Asnwers and Explanations – Economy + Science NCERTs€¦ · Explanation: While announcing several...

Asnwers and Explanations – Economy + Science NCERTs

1) Ans: D

Topic: Taxation: Distribution, Federalism and Recent Reforms - GST, GAAR etc.

Level: difficult

Type: memory based

Explanation: Here are the salient features of the act

1. Tax on all foreign income will have to be paid at the flat rate of 30 per cent without any exemption,

deduction, set off or carry forward losses that the Income Tax Act permits.

2. Enhanced punishment of jail for 3-10 years for wilful evasion of tax on foreign income along with a

penalty equal to three times the amount of tax evaded 3. There is a limited compliance window offer. Offenders would have to pay tax at the rate of 30 per

cent but concessional penalty would be equal to the tax amount.

4. Failure to file returns of foreign income or assets will attract a penalty of Rs. 10 lakh.

5. Second and subsequent offence will be punishable with rigorous imprisonment of 3-10 years with a

fine of up to Rs. 1 crore. 6. Undisclosed holdings of less than Rs. 5 lakh at any time during a year not reported out of oversight

or ignorance will not entail penalty or prosecution.

7. The Bill empowers the Centre to enter into agreements with other countries for the exchange of

information, recovery of tax and avoidance of double taxation.

8. To include tax evasion under the proposed legislation as a scheduled offence the Bill proposes to

amend the Prevention of Money Laundering Act, 2002. 9. The right to appeal will be to the Income Tax Appellate Tribunal and to jurisdictional High Courts

and the Supreme Court on substantial questions of law.

10. The tax authorities will have powers of discovery and inspection, issue of summonses, enforcement

of attendance, production of evidence and impounding of account books and documents.

2) Ans: B

Topic: The Financial System of India

Level : moderate

Type : conceptual

Explanation: While announcing several steps for monetising gold in his Budget 2015-16, Union

Finance Minister Arun Jaitley stated that stocks of gold in India were estimated to be over 20,000

tonnes but mostly this gold was neither traded, nor monetised.

Mr. Jaitley proposed a Gold Monetisation Scheme, which would replace both the present Gold Deposit and Gold Metal Loan Schemes. He said the new scheme would allow the depositors of gold to earn

interest in their metal accounts and the jewellers to obtain loans in their metal account. Banks/ other

dealers would also be able to monetise this gold.

What is gold monetisation scheme?

It is a scheme that facilitates the depositors of gold to earn interest on their metal accounts. Once the gold is deposited in metal account, it will start earning interest on the same.

How it generally works?

When a customer brings in gold to the counter of specified agency or bank, the purity of gold is

determined and exact quantity of gold is credited in the metal account. Customers may be asked to complete KYC (know-your-customer) process. The deposited gold will be lent by banks to jewellers at

an interest rate little higher than the interest paid to customer.

How is the interest rate calculated?

Both principal and interest to be paid to the depositors of gold, will be ‘valued’ in gold. For example, if

a customer deposits 100 gm of gold and gets one per cent interest, then, on maturity he has a credit of 101 grams. The interest rate is decided by the banks concerned.


What is the tenure?

The tenure of gold deposits is minimum of one year. The minimum quantity of deposits is pegged at 30

grams to encourage even small deposits. The gold can be in any form, bullion or jewellery.

How the redemption takes place?

Customer will have the choice to take cash or gold on redemption, but the preference has to be stated at the time of deposit.

3) Ans: C

Topic: An Introduction to Economics

Level: easy Type: conceptual

4) Ans: A

Topic: Taxation: Distribution, Federalism and Recent Reforms - GST, GAAR etc. Level: easy

Type: conceptual

Explanation: Cess is a temporary levy imposed to acheive a specific socio-economic objective.

Examples: A cess is a tax that is levied by the government to raise funds for a specific purpose.

Collections from the Education Cess and the Secondary and Higher Education Cess, for instance, are supposed to be used for funding primary and higher and secondary education respectively. Likewise,

money collected from the newly introduced Krishi Kalyan Cess is to be used for funding agro

development initiatives.

Surcharge is: A fee or other charge that is added to the cost of a good or service. A surcharge is typically added to an existing tax, and may not be included in the stated price of a good or service.

5) Ans: B


Level: difficult Type: conceptual

Explanation: Article 269 deals with inter-state trade. Tax on inter-state trade of goods and services is

levied and collected by the center but assigned to the states.

6) Ans: C


Level: difficult

Type: factual

Article 272 deals with 20 taxes which are levied, collected and retained by the state governments and

hence does not become a part of consolidated fund of India.

Examples: agricultural income tax, land revenue, professional tax etc.

7) Ans: C


Level: moderate

Type: conceptual


Explanation: Tax buoyancy is an indicator to measure efficiency and responsiveness of revenue

mobilization in response to growth in the Gross domestic product or National income. A tax is said to

be buoyant if the tax revenues increase more than proportionately in response to a rise in national

income or output.

8) Ans: B


Level: difficult

Type: conceptual

In Treaty shopping, a resident of a third country invests by taking advantage of a fiscal treaty between India and another contracting state. This has greatly contributed in encouraging FDI in the country

but has been a medium of tax evasion.

Round tripping refers to money from one country going out through unofficial channels and being

invested back into the same country from outside to avail of tax benefits under the double tax avoidance agreement (DTAA).

