UPSC Prelims Test Series 2019

DO NOT OPEN THIS TEST BOOKLET UNTIL YOU ARE TOLD TO DO SO

TEST BOOKLET GENERAL STUDIES: Test 15

TOPIC: Economics-II Date: 24/03/2019 Time Allowed: 1 Hr Maximum Marks: 100

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1. Which of the following can lead to rupee depreciation? 1. Rising interest rates in the US 2. FPI Inflows 3. High import intensity

Select the correct code: (a) 1, 2 (b) 1, 3 (c) 3 only (d) 1, 2, 3

2. Consider the following statements regarding Essential Commodities Act 1955 : 1. It was enacted to ensure easy

availability of essential commodities to consumer.

2. The Central government alone is empowered to add, remove or modify essential commodity in the public interest.

3. Both Agricultural Produce and Manufactured items are included in Essential Commodities.

4. Raw Jute and Jute Textiles are included in Essential Commodities.

Which of the above statement(s) is/are correct?

(a) 1 and 3 only (b) 2 and 4 only (c) 1, 3 and 4 only (d) 1, 2, 3 and 4

3. Consider the following statements

regarding power consumption in India: 1. Consumption of electricity in

agricultural sector is the highest compared to other sectors.

2. All the thermal power stations in India are running at full capacity.

3. Transmission and Distribution (T&D) Losses in India are negligible when compared to the power production.

Which of the statement(s) given above is/are correct?

(a) 1 only

(b) 1 and 3 only (c) 2 and 3 only (d) None of the above

4. Predatory pricing policy is designed to

(a) Drive competitors out of business (b) Maximise profits (c) Encourage entrants into the market (d) Attain least cost output

5. Use of HYV technology has resulted in which of the following in Indian agriculture? 1. Increase in Gross area under

cultivation. 2. Crop diversification. 3. Increase in marketable surplus. 4. Increase in farming population.

Select the correct answer using the code given below.

(a) 1 and 2 only (b) 1, 3 and 4 only (c) 1 and 3 only (d) 2, 3 and 4 only

6. Consider the following statements

with respect to international financial

institutions : 1. World Bank includes International

Development Association, International Finance Cooperation, International Bank for Reconstruction and Development.

2. International Finance Corporation lends money to developing countries at low interest rates.

3. Multilateral Investment Guarantee Agency encourages investment in developing countries.

Which of the statement(s) given above is/are correct?

(a) 2 only (b) 1 and 3 only (c) 2 and 3 only (d) 1, 2 and 3

7. Consider the following statements

with respect to market situations: 1. Indian railways can be an example of

Monopsony. 2. Cartel can be described as illegal

coming together of suppliers to monopolise the market.

3. Autarky is a state where an economy produces all the goods that it needs.

Which of the above statement(s) is/are

correct? (a) 1 and 3 only (b) 1 and 2 only (c) 2 and 3 only (d) 1, 2 and 3

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8. NABARD is the apex institution handling policy, planning & operations for Agricultural credit. This implies which of the following functions? 1. Refinancing agency for financial

institutions, promoting agriculture and developmental activities in rural areas.

2. Preparing rural credit plans for all districts and monitoring flow of ground level credit.

3. Help Co-operative banks & Regional Rural Banks with financial & managerial assistance and conduct their inspections.

Select the correct answer using the code given below.

(a) 1 and 2 only (b) 1 and 3 only (c) 2 and 3 only (d) 1, 2 and 3

9. Which of the following was/were the

correct reason(s) for slowed industrial development in India till the beginning of the Second Plan? 1. Absence of capital goods industry. 2. Limited area of operation of the public

sector. 3. Lack of capital to invest. 4. Lack of demand of consumer goods.

Select the correct answer using the code given below.

(a) 1, 2, and 3 only (b) 1 and 3 only (c) 2, 3, and 4 only (d) 1, 2, 3, and 4

10. Consider the following sentences

about Participatory Notes : 1. It is a derivative instrument issued in

foreign jurisdictions against underlying Indian securities.

2. RBI and SEBI have a dual control over P-Notes; In order to check its volatility.

3. The P-Note holder does not enjoy any voting rights in relation to security/shares referenced by the P-Note.

Select the correct answer using the code given below.

(a) 1 and 2 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3

11. Compulsory Licensing has been an issue of dispute between Government of India and Multinational Drug Companies. Consider the following statements regarding this: 1. Compulsory Licensing allows a

government to temporarily override a patent.

2. It is in violation of WTO TRIPS agreement.

3. It allows generic copies of a patented product to be produced domestically, without compensation paid to patent holder.

