted into cash, such as bells of exchange.
Narrow money : Money in forms that can be used as a medium of exchange generally notes, coins and certain balances held by bank.

47. D. Hyper inflation occurs when a country experiences very high and usually accelerating rates of monetary and price inflation, causing the population to minimize their holdings of money. Under such conditions, the general price level within an economy increases rapidly as the official currency quickly loses real value.
Stagflation : Persistent high inflation combined with high unemployment.
Conflation : The merging of two or more sets of information texts, ideas etc into one.
Steath inflation : It is a type of charges or fees created by business to gain extra profit and revenue from its customers.

48. B. Reflation is the act of stimulating the economy by increasing the money supply or by reducing taxes, seeking to bring the economy (specifically price level) back up to the long-term trend, following a dip in the business cycle.
Disinflation : Reduction in the rate of inflation.
Inflation Hedge : It is an investment with intrinsic value such as Oil,
Natural Gas, Gold, farmland and to a lesser degree commercial real state.

49. A. The gilt-edged market refers to the market for Government and semi-government securities, backed by the Reserve Bank of India (RBI). Government securities are tradeable debt instruments issued by the Government for meeting its financial requirements. The term gilt-edged means ‘of the best quality’.

50. B. M1 measures the most liquid components of the money supply, as it contains cash and assets that can quickly be converted to currency.
M0 + M1 - Narrow money - includes coins and notes in circulation and other money equivalents that are easily convertible into cash.
M2 - M1 + short term deposits in banks.
M3 - M2 + long term deposits and money market fund.
M4 - M3 + other deposits.

51. A. For a given stock of gold, a rise in real money supply can only occur if the price level declines.
The blue fit of Gold standard is that a fixed assets back the money values. It provide a self-regulating and stabilizing effect on the economy that discourages the inflation.

52. C. The base effect relates to inflation in the corresponding period of the previous year: If the inflation rate was too low in the corresponding period of the previous year, even a smaller rise in the price index will arithmetically give a high rate of inflation.

53. D. This is an economy that does not interact with the economy of any other country. A closed economy prohibits imports and exports and prohibits any other country from participating in their stock market.

54. D.

55. A. Investment in capital and labour will increase productivity and production which will cause either rise in wages or creation of employment or both thus the overall income will rise.

56. A. When the re-organisation of production is not possible which can make any one better off without making someone else worse off than efficiency occurs. Pareto Efficiency, Pareto Optimality and Allocative Efficiency are all the same and indicates “efficiency in resource allocation”.

57. A. A self-regulatory organization (SRO) is a non-governmental organization that has the power to create and enforce industry regulations and standards. The priority is to protect investors through the establishment of rules that promote ethics and equality.

58. A. General equilibrium involving both production and consumption also ensures the achievement of pareto efficiency. Pareto efficiency in this regard requires that marginal rate of transformation should be equal to the marginal rate of substitution of the individuals.

59. D.

60. A. The way total output changes due to change in all inputs in the same proportion is known as “law of return to scale”.

61. C. The ratio of liquid assets to net demand and time liability is called statutory Liquidity Ratio (SLR).
SLR Rate = [(Liquid Assets)/(Demand + Time Liabilities)]x100

62. D. Commercial Banks, Regional Rural Banks and Co-operative Banks are implementing the Micro Finance programme linked with Self Help Groups.

63. D. Largest Shareholdings—
Japan (15.6%)
US (15.5%)
China (6.5%)
India (6.3%)

64. A. In the regional rural banks, 50% share shall be held by the central government, 15% by the concerned state government and 35% by the sponsor bank.

65. D. Bandhan Bank was incorporated on 23 December 2014 as a wholly owned subsidiary of Bandhan Financial Holdings with its headquarters at Kolkata, West Bengal, India.

66. D. The baseline “Aapka bhala, Sabki bhalai” is associated with Bandhan Bank limited.

67. C. Indian Bank is an Indian state-owned financial services company established in 1907 and headquartered in Chennai, India.