9) Ans: B

Topic: inflation

Level: moderate Type: conceptual

Explanation: Demand-pull inflation is asserted to arise when aggregate demand in an economy

outpaces aggregate supply. It involves inflation rising as real gross domestic product rises and

unemployment falls

Cost-push inflation develops because the higher costs of production factors decreases in aggregate

supply (the amount of total production) in the economy. Ans also because there are fewer goods being

produced (supply weakens) and demand for these goods remains consistent, the prices of finished

goods increase (inflation).

10) Ans: B

Topic: inflation


Explanation: Inflation means a persistent and widespread growth in the prices of goods and services.

When the prices of goods and services increases it reduces the purchasing power of the people. Due to

the increased expenditure people will save less and hence savings decreases.

Due to low savings, the overall deposits in the banks reduces and this puts pressure on available financial resources. This leads to increase in the interest rates.

Due to higher interest rates and low demand investment also reduces.

11) Ans: A

Topic: inflation

Level: moderate

Type: conceptual

Explanation: Creeping inflation is defined as the circumstance where the inflation of a nation increases

gradually, but continually, over time. (1-5%) According to Chakravarthy committee report of 1985, small amount of inflation i.e up to 5% is good for


the economy

12) Ans: D

Topic: Deficits, Debts and Discipline: Financing an Economy Level: difficult

Type: memory based

Explanation: The Fiscal Responsibility and Budget Management Act, 2003 (FRBMA) is an Act of the

Parliament of India to institutionalize financial discipline, reduce India's fiscal deficit, improve

macroeconomic management and the overall management of the public funds by moving towards a balanced budget. The main purpose was to eliminate revenue deficit of the country (building revenue

surplus thereafter) and bring down the fiscal deficit to a manageable 3% of the GDP by March 2008.

Objectives

The main objectives of the act were 1. to introduce transparent fiscal management systems in the country

2. to introduce a more equitable and manageable distribution of the country's debts over the years

3. to aim for fiscal stability for India in the long run

Fiscal management principles

The Central Government, by rules made by it, was to specify the following: 1. a plan to eliminate revenue deficit by 31 Mar 2008 by setting annual targets for reduction starting

from day of commencement of the act.

2. reduction of annual fiscal deficit of the country

3. annual targets for assuming contingent liabilities in the form of guarantees and the total liabilities

as a percentage of the GDP

Borrowings from Reserve Bank of India

The Act provided that the Central Government shall not borrow from the Reserve Bank of India(RBI)

except under exceptional circumstances where there is temporary shortage of cash in particular

financial year. It also laid down rules to prevent RBI from trading in the primary market for Government

securities. It restricted them to the trading of Government securities in the secondary market after an April, 2005, barring situations highlighted in exceptions paragraph.

Exceptions

National security, natural calamity or other exceptional grounds that the Central Government may

specify were cited as reasons for not implementing the targets for fiscal management principles, prohibition on borrowings from RBI and fiscal indicators highlighted above, provided they were

approved by both the Houses of the Parliament as soon as possible, once these targets had been

exceeded

Targets and fiscal indicators

Subsequent to the enactment of the FRBMA, the following targets and fiscal indicators were agreed by the Central government

• Revenue deficit

• Date of elimination – 31 March 2009 (postponed from 31 March 2008)

• Minimum Annual reduction – 0.5% of GDP

• Fiscal Deficit • Ceiling – 3% of the GDP by 31 Mar 2008

• Minimum Annual reduction – 0.3% of GDP

• Total Debt – 9% of the GDP (a target increased from the original 6% requirement in 2004–05)

• Annual Reduction – 1% of GDP

• RBI purchase of Government bonds – to cease from 1 April 2006

Four fiscal indicators to be projected in the medium term fiscal policy statement were proposed. These


are, revenue deficit as a percentage of GDP, fiscal deficit as a percentage of GDP, tax revenue as

percentage of GDP and total outstanding liabilities as percentage of GDP.

13) Ans: A

Topic: Deficits, Debts and Discipline: Financing an Economy Level: moderate

Type: memory based

Explanation: The five-member committee including Reserve Bank of India Governor Urjit Patel, former

Finance Secretary Sumit Bose, Chief Economic Advisor Arvind Subramanian, and National Institute of

Public Finance and Policy Director Rathin Roy was constituted in May 2016 following Mr. Jaitley announcement, in Budget 2016-17, of the creation of a panel to review the Fiscal Responsibility and

Budget Management Act.

14) Ans: D

Topic: inflation

Level: moderate

Type: conceptual

Explanation: It is a situation where inflation pushes income to a higher tax brackets. It leads to higher

income tax collection by the government but no increase in real purchasing power. Government gains due to higher tax collections and the economy suffers as growth is dragged down

due to less demand.

15) Ans: B

Topic: Deficits, Debts and Discipline: Financing an Economy

Level: moderate

Type: conceptual

Explanation: Primary deficit refers to difference between fiscal deficit of the current year and interest

payments on the previous borrowings. Primary Deficit = Fiscal Deficit Interest Payments. The total borrowing requirement of the government includes the interest commitments on accumulated debts.

Primary deficit reflects the extent to which such interest commitments have compelled the government

to borrow in the current period.

Implications of Primary Deficit: It indicates, how much of the government borrowings are going to meet expenses other than the interest

payments. The difference between fiscal deficit and primary deficit shows the amount of interest

payments on the borrowings made in past.

16) Ans: A

Topic: Deficits, Debts and Discipline: Financing an Economy

Level: moderate

Type: conceptual

Explanation: A policy by monetary authorities to expand money supply and boost economic activity, mainly by keeping interest rates low to encourage borrowing by companies, individuals and banks. An

expansionary monetary policy also risks ramping up inflation.