Which of the given above statement(s) is/are correct?

(a) 1 only

(b) 2 and 3 only (c) 1 and 3 only (d) 1 and 2 only

12. Consider the following statements

regarding Index of Industrial Production (IIP) : 1. IIP measures volume change in the

production of an economy and free of influences of price changes.

2. IIP is compiled and published monthly by the Central Statistics Office (CSO).

3. Current base year for IIP is 2010-11 in which Mining has been assigned the highest weight.

Which of the statements given above is/are correct?

(a) 2 only (b) 1 and 2 only (c) 1 and 3 only (d) 1, 2 and 3

13. Consider the following statements

with reference to the land reforms in India : 1. Among the various measures,

cooperative farming constitutes a part of land reforms.

2. Land reforms had great positive

socioeconomic impact especially on the agricultural laborers.

Which of the statements given above is/are correct ?

(a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2

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14. Consider the following statements regarding High Yielding Variety (HYV) seeds : 1. HYV seeds are non-photosynthetic,

thus independent of sunlight for targeted yields.

2. HYV seeds are more resistant to pests than naturally occurring seeds.

3. HYV plants are dwarf because more nutrients are supplied for grains.

Which of the statements given above is/are correct?

(a) 1 and 2 only (b) 3 only (c) 2 and 3 only (d) 1 and 3 only

15. Infrastructure development results in which of the following? 1. Modernisation of economy. 2. Increase in productivity. 3. Generation of employment

opportunities. 4. Forging backward and forward

linkages. Select the correct answer using the code given below.

(a) 1 and 2 only (b) 1, 2 and 3 only (c) 1, 3 and 4 only (d) 1, 2, 3 and 4

16. Indian medical tourism has

witnessed tremendous growth in recent times. In this context, which of the following is/are the correct reasons for this phenomenon? 1. Indian hospitals possess state of the

art medical technologies. 2. The Central Government provides

subsidy to the private hospitals for attracting medical tourists.

3. The government invests heavily in medical infrastructure; thereby the medical services are cheaper in India.

4. Indian traditional treatment

techniques are very popular among foreigners.

Select the correct answer using the code given below.

(a) 2, 3 and 4 only (b) 1, 3 and 4 only (c) 1 and 4 only (d) 1, 2, 3 and 4

17. It is often argued that price subsidies are regressive. Which of the following statements is/are not an example of regressive price subsidy? 1. Top quintile of households consuming

37% of power subsidy. 2. Controlled rail prices providing more

benefits to wealthy households. 3. Higher Minimum Support Price (MSP)

encouraging under cultivation of non-MSP crops.

4. PDS allocation of kerosene significantly exceeding the consumption.

Select the correct answer using the code given below.

(a) 1 and 2 only

(b) 3 and 4 only (c) 3 only (d) None of the above

18. Which of the following is true about

Exchange Traded Funds (ETF)? 1. Like mutual funds they comprise a set

of specified stocks or a commodity. 2. Like equity shares they are traded on

the stock exchange on real-time basis. Select the correct answer using the code given below.

(a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2

19. Consider the following statements

with reference to "crowding out" of private investment by government : 1. It takes place when there is high

private sector borrowing, thereby reducing the size of government investment.

2. Due to crowding out of private investment by the government, private sector is not allowed to invest more in government securities.

Which of the above given statements

is/are correct? (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2

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20. Consider the following characteristics about Banking Cash Transaction? 1. It is imposed on high withdrawals

from Bank’s non-savings account. 2. It indirectly curbs the black money. 3. It has been abolished in India.

Which of the statements given above is/are correct?

(a) 1 and 2 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3

21. Consider the following statements

regarding the Minimum Support Price (MSP) :

1. MSP is the price at which government would purchase crops from the farmers.

2. MSP is decided before sowing starts. 3. MSP does not cover cash crops.

Which of the above statements is/are correct?

(a) 1 and 2 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3

22. Which of the following changes

were brought in industrial sector after

the 1991 reforms? 1. The requirement of licencing was

abolished in all the industries except for Atomic energy and Railways.

2. Many production areas earlier reserved for large scale industries are now allowed for small scale industries.

3. Freedom from licencing also included freedom to increase the production capacity without restrictions.

Select the correct answer using the code given below.