68. D. ICICI, the first Indian bank has launched “Smart Vault” a fully automated locker facility using robotic technology to access lockers (available 24x7, including weekends and after banking hours.) from state vault.

69. D. According to extant RBI guidelines, Payment Banks are not permitted to set up subsidiaries to undertake NBFC activities.

70. D. National Payments Corporation of India (NPCI) is an umbrella organization for all retail payments in India.

71. D. In banking, antedated refers to cheques which have been written by the drawer, and dated at some point in the past.

72. A. SFMS stands for Structured Financial Messaging System.

73. D. Mutilated banknote is a banknote, of which a portion is missing or which is composed of more than two pieces.

74. A. There are four major types of market risk; Interest Rate Risk, Equity Price Risk, Foreign Exchange Risk, Commodity Price Risk.

75. B. The maximum loan size and investment limit exposure to a single and group obligor would be restricted to 10 percent and 15 percent of its capital funds, respectively.

76. A. Reserve Bank has established a Fund to be called the Depositor Education and Awareness Fund (DEAF) referred to in Section 26A of the Act.

77. A. The IFSC is an 11-character code with the first four alphabetic characters representing the bank name, and the last six characters (usually numeric, but can be alphabetic) representing the branch.

78. A. A Unified Payment Interface (UPI) is a single window mobile payment system launched by the National Payments Corporation of India (NPCI). The letter “I” in the abbreviation UPI stands for interface.

79. D. The Mudra Bank is subsidiary of Small industrial development bank of India (SIDBI).

80. B. A central bank uses OMO as the primary means of implementing monetary policy.

81. D. Bank rate is the rate charged by the central bank for lending funds to commercial banks.

82. B. Microfinance Institutions (MFIs) regulated by the Reserve Bank of India (RBI).

83. C. SBI Life Insurance is a joint venture life insurance company between State Bank of India (SBI), and BNP Paribas Cardif.

84. A. The abbreviation of Net Demand and Time Liabilities is NDTL, in which ‘D’ stands for demand.

85. D. SMERA Ratings Limited is a full service Credit Rating Agency, registered with SEBI, and accredited by RBI as an External Credit Assessment Institution, for Bank Loan Ratings under BASEL-II norms.

86. A. MobiKwik is an Indian company founded in 2009 that provides a mobile phone based payment system and digital wallet.

87. D. DCB Bank, launched a “card-less and PIN-less” ATM in Bengaluru, in June, 2017. The ATM accepts Aadhaar number and Aadhaar fingerprint (biometric) instead of ATM / debit card and PIN to dispense cash from the bank account.

88. A. India Post Payments Bank is the third entity to receive payments bank permit after Airtel and Paytm.

89. D. Imperfect banknote means any banknote, which is wholly or partially, obliterated, shrunk, washed, altered or indecipherable but does not include a mutilated banknote.
90. B. Currency Note Press (CNP), Nasik, Maharashtra was established in 1928. It was the first printing press for bank notes in India.

91. C. Aviva India is an Indian life assurance company, and a joint venture between Aviva plc, a British assurance company, and Dabur Group, an Indian conglomerate.

92. B. A Third Party Administrator (TPA) is an Insurance Regulatory Development Authority (IRDA) registered company or an organization that processes insurance claims on behalf of insurance companies.

93. B. According to the RBI’s guidelines to banks, a person can change up to 20 pieces of notes with a maximum value of Rs.5000 per day, banks should exchange them over the counter, free of charge.

94. D. Currency chests are usually located at authorized select branches of scheduled banks. These currency chests are store houses of bank notes and rupee coins and are usually established with important branches of Scheduled Commercial Banks. They do their function on behalf of the Reserve Bank.

95. A. According to the Section 2 of the Coinage Act, 2011, a “Coin” does not include the credit card, debit card, postal order and emoney issued by any bank, post office or financial institution.

96. A. The Government of India has the sole right to mint coins. Coins are minted at the four India Government Mints at Mumbai, Alipore(Kolkata), Saifabad(Hyderabad), Cherlapally (Hyderabad) and Noida (UP).