17) Ans: C

Topic: Taxation: Distribution, Federalism and Recent Reforms - GST, GAAR etc. Level: moderate


Type: conceptual

Explanation: Tax expenditures alter the horizontal and vertical equity of the basic tax system by

allowing exemptions, deductions, or credits to select groups or specific activities.

18) Ans: C

Topic: The Monetary Policy Approach: RBI in Action

Level: difficult

Type: conceptual

Explanation: Open market operations (OMO) refers to the buying and selling of government securities

in the open market in order to expand or contract the amount of money in the banking system,

facilitated by the RBI. Purchases inject money into the banking system and stimulate growth, while

sales of securities do the opposite and contract the economy. OMO changes the proportions of

government securities held by various players

19) Ans: B


Level: moderate

Type: memory based

Explanation: CRR does not earn interest on it, SLR does. The RBI act of 1934 fixed 3% and 20% as

floor and cap of CRR rates. However, the 2007 amendment to the RBI act removed both the floor and

cap rates. Co-operative banks maintain CRR and SLR but lesser than the commercial banks

20) Ans: D


Level: moderate

Type: conceptual

Explanation: SLR can be maintained only in RBI approved public sector bonds not all the public sector

bonds

21) Ans: B


Level: moderate

Type: conceptual

Explanation: As of today, Repo rate is 6.25%; reverse repo is 5.75%; MSF is 6.75%

So conceptually reverse repo will be 50 basis points lesser than repo rate and MSF will be 50 basis

point higher than repo rate.

22) Ans: B


Level: moderate

Type: conceptual

23) Ans: A



Level: moderate

Type: conceptual

Explanation: Base rate is the minimum rate set by the Reserve Bank of India below which banks are

not allowed to lend to its customers. Base rate is decided in order to enhance transparency in the

credit market and ensure that banks pass on the lower cost of fund to their customers. Loan pricing will be done by adding base rate and a suitable spread depending on the credit risk premium.

24) Ans: C



Explanation: MSS (Market Stabilisation Scheme) securities are issued with the objective of providing

the RBI with a stock of securities with which it can intervene in the market for managing liquidity.

These securities are issued not to meet the government's expenditure.

The MSS scheme was launched in April 2004 to strengthen the RBI's ability to conduct exchange rate

and monetary management. The bills/bonds issued under MSS have all the attributes of the existing

treasury bills and dated securities. These securities will be issued by way of auctions to be conducted

by the RBI. The timing of issuance, amount and tenure of such securities will be decided by the RBI.

25) Ans: C

Topic: Beyond GDP: Growth and Development

Difficulty Level: Moderate

Type: Conceptual

Explanation: The Human Development Index (HDI) is a composite statistic of life expectancy,

education, and per standard of living, which are used to rank countries into four tiers of human

development. A country scores higher HDI when the lifespan is higher, the education Level is higher,

and the GDP per capita is higher.

26) Ans: B

Explanation: The National Institution for Transforming India (NITI) Aayog and Confederation of Indian

Industry (CII) jointly launched India Innovation Index. Besides country’s first innovation index portal

was also launched.

The index has been jointly developed by NITI Aayog, DIPP and CII in consultation with World Economic

Forum (WEF), World Intellectual Property Organization (WIPO), Cornell University, UNIDO, ILO, OECD,

UNESCO, ITU etc.

27) Ans: A

Topic: inflation

Level: difficult

Type: conceptual

Explanation: If the borrower already owed the money before the inflation occurred, the inflation

benefits the borrower. This is because the borrower still owes the same amount of money, but now he

or she has more money in his or her pay check to pay off the debt This results in less interest for the

lender if the borrower uses the extra money to pay his or her debt.

The twin factors that affect a bond's price are inflation and changing interest rates. A rise in either interest rates or the inflation rate will tend to cause bond prices to drop.


28) Ans: C


Level: moderate

Type: current affairs

Explanation: India ranked 60th among the 79 developing countries in 2017 Inclusive Development

Index (IDI) released in World Economic Forum’s (WEF) ‘Inclusive Growth and Development Report’.

The index is based on 12 performance indicators and countries are ranked on IDI scores based on a

scale of 1-7. It has three pillars Growth and Development, Inclusion and Intergenerational Equity, and

Sustainability in order to provide a more complete measure of economic development than GDP growth alone.

29) Ans: B

Topic: industries Level: difficult


Explanation: Criteria for a startup:

1. The firm incorporated should be less than five years old. 2. Annual Revenue of less than Rs. 25 crore.

3. Needs to get approval from inter- ministerial board to be eligible for tax benefits.

4. Get recommendation from an Incubator recognized by government, domestic venture fund or have

an Indian patent.

30) Ans: D


Level: moderate


Explanation: The study contains quantitative measures of regulations for starting a business, dealing

with construction permits, employing workers, registering property, getting credit, protecting investors,

taxes, trading across borders, enforcing contracts, getting an electricity connection and closing a

business.

31) Ans: D

Explanation: Govt. launched a seven pronged plan-- Indradhanush--to revamp functioning of public

sector banks.

The seven elements include appointments, board of bureau, capitalisation, de-stressing, empowerment, framework of accountability and governance reforms.

Banks board of bureau will replace existing appointments board. Its members would be appointed and

to be headed by the RBI governor.

Banks board bureau would also hold bad assets of public sector banks.