(a) 1 and 3 only (b) 2 and 3 only

(c) 1 and 2 only (d) 3 only

23. A foreigner is travelling by Air India

from Delhi to Mumbai. What will this be considered as in terms of national income: (a) Import (b) Domestic consumption (c) Exports (d) None of the Above

24. In the context of the Health System in India, which of the following is/are included within the ‘primary healthcare’? 1. Education of and controlling basic

health problems. 2. Polio Immunization program. 3. Promotion of mental health. 4. Supply of water. 5. Promotion of maternal health. 6. Provision of essential drugs.

Select the correct answer using the code given below.

(a) 1, 2, 5 and 6 only (b) 1, 3, 5 and 6 only (c) 1, 2, 3, 5 and 6 only (d) 1, 2, 3, 4, 5 and 6

25. Consider the following statements :

1. NABARD has set up Rural Infrastructure Development Fund (RIDF) under which loans are granted to states for speedy completion of major irrigation project.

2. Accelerated Irrigation Benefit Programme, is one under which the centre provides additional central assistance by way of loans to the states for early completion of selected large and medium irrigation and multipurpose projects.

Which of the statements given above is/are not correct?

(a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2

26. What is meant by Most Favoured

Nation (MFN) status? 1. Non-discriminatory treatment by one

country towards the other country with regard to trade in goods and services.

2. Lowering the custom duties for that country as a special privilege.

3. Granting a higher status to one country with respect to the other trading partners.

Select the correct answer using the code given below.

(a) 1 only (b) 1 and 2 only (c) 3 only (d) 1, 2 and 3

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27. Consider the following statements regarding the Agricultural Produce Market Committee (APMC) Act: 1. It empowers the state governments to

control production, supply and distribution of agricultural commodities resulting in monopolies.

2. Though subjected to legislative approval for fund utilization, the non-transparent methodology of revenue collection makes AMPCs hidden from scrutiny.

3. Agriculture being a state subject, the Constitution prevents the centre from enacting legislation for setting up a national common market for agricultural commodities.

Which of the statements given above is/are correct?

(a) 1, 2 and 3 only (b) 3 only (c) 1 only (d) None of the above

28. In the context of Indian economy,

which of the following constitutes export of services? 1. An Indian tourist visiting Mauritius. 2. Bharti Airtel setting up telecom towers

in Africa. 3. An Indian IT company selling software

to a Chinese firm. 4. A Pakistani national visiting India for

liver transplant. Select the correct answer using the code given below.

(a) 1, 2, and 3 only (b) 4 only (c) 2, 3, and 4 only (d) 2 and 4 only

29. Indian economy is facing structural

constraints. Which among the following options is/are structural constraint faced by Indian economy? 1. Low agricultural productivity.

2. Poorly targeted subsidies. 3. Low manufacturing base. 4. Presence of large informal sector.

Select the correct answer using the code given below.

(a) 3 and 4 only (b) 1, 3 and 4 only (c) 1 and 3 only (d) 1, 2, 3 and 4

30. Consider the following statements regarding the cropping seasons in India : 1. The agricultural year in India is from

July to June. 2. Chickpea, Rice and Barley are Rabi

crops. 3. Cotton, Maize, and Groundnut are

Kharif crops. Which of the statements given above is/are correct?

(a) 1 and 2 only (b) 1 and 3 only (c) 2 and 3 only (d) 1, 2 and 3

31. Under the GATS agreement, there

are four modes of supply for delivery of services in international trade.

Mode Type (A) Mode 1 1. Commercial presence (B) Mode 2 2. Presence of a natural person (C) Mode 3 3. Consumption Abroad (D) Mode 4 4. Cross-Border Supply Match the following two columns appropriately and select the correct answer using the code given below.

(a) A-4, B-3, C-1, D-2 (b) A-2, B-1, C-3, D-4 (c) A-3, B-4, C-2, D-1 (d) A-1, B-2, C-4, D-3

32. Which of the above statements

is/are correct? 1. Liquidity swap is a type of currency

swap used by a country's central bank to provide liquidity of its currency to another country's central bank.

2. The Chiang Mai Initiative (CMI) is a multilateral currency swap arrangement among the ten members of the ASEAN, China (including Hong Kong), Japan and South Korea.

3. Currency swap is a swap that involves the exchange of principal and interest

in one currency for the same in another currency.

Select the correct answer using the code given below.

(a) 1 and 3 only (b) 1 and 2 only (c) 2 and 3 only (d) 1, 2 and 3

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33. Consider the following statements : 1. Surcharge is a tax on tax 2. Surcharge causes inequality 3. Cess is a temporary tax 4. Cess is a direct tax

Select the correct answer using the code given below.