97. C. NPCI is a not-for-profit company formed by various banks, with primary objective of providing cost-effective payment solutions to the banks. NPCi’s solutions such as IMPS, BHIM, RuPay, AEPS etc. have indeed helped in financial inclusion. So first is correct.
And second is correct- NPCi launched Rupay card in 2012, as 7th payment gateway in the world.

98. A. “A” is the most appropriate choice. Mobile wallets will not be necessary, because your mobile number is directly linked with the bank account using bank’s ‘customized app’ which is built on the UPI platform.

99. A. MPC has 6 members, not 12; and it’s headed by RBI governor and not Finance Minister. So statement 2 and 3 are wrong, hence by elimination, we reach answer A. only 1 correct.

100. B. S4A is RBI’s scheme for restructuring of corporate loans, hence “B” is the most appropriate among the given options.
101. A. While directly or indirectly all three will be encouraged because of Small Finance banks. But when RBI invited applications, the specific purpose were 1 and 2 only.

102. C. NPS was compulsory for new central govt recruits (except armed forces) WEF 1/1/2004. so “D” is wrong. Any Indian between 18 to 55 can join NPS. So “B” is wrong. NRIs are allowed to open NPS account as per PFRDA norms.

103. D. A firm sells shares worth ` 1000 direct to individuals. This transaction will cause no impact on Gross National Product as GNP measures the output generated by a country’s enterprises (whether physically located domestically or abroad) but here no output is generated.

104. C.

105. C. OTCEI was incorporated in 1990 as a Section 25 company under the Companies Act 1956 and is recognized as a stock exchange under Section 4 of the Securities Contracts Regulation Act, 1956.
The Exchange was set up to aid enterprising promoters in raising finance for new projects in a cost-effective manner and to provide investors with a transparent & efficient mode of trading.
OTCEI (over the counter exchange of India) is based in Mumbai. It is India’s first exchange for small companies as well as first screen based nationwide stock exchange in India.
Founded: 1990 Chairman: S.C. Bhargava

106. B. A person having the debentures is called debenture holder whereas a person holding the shares is called shareholder. A shareholder subscribes to the shares of a company. Shares are the parts of share capital. On the other hand, debenture-holders are the subscribers to debentures. Debentures are part of loan. A shareholder or member is the joint owner of a company; but a debenture holder is only a creditor of the company.

107. D. S & P 500 relates to an index of stocks of large companies. It stands for Standard & Poor’s 500 index and is an indicator of the equities of the United States and one of the most common benchmarks for its stock market.

108. A. A bull investor wishing to invest thinks the market or the company he/she’s investing in is going to be better. A bear investor is pessimistic about the market and many make more conservative stock choices.

109. D. NIFTY is an Index computed from performance of top stocks from different sectors listed on NSE (National stock exchange).
NIFTY consists of 50 companies from 24 different sectors. Indian Capital Markets are regulated and monitored by the Ministry of Finance, The Securities and Exchange Board of India (SEBI) and The Reserve Bank of India. It does not trade in mutual funds.

110. A. The term bear denotes an investor who believes that a particular security or market is headed downward. Bears attempt to profit from a decline in prices. Bears are generally pessimistic about the state of a given market. Bearish sentiment can be applied to all types of markets including commodity markets, stock markets and the bond market.

111. C. An investor may reduce the risk of loss from fluctuations in exchange rates by hedging with currency futures. Simply stated, hedging involves taking on one risk to offset another.

112. C. Monopolistic competition is a form of market in which there are large numbers of sellers of a particular products but each seller sells somewhat differentiated but close products.

113. D. YES BANK, a leader in the climate finance space in the country, investing and raising capital towards mitigation, adaptation and resilience. This bank has the target funding of 5,000 MW of clean energy by 2020.

114. B. The first land development bank was started at Jhang in Punjab in 1920.

115. B. ICICI Bank has tied up with railway’s e-ticketing platform IRCTC to sell rail tickets through its website.

116. B. Industrial and Commercial Bank of China is the Largest Banks in the World with total assets of 3616.39 billion USD.