32) Ans: A

Topic: The Financial System of India

Level: easy Type: current affairs


Explanation: A payments bank is like any other bank, but operating on a smaller scale without

involving any credit risk. In simple words, it can carry out most banking operations but can't advance

loans or issue credit cards. It can accept demand deposits (up to Rs 1 lakh), offer remittance services,

mobile payments/transfers/purchases and other banking services like ATM/debit cards, net banking

and third party fund transfers.

In September 2013, the Reserve Bank of India constituted a committee headed by Dr Nachiket Mor to

study 'Comprehensive financial services for small businesses and low income households'. The

objective of the committee was to propose measures for achieving financial inclusion and increased

access to financial services.

The committee submitted its report to RBI in January 2014. One of the key suggestions of the

committee was to introduce specialised banks or 'payments bank' to cater to the lower income groups

and small businesses so that by January 1, 2016 each Indian resident can have a global bank account.

In February 2015, RBI released the list of entities which had applied for a payments bank licence. There were 41 applicants. It was also announced that an external advisory committee (EAC) headed by

Nachiket Mor would evaluate the licence applications. On 28 February 2015, during the presentation

of the Budget it was announced that India Post will use its large network to run payments bank. The

external advisory committee headed by Nachiket Mor submitted its findings on 6 July 2015. The

applicant entities were examined for their financial track record and governance issues. On 19 August

2015, the Reserve Bank of India gave "in-principle" licences to eleven entities to launch payments banks:

1. Aditya Birla Nuvo

2. Airtel M Commerce Services

3. Cholamandalam Distribution Services

4. Department of Posts 5. FINO PayTech

6. National Securities Depository

7. Reliance Industries

8. Sun Pharmaceuticals

9. Paytm

10. Tech Mahindra 11. Vodafone M-Pesa

33) Ans: B

Topic: IFS: Roles of the IMF and the World Bank Level: moderate

Type: memory based

Explanation: The SDR is an international reserve asset, created by the IMF in 1969 to supplement its

member countries official reserves.

In the most recently concluded review (November 2015), the Executive Board decided that the Chinese

renminbi (RMB) met the existing criteria for SDR basket inclusion and therefore, effective October 1,

2016, would join the SDR basket, along with the U.S. dollar, euro, Japanese yen, and pound sterling.

34) Ans: B

Topic: financial system

Level: moderate

Type: memory based

Explanation: Priority Sector refers to those sectors of the economy which may not get timely and


adequate credit in the absence of this special dispensation. Priority Sector Lending is an important role

given by the Reserve Bank of India (RBI) to the banks for providing a specified portion of the bank

lending to few specific sectors like agriculture and allied activities, micro and small enterprises, poor

people for housing, students for education and other low income groups and weaker sections. This is

essentially meant for an all-round development of the economy as opposed to focusing only on the

financial sector.

Categories under priority sector

i. Agriculture

ii. Micro, Small and Medium Enterprises

iii. Export Credit

iv. Education v. Housing

vi. Social Infrastructure

vii. Renewable Energy

35) Ans: A

Topic: IFS: Roles of the IMF and the World Bank

Level: moderate

Type: memory based

Explanation: The International Finance Corporation (IFC) is an international financial institution that offers investment, advisory, and asset management services to encourage private sector development

in developing countries. The IFC is a member of the World Bank Group and is headquartered in

Washington, D.C., United States. It was established in 1956 as the private sector arm of the World

Bank Group to advance economic development by investing in strictly for-profit and commercial

projects that purport to reduce poverty and promote development.

The International Bank for Reconstruction and Development was created in 1944 to help Europe

rebuild after World War II. Today, IBRD provides loans and other assistance primarily to middle income

countries.

The institution provides a combination of financial resources, knowledge and technical services, and strategic advice to developing countries, including middle income and credit-worthy lower income

countries.

The IMF's responsibilities: The IMF's primary purpose is to ensure the stability of the international

monetary system the system of exchange rates and international payments that enables countries (and their citizens) to transact with each other. The Fund's mandate was updated in 2012 to include all

macroeconomic and financial sector issues that bear on global stability.

36) Ans: C

Topic: inclusive growth Level: difficult

Type: memory based

Explanation: To address the longevity risks among the workers in unorganised sector and to encourage

the workers in unorganised sector to voluntarily save for their retirement, the Government had launched a new initiative called Atal Pension Yojana (APY) with effect from 1st June, 2015.

The Government has decided to give an option to the spouse of the subscriber to continue contributing

to APY account of the subscriber, for the remaining vesting period, till the original subscriber would

have attained the age of 60 years instead of present provision of handing-over lump-sum amount to

spouse on the premature death (death before 60 years of age) of the subscriber.


The spouse of the subscriber shall be entitled to receive the same pension amount as that of the

subscriber until the death of the spouse. After the death of both the subscriber and the spouse, the

nominee of the subscriber shall be entitled to receive the pension wealth, as accumulated till age of 60

years of the subscriber.

37. Ans: D

Topic: taxation

Level: easy

Type : current affairs

Explanation: 'Rajasva Gyan Sangam' is an annual conference of Central Board of Direct Taxes (CBDT) and Central Board of Excise and Customs (CBEC).

It is for the first time that two Revenue Boards are holding the conference simultaneously.

Here, the Prime Minister outlined a five-point charter for tax administrators, RAPID: R for Revenue, A for Accountability, P for Probity, I for Information and D for Digitization. He urged the officers to turn

the Gyan Sangam into a Karma Sangam, so that the ideas generated from this conference lead to

concrete action on the ground.

38) Ans: A

Topic: industries

Level: moderate

Type: factual

Explanation: The Eight Core Industries comprise nearly 38 % of the weight of items included in the Index of Industrial Production (IIP).

Coal production (weight: 4.38 %)

Crude Oil production (weight: 5.22 %)

The Natural Gas production (weight: 1.71 %)

Petroleum Refinery production (weight: 5.94%) Fertilizer production (weight: 1.25%)

Steel production (weight: 6.68%)

Cement production (weight: 2.41%)

Electricity generation (weight: 10.32%)

39) Ans: B

Topic: banking

Level: difficult

Type: conceptual

Explanation: The accounts which have remained NPA for up to a year are called substandard assets

The accounts which have remained NPA for more than a year are called DOUBT FULL assets.

Public sector banks have 80% of the overall NPA.

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (also known as the Sarfaesi Act) is an Indian law. It allows banks and other financial institution

to auction residential or commercial properties to recover loans.

40) Ans: B

Explanation: The Committee is not a classical multilateral organization, in part because it has no founding treaty. BCBS does not issue binding regulation; rather, it functions as an informal forum in


which policy solutions and standards are developed. The Basel Committee formulates broad

supervisory standards and guidelines and recommends statements of best practice in banking

supervision.

Basel norms 1 was introduced in 1988.

Topic: Trade Policies, Global System & The WTO

Level: difficult

Type: memory based

41) Ans: D

Topic: The Money Market: RBI’s Playground

Level: difficult

Type: conceptual

Explanation: Money market is the market for short term lending and borrowing and deals with secured loans and UNSECURED loans.

42) Ans: D


Level: difficult Type: conceptual

Explanation: a, b, c are money market instruments whereas d is a capital market instrument

Treasury Bills are short term (up to one year) borrowing instruments of the Government of India which enable investors to park their short term surplus funds while reducing their market risk. They are

auctioned by Reserve Bank of India at regular intervals and issued at a discount to face value.

Certificate of Deposit (CD) refers to a money market instrument, which is negotiable and equivalent to

a promissory note. It is either issued in demat form or in the form of a usance promissory note. This

instruments are an issue in lieu of the funds deposited at a bank for a specified time period.

Commercial paper is an unsecured, short-term debt instrument issued by a corporation, typically for

the financing of accounts receivable, inventories and meeting short-term liabilities. Maturities on

commercial paper rarely range any longer than 270 days. Commercial paper is usually issued at a

discount from face value and reflects prevailing market interest rates.

G-SECS are long term government securities with a maturity period of 1- 30 years

43) Ans: D

Topic: The Money Market: RBI’s Playground Level: difficult

Type: conceptual

Explanation: An external commercial borrowing(ECB) is an instrument used in India to facilitate the

access to foreign money by Indian corporations and PSUs (public sector undertakings). From 2013 onwards banks and NBFC are allowed to make use of ECB to meet their tier 1 capital requirement

44) Ans: C


Level: easy Type: conceptual


Explanation: A follow-on public offer (FPO) is an issuing of shares to investors by a public company

that is already listed on an exchange. An FPO is essentially a stock issue of supplementary shares

made by a company that is already publicly listed and has gone through the IPO process.

45) Ans: B

Topic: India in the World: Trade Scenario Overview

Level: moderate

Type: conceptual

Explanation: The Qualified Foreign Investor (QFI) is sub-category of Foreign Portfolio Investor and refers to any foreign individuals, groups or associations, or resident, however, restricted to those from

a country that is a member of Financial Action Task Force (FATF) or a country that is a member of a

group which is a member of FATF and a country that is a signatory to International Organization of

Securities Commission’s (IOSCO) Multilateral Memorandum of Understanding (MMOU).

QFI scheme was introduced by Government of India in consultation with RBI and SEBI in the year

2011, through a Union Budget announcement. The objective of enabling QFIs is to deepen and infuse

more foreign funds in the Indian capital market and to reduce market volatility as individuals are

considered to be long term investors, as compared to institutional investors.

46) Ans: A


Level: moderate

Type: conceptual

47) Ans: B


Level: moderate

Type: conceptual

Explanation: Quantitative easing is an unconventional monetary policy in which a central

bank purchases government securities or other securities from the market in order to lower interest

rates and increase the money supply. Quantitative easing increases the money supply by flooding

financial institutions with capital in an effort to promote increased lending and liquidity.

48) Ans: A


Level: moderate

Type: factual

Explanation: According to the composition of the crude oil and depending on the demands of the

market, refineries can produce different shares of petroleum products. The largest share of oil products

is used as "energy carriers", i.e. various grades of fuel oil and gasoline. These fuels include or can be

blended to give gasoline, jet fuel, diesel fuel, heating oil, and heavier fuel oils. Heavier (less volatile)

fractions can also be used to produce asphalt, tar, paraffin wax, lubricating and other heavy oils. Refineries also produce other chemicals, some of which are used in chemical processes to

produce plastics and other useful materials. Since petroleum often contains a few percent sulphur-

containing molecules, elemental sulphur is also often produced as a petroleum product. Carbon, in the

form of petroleum coke, and hydrogen may also be produced as petroleum products. The hydrogen

produced is often used as an intermediate product for other oil refinery processes such

as hydrocracking and hydrodesulphurization.