117. D. CTS: Cheque Truncation System Cheque,
MICR: Magnetic Ink Character Recognition,
IFSC: Indian Financial System Code
FERA: Foreign Exchange Regulation Act.

118. C.

119. A.

120. C. The Special Economic Zones Act, 2005, was passed by Parliament in May, 2005 which received Presidential assent on the 23rd of June, 2005 and it came into effect on 10th February, 2006.

121. C. In an economy, the sectors are classified into private and public on the basis of ownership.
Public Ownership - Majority or controlling share (51%) of a firm by Government.
Private Ownership - Being owned by a private individual or organization rather than by the state or public.

122. A. Economic liberalisation in India started with substantial changes in industrial licensing policy. The LPG Model (Liberalisation, Privatisation & Globalisation) was introduced by Dr. Manmohan Singh in 1991 as India was facing problems of depleting reserves.

123. B. According to new CSR rules, companies must spend at least 2% of their 3 year average annual profit on social welfare activites.
However, funds given to political parties and money spent on own employees and their families will not countas CSR.

124. B. Oil sector majors, ONGC Videsh (OVL) and the Oil India- IndianOil (OIL-IOC) combine have bagged an oil block each in Libya. This will enhance exploration possibilities for the Indian companies in northern Africa.
ONGC: An Indian multinational oil & Gas Company headquarters in Dehradun
BPCL – An Indian state controlled oil and Gas Company headquarters in Mumbai (Maharashtra)
Reliance Petroleum – Oil Industry Company, Headquarters– Ahmedabad.

125. D. With an aim to attract more visitors to the country by improving cleanliness and hygiene at tourist destinations, Tourism Ministry launched the “Clean India” campaign at world heritage site Taj Mahal which has been adopted by ONGC. It is the second site to be covered under this project. The first one was Qutub Minar.

126. B. A company organized for commercial purposes is called an enterprise. Classification of an enterprise into public or private sector is based on ownership of assets of the enterprise.

127. B. Nominal, authorized or registered capital means the sum mentioned in the capital clause of Memorandum of Association. It is the maximum amount which the company raises by issuing the shares and on which the registration fee is paid. This limit cannot be exceeded unless the Memorandum of Association is altered.

128. C. Disinvestment was not part of the model.

129. C. An industrial unit is also regarded as potentially sick or weak unit if at the end of any financial year, it has accumulated losses equal to or exceeding 50 per cent of its average net worth in the immediately preceding four financial years and has failed to repay debts to its creditor(s) in three consecutive quarters on demand made in writing for such repayment.
The Board for Industrial and Financial Reconstruction was established under The Sick Industrial Companies (Special Provisions) Act, 1985. The board was set up in January 1987 and became functional as of 15 May 1987.

130. C. Defensive Pricing is a pricing strategy where a product or service is set at a very low price with the intension to drive competitors out of market.

131. B.

132. D. Trans Union CIBIL Ltd., founded in August 2000, in India’s first Credit Information Company. CIBIL collects and maintains records of an individual’s payments pertaining to loans and credit cards.

133. D. Hedge funds invest in a diverse range of markets and use a wide variety of investment styles and financial instruments. Hedge funds are open only to certain types of investors in a country specified by the regulator and cannot be offered or sold to the general public. Legally, hedge funds are most often set up as private investment partnerships that are open to a limited number of investors and require a very large initial minimum investment.

134. B. Inflation-indexed bonds are bonds where the principal is indexed to inflation. They are thus designed to cut out the inflation risk of an investment. These bonds thus decrease the inflation risk attached to the investment. Moreover these bonds are a better hedge than FD in a volatile economy.

135. C. The Gini coefficient is a measure of statistical dispersion intended to represent the income distribution of a nation’s residents. Gini coefficient commonly used as a measure of inequality of individual income or wealth. Lorenz curve helps to find mathematical value of Gini coefficient.