List of exports of India

# Product Value

1 Refined petroleum 52,905

2 Jewellery 17,814

3 Pharmaceuticals 10,886

49) Ans: D


Level: easy

Type: memory based

Explanation: The Uruguay Round was the 8th round of multilateral trade negotiations (MTN)

conducted within the framework of the General Agreement on Tariffs and Trade (GATT), spanning from

1986 to 1994 and embracing 123 countries as "contracting parties". The Round led to the creation of

the World Trade Organization, with GATT remaining as an integral part of the WTO agreements

50) Ans: B


Level: easy

Type: memory based

51. Answer: D Topic: Biology Difficulty: Moderate Type: Factual

Explanation: The part of a leaf by which it is attached to the stem is called petiole. The broad green part of the leaf is called lamina. 52. Answer: C Topic: Biology Difficulty: Easy Type: Factual 53. Answer: C Topic: Biology Difficulty: Moderate Type: Conceptual Explanation: Ball-and-Socket Joints

The largest joints of the body, at the hips and the shoulders, are ball-and-socket joints. The end of the upper arm and leg bone is rounded, appearing much like a half ball. This bony ball fits into a cup-like socket. Ball-and-socket joints provide the greatest range of movement of all the freely movable joint types. The upper arms and legs are capable of moving backward, forward, and to the side. In addition, a ball-and-socket joint allows for rotation of the long bones, providing the arms and legs with a remarkable range of complex movement. Hinge Joints

Hinge joints act much like the hinges on doors. They permit back and forth movement, but not side-to-side or lateral movement. The elbows, the knees, and the middle and end joints of the fingers are hinge joints. Hinge joints are prone to injury when lateral forces are applied to the joint.


Pivotal Joints

Pivotal joints are especially suited for rotating movements. The articulation between the atlas and axis bones in the neck is a pivot joint, which enables the head to turn from side to side. Fixed Joints Fixed joints, also known as fibrous joints, are places where two bones come together in the body but are unable to move. This type of joint is held together by fibrous connective tissue rather than ligaments and tendons. Examples of fixed joints include the joints between the bones in the skull and the joint where the radius and ulna

bones meet in the lower arm. 54. Answer- A Topic: Biology Difficulty: Moderate Type: Conceptual

Explanation: Test for Carbohydrates: 1. Take small quantity of the food item to be tested on a porcelain tile. 2. Dilute it with two drops of water. 3. Put 2-3 drops of iodine solution on it. 4. Observe the colour of the food item. 5. Change of colour in the food item into blue-black indicates the presence of starch in the food item.

Test for Proteins: 1. Take a small quantity of the food item to be tested. 2. Grind the food item and powder it by mashing. 3. Put the food item into a test tube. 4. Add 10 drops of water into the same test tube.

5. Add two drops of copper sulphate solution to the same test tube. 6. Add 10 drops of caustic soda solution and shake the same test tube. 7. Observe the colour of the mixture. 8. Violet colour indicates the presence of proteins in the tested food item.

Test for Fats: 1. Take a small quantity of the food item to be tested. 2. Wrap the food item in a small piece of paper. 3. Crush the food item wrapped in the paper. 4. Straighten the paper. 5. Dry the paper by keeping it in sunlight for a while. 6. Observe the paper. 7. An oily patch on the paper indicates the presence of fat in the tested food item.

Vitamins are required in trace amounts, and play a major role in protection against diseases. They have lesser nutritive value, but we cannot say that they don’t have any nutritional value. 55. Answer: D

Topic: Biology Difficulty: Difficult Type: Factual Explanation: Nitrogen fixation is a process by which nitrogen in the Earth's atmosphere is converted into ammonia or other molecules available to living organisms. Atmospheric nitrogen or molecular dinitrogen is relatively inert: it does not easily react with other chemicals to form new compounds.

Nitrogen fixation, natural and synthetic, is essential for all forms of life because nitrogen is required to biosynthe-size basic building blocks of plants, animals and other life forms, e.g., nucleotides for DNA and RNA, the coenzyme nicotinamide adenine dinucleotide for its role in metabolism (transferring electrons between molecules), and amino acids for proteins. Therefore, as part of the nitrogen cycle, it is essential for agriculture and the manufacture of


fertilizer. It is also, indirectly, relevant to the manufacture of all chemical compounds that contain nitrogen, which

includes explosives, most pharmaceuticals, dyes, etc. Nitrogen fixation occurs naturally in the soil by nitrogen fixing bacteria (for example, Rhizobium affiliated with some plants, especially legumes). Nitrification is the biological oxidation of ammonia or ammonium to nitrite followed by the oxidation of the nitrite to nitrate. Nitrification is an important step in the nitrogen cycle in soil. 56.Answer: A Topic: Biology Difficulty: Moderate Type: Conceptual Explanation: Ruminants are mammals that are able to acquire nutrients from plant-based food by fermenting it in a specialized stomach prior to digestion, principally through microbial actions. The process typically requires the fermented ingesta (known as cud) to be regurgitated and chewed again. The process of rechewing the cud to further break down plant matter and stimulate digestion is called rumination. The word "ruminant" comes from the Latin ruminare, which means "to chew over again".

57. Answer: B Topic: Physics Difficulty: Easy Type: Conceptual Explanation: In the day, when the sun is up, the land heats up very quickly and the air above it warms up a lot more than the

air over the water. The warm air over the land is less dense and begins to rise. Low pressure is created. The air pressure over the water is higher with cold dense air, which moves to occupy the space created over the land. The cool air that comes along is called a sea breeze. In the night, the reverse happens. The land quickly loses its’ heat whiles the water retains its’ warmth. This means the air over the water is warmer, less dense and begins to rise. Low pressure is created over the water. Cold and dense air over the land begins to move to the water surface to replace the warmer rising air. The cool breeze from the land is called a land breeze. 58. Answer: A Topic: Chemistry Difficulty Level: Moderate Type: Conceptual Explanation: Phenolphthalein Test: Phenolphthalein is often used as an indicator in acid–base titrations. For this application, it turns colourless in acidic solutions and pink in basic solutions. China rose solution gives dark pink (magenta) colour with acid and green colour with base. Litmus Test: The main use of litmus is to test whether a solution is acidic or basic. Blue litmus paper turns red under acidic conditions and red litmus paper turns blue under basic or alkaline conditions.

59.Answer: B Topic: Chemistry

Difficulty Level: Moderate Type: Conceptual Explanation: Rusting happens in the presence of both oxygen and water. Unless both components are present, the reaction will not lead to rusting. 60. Answer: B Topic: Biology Difficulty Level: Moderate


Type: Conceptual

Explanation: Earthworms breathe through their skin. 61. Answer: B Topic: Physics Difficulty Level: Easy Type: Conceptual Explanation: The inner surface of a spoon will act as a concave mirror. 62.Answer: C Topic: Biology Difficulty Level: Easy Type: Factual

63. Answer: A Topic: Chemistry Difficulty Level: Easy Type: Conceptual Explanation: The property of the metals by which they can be drawn into wires is called ductility. 64. Answer: D

Topic: Chemistry Difficulty Level: Moderate Type: Factual 65. Answer: D Topic: Biology Difficulty Level: Easy Type: Factual 66. Answer: B Topic: Physics Difficulty Level: Easy Type: Conceptual Explanation: Force acting on a unit area of a surface is called pressure. 67. Answer: B Topic: Physics Difficulty Level: Moderate

Type: Conceptual

Explanation: Loudness of sound is expressed in terms of decibel

68. Answer: A Topic: Biology Difficulty Level: Moderate Type: Factual

Explanation: The retina is a light-sensitive layer at the back of the eye that covers about 65 percent of its interior surface. Photosensitive cells called rods and cones in the retina convert incident light energy into signals that are carried to the brain by the optic nerve. 69.Answer: D


Topic: Biology

Difficulty Level: Easy Type: Conceptual 70. Answer: D Topic: Physics Difficulty Level: Easy Type: Conceptual Explanation: Laws of reflection 1. The incident ray, the reflected ray, and the normal to the reflecting interface at the point of incidence all lie in the same plane. 2. The angle of incidence equals the angle of reflection. 71. Answer: D Topic: Physics

Difficulty Level: Moderate Type: Conceptual Explanation: Velocity and displacement are vector quantities, whereas distance and speed are scalar quantities. Vectors also take into account the direction, which makes it possible for the average velocity and displacement to be zero for a moving body. 72. Answer: B Topic: Physics

Difficulty Level: Moderate Type: Conceptual Explanation: Newton’s Third Law of Motion states: ‘To every action there is an equal and opposite reaction’. It must be remembered that action and reaction always act on different objects. The Third Law of Motion indicates that when one object exerts a force on another object, the second object instantaneously exerts a force back on the first object. These two forces are always equal in magnitude, but opposite in direction. These forces act on different objects and so they do not cancel each other. Thus, Newton’s Third Law of Motion describes the relationship between the forces of interaction between two objects. Whenever two bodies interact with each other, the force exerted by the first body on the second is called action. The force exerted by the second body on the first body is called reaction. The action and reaction are equal and opposite. 73. Answer: D Topic: Physics Difficulty Level: Difficult Type: Conceptual Explanation: The gravitational constant, denoted by the letter G, is an empirical physical constant involved in the calculation of gravitational effects in Newton's law of universal gravitation and in Albert Einstein's general theory

of relativity. Since it is a constant value, it does not depend on other factors. 74. Answer: C Topic: Physics

Difficulty Level: Difficult Type: Conceptual Explanation: Sound waves are independent upon the wave characteristics such as frequency, period, and ampli-tude. Its speed depends on the properties of the medium through which it travels. Sound waves travels faster in solid, fast in liquid and slow in air. It cannot travel in vacuum. 75. Answer: C Topic: Chemistry Difficulty Level: Difficult


Type: Conceptual

76. Answer: A Topic: Chemistry Difficulty Level: Moderate Type: Conceptual Explanation: Physical changes are changes affecting the form of a chemical substance, but not its chemical composition. Melting is the physical change, temperature and melting points are physical properties. Simply add-ing heat to a substance doesn't necessarily mean that chemical bonds will be broken or formed. 77. Answer: D Topic: Chemistry Difficulty Level: Easy Type: Conceptual

78. Answer : B Topic: Chemistry Difficulty Level: Easy Type: Conceptual 79. Answer: C Topic: Chemistry

Difficulty Level: Easy Type: Conceptual 80. Answer: Topic: Chemistry Difficulty Level: Difficult Type: Conceptual Explanation: Sodium chloride is a salt. Vinegar contains acetic acid. 81. Answer: B Topic: Chemistry Difficulty Level: Moderate Type: Factual Explanation: Bauxite is an important ore of aluminium. 82. Answer: B Topic: Physics Difficulty Level: Moderate

Type: Conceptual 83. Answer: D

Topic: Chemistry Difficulty Level: Moderate Type: Conceptual 84. Answer: C Topic: Chemistry Difficulty Level: Moderate Type: Conceptual


85. Answer: D

Topic: Physics Difficulty Level: Difficult Type: Conceptual 86. Answer-B Topic: Physics Difficulty Level: Easy Type: Factual 87. Answer-D Topic: Biology Difficulty Level: Difficult Type: Factual 88. Answer-C