136. B. Besides for the Wage Boards for journalists and non-journalists newspaper and new-agency employees being Statutory Wage Board, all other wage boards are non-statutory in application. That is why recommendations made by these Boards are out of enforceable by the law.

137. B. Unorganized workers (UW) in India have increased many folds post-independence. Around 52% of UW’s are engaged in agriculture & allied sector and they constitute more than 90% of the labour work force.
Characteristics of unorganized sector are:
• Excessive seasonality of employment
• Poor working conditions
• No fixed jobs
• Work in very poor working environment
• No job regulation
• No security of Employment
• Employed for a limited period

138. C. The minimum period of maturity for Masala bonds up to an INR equivalent of USD 50 million in a financial year will be 3 years, and for above USD 50 Million (INR equivalent) will be 5 years.

139. C. Masala bonds are bonds issued outside India but denominated in Indian Rupees, rather than the local currency. The first Masala bond was issued by the World Bank backed International Finance Corporation in November 2014 when it raised 1,000 crore bond to fund infrastructure projects in India.

140. A. The major aim of devaluation is to encourage exports.
Devaluation is a deliberate downward adjustment to the value of a country’s currency, relative to another currency, group of currencies. One reason a country may devaluate its currency is to combat trade imbalances.

141. A.

142. A. Foreign currency which has a tendency of quick migration is called hot currency.
Soft Currency: A currency with a value that fluctuates as a result of country’s political or economic uncertainty.
Digital Gold Currency: It is a form of electronic money based on mass unit of Gold.
Scarce Currency: A currency that is traded in a foreign exchange market and for which demand is persistently high relative to its supply.

143. A.

144. D. In the traditional accounting of balance of payments, the current account equals the change in net foreign assets. A current account deficit implies a paralleled reduction of the net foreign assets.

145. B. During the period of 1814 - 1860 AD. Mainly five commodities are exported from British India such as - cotton, indigo, jute opium and raw silk.

146. D. Foreign direct investments can be made through the opening of a subsidiary or associate company in a foreign country, acquiring a controlling interest in an existing foreign company, or by means of a merger or joint venture with a foreign company.
147. A. The areas such as Infrastructure, Education and Health care are mainly funded by International Development Agency in the poor and developing countries.

148. A. Free trade, usually defined as the absence of tariffs, quotas, or other governmental impediments to international trade, allows each country to specialize in the goods it can produce cheaply and efficiently relative to other countries.

149. B. ECGC Ltd. (Export Credit Guarantee Corporation of India Ltd.), wholly owned by Government of India, was set up in 1957 with the objective of promoting exports from the country by providing Credit Risk Insurance and related services for exports.

150. B. A Rupee Denominated Bond or Masala Bonds are the bonds issued by an Indian entity in foreign markets and the interest payments and principal reimbursements are denominated (expressed) in rupees.

151. D. The main Ingredients of Globalization of Indian Economy are Privatization of the public sector, Disbanding of Controls and Regulations and Deregulation of Trade and Finance.
Disinvestment of Public Sector equity doesn’t include in Globalization.

152. C. Reserve Bank of India is the Sanctioning Authority for foreign exchange for the import of goods.

153. A. Manager of Foreign Exchange is one of the Function of RBI with the objective to facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India.

154. D. The Real Effective Exchange Rate is the weighted average of a country’s currency relative to an index or basket of other major currencies, adjusted for the effects of inflation.

155. C. Foreign exchange resources normally include, gold reserves, special drawing rights (SDRs), and International Monetary Fund (IMF) reserve positions.

156. B. A favorable balance of trade is known as a trade surplus and consist of exporting more than is imported. It is favorable in 1972-1973 & 1976-1977.

157. A. India is amongst the top cotton manufactures in terms of quality.One main reason to import cotton is obsolete machinery.

158. B. In terms of capital goods, India still depends on the import has not attained self-sufficiency in almost all consumer goods.

159. B. The items gold and silver have gained the highest growth rate in the import composition of the Indian economy in the last decade.

160. D. Capital receipts and payments do not form part of current account of Balance of Payment.