Topic: Biology Difficulty Level: Moderate Type: Factual Explanation: Blood pressure is measured using sphygmomanometers. 89. Answer-D Topic: Biology Difficulty Level: Moderate

Type: Factual Explanation: Cytokinins are a group of hormones that promote cell division in plant roots and shoots and the growth of buds. These hormones have been found in all complex plants as well as mosses, fungi, and bacteria. Once the cytokinin has been produced in the roots, it travels up the xylem, or vascular tissue, to other parts of the plant where continued growth takes place (such as young leaves, developing fruits, and seeds). 90. Answer-B Topic: Biology Difficulty Level: Difficult Type: Factual 91. Answer-B Topic: Biology Difficulty Level: Easy Type: Factual Explanation: Mitochondria are known as the powerhouses of the cell. They are organelles that act like a digestive system which takes in nutrients, breaks them down, and creates energy rich molecules for the cell. The biochem-ical processes of the cell are known as cellular respiration. Many of the reactions involved in cellular respiration happen in the mitochondria. Mitochondria are the working organelles that keep the cell full of energy. 92. Answer-D

Topic: Biology Difficulty Level: Moderate Type: Factual

Explanation: Chromoplasts are coloured plastids found in roots, leaves, flowers and ripe fruits. They contain lipid-soluble pigments, referred to as carotenoids, that provide colour to many different types of plants and flowers. 93. Answer: B Topic: Biology Difficulty Level: Easy Type: Conceptual


Explanation: The human body is composed of four basic kinds of tissue: nervous, muscular, epithelial, and con-

nective tissue. Connective tissue is the most abundant, widely distributed, and varied type. It includes fibrous tissues, fat, cartilage, bone, bone marrow, and blood. As the name implies, connective tissues often bind other organs together, hold organs in place, cushion them, and fill space. 94. Answer: D Topic: Biology Difficulty Level: Difficult Type: Factual Explanation: Gymnosperms are seed-bearing vascular plants in which the ovules or seeds are not enclosed in an ovary. The word "gymnosperm" comes from the Greek word gymnospermos, meaning "naked seeds". Gymnosperm seeds develop either on the surface of scale or leaf-like appendages of cones, or at the end of short stalks. The largest group of living gymnosperms are the conifers (pines, cypresses and relatives). There are around 1000 spe-cies of gymnosperm. 95. Answer: B

Topic: Biology Difficulty Level: Moderate Type: Conceptual Explanation: Birds all share some characteristics. All birds are warm-blooded, or endothermic, animals. Birds are vertebrates because they have backbones. All birds have a four-chambered heart, a characteristic they share with mammals. All birds lay hard-shelled eggs. Birds have only two legs. Their forelimbs have become modified into wings for flying. All modern birds evolved from ancestors that could fly.

The bodies of birds are adapted for flying. Many of a bird's bones are hollow which makes birds' bodies lightweight. Flying birds have large chest muscles that move the wings. Birds have feathers that help them fly. The long flight feathers on the wings and tail help birds balance and steer. In addition, birds have a system of air sacs in their body that connect to the lungs. The air sacs enable birds to extract much more oxygen from each breath of air than other animals can. Birds need extra oxygen to release large amounts of energy to power their flight. Their four-chambered heart also helps a bird get more oxygen. The advantage of a four-chambered heart is that there is no mixing of oxygen-rich and oxygen-poor blood. Blood that arrives in the bird's body tissues has plenty of oxygen. Birds also have well-developed brains and keen eyesight. In order to fly, birds must have very quick reactions. When approaching a tree or cliff, a bird has only a few seconds to spot a place to land safely and avoid crashing. Most birds have keener eyesight than humans do. Birds' eyes are much larger in relation to their body size than humans' eyes. 96. Answer: D Topic: Biology Difficulty Level: Moderate Type: Factual Explanation: An arthropod (from Greek arthro-, joint + podos, foot) is an invertebrate animal having an exoskel-eton (external skeleton), a segmented body, and jointed appendages (paired appendages). Arthropods form the phylum Arthropoda, which includes the insects, arachnids, myriapods, and crustaceans. 97. Answer: C

Topic: Biology Difficulty Level: Difficult Type: Factual

Explanation: Ascaris is a genus of parasitic nematode worms known as the "small intestinal roundworms", which is a type of helminth (parasitic worm). One species, Ascaris lumbricoides, affects humans and causes the disease ascariasis. Another species, Ascaris suum, typically infects pigs. 98. Answer: B Topic: Biology Difficulty Level: Difficult Type: Factual


Explanation: When a disease is prevalent in an area over long periods of time, it is considered to be endemic in

that area. When the prevalence of disease is subject to wide fluctuations in time, it is considered to be epidemic during periods of high prevalence. Epidemics prevailing over wide geographic areas are called pandemics. 99. Answer: D Topic: Biology Difficulty Level: Easy Type: Factual Explanation: BCG, or bacille Calmette-Guerin, is a vaccine for tuberculosis (TB) disease. Many foreign-born per-sons have been BCG-vaccinated. BCG is used in many countries with a high prevalence of TB to prevent childhood tuberculous meningitis and miliary disease. 100. Answer: B Topic: Biology Difficulty Level: Easy Type: Factual

Explanation: The most common cause of rickets is the deficiency of vitamin D or calcium in a child's diet. Both are essential for children to develop strong and healthy bones. The main sources of vitamin D are: sunlight – your skin produces vitamin D when it's exposed to the sun, and we get most of our vitamin D this way.

Asnwers and Explanations – Economy + Science NCERTs€¦ · Explanation: While announcing several...

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