(a) 1 and 3 only (b) 2 and 3 only (c) 2 and 4 only (d) 1, 2, 3 and 4

34. Which of the following is/are the

recommendations of Shanta Kumar Committee? 1. Complete devolution of procurement

role to state-level agencies.

2. Negotiable Warehouse Receipt System (NWRs) should be taken up on priority and scaled up quickly.

3. Gradual substitution of Public Delivery System with Direct Cash Transfer to target groups.

Select the correct answer using the code given below.

(a) 2 only (b) 1 and 2 only (c) 1 and 3 only (d) 1, 2 and 3

35. Which of the following plantation

crops are covered under the Price Stabilization Fund Scheme? 1. Sugarcane 2. Tobacco 3. Rubber 4. Coffee 5. Banana

Select the correct answer using the code given below.

(a) 1 and 2 only (b) 2, 3 and 4 only (c) 3, 4 and 5 only (d) 3 and 4 only

36. In economics, ‘Externalities’ refer

to (a) External commercial borrowings (b) Income earned from external sources (c) Positive or negative consequence of an

economic activity (d) Paying interest to the loans taken

from International financial institutions

37. A ‘wilful default’ would be deemed to have occurred if which of the following events. 1. Defaulting in meeting its repayment

obligations to the lender even when it has the capacity to repay.

2. Not utilising the finance from the lender for the specific purposes for which finance was availed and diverting the funds for other purposes.

3. Disposed off the movable fixed assets or immovable property given for the purpose of securing a term loan without the knowledge of the bank.

Which of the above statements is/are correct?

(a) 1, 2 (b) 2, 3 (c) 1, 3 (d) 1, 2, 3

38. Consider the following statement : 1. Majority of cotton cultivation areas

are irrigated. 2. Gossypium arboretum and

Gossypium herbaceum are varieties of cotton.

3. China is the largest producer of cotton in the world.

Which of the above statement is/are not

correct? (a) 1 only (b) 2 and 3 only (c) 3 only (d) None of the above

39. The Reserve Bank of India (RBI) had

introduced an incremental Cash Reserve Ratio (CRR) few years ago to 1. Allow banks to cut down their priority

sector lending targets 2. Absorb excess liquidity in the banking

system following demonetisation 3. Increase the loanable funds with RBI

Select the correct answer using the codes

below. (a) 1 and 2 only (b) 2 and 3 only (c) 2 only (d) 1 and 3 only

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40. Which of the following measures by the government will lead to reduction in inflation? 1. Reducing government tax collection 2. Reducing government spending 3. Banning the export of essential items

Which of the above statements is/are correct?

(a) 1, 2 (b) 2, 3 (c) 1, 3 (d) 1, 2, 3

41. Which of the following

action/actions can be taken by the Government to reduce the deficit budget? 1. Reducing revenue expenditure 2. Introducing new welfare schemes 3. Rationalizing subsidies 4. Reducing import duty

Select the correct answer using the code given below.

(a) 1 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2, 3 and 4

42. Consider the following statements

about Society for Worldwide Interbank Financial Telecommunication (SWIFT)

1. SWIFT sells software and services to financial institutions

2. All international interbank messages use the SWIFT network.

3. SWIFT does not facilitate funds transfer.

Which of the above statements is/are correct?

(a) 1, 2 (b) 2, 3 (c) 1, 3 (d) 1, 2, 3

43. Which of the following is not a

consequence of rupee depreciation? (a) Increase in the cost of imports (b) Foreign trips will become costlier (c) Exports will become competitive (d) Reduction in remittances from abroad

44. Consider the following statement about Foreign Portfolio Investment (FPI). 1. FPI does not provide investor with

direct ownership of financial assets. 2. FPI is part of country’s current

account. 3. FPI is more liquid and more risky

than FDI. Which of the above statements is/are incorrect?

(a) 1 only (b) 2 only (c) 2, 3 (d) 1, 3

45. With respect to investment,

consider the following 1. Investment in mutual funds is an

indirect way to invest in stocks. 2. An adult citizen of India can invest in

stocks directly of a company listed in NSE with or without broker

Select from the following codes (a) 1 only (b) 2 only (c) Both (d) None

46. Which of the following mechanisms

can help to contain food inflation?

1. Increasing import duties on food articles

2. More procurement by FCI 3. Imposing stock limit

Select the right code (a) 1 and 2 (b) 3 only (c) 2 and 3 (d) 1 and 3

47. Which of the following will lead to

cost push inflation for a particular industry? 1. Rising NPAs of banks 2. Shortage of skilled labour

Select the right statements (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2

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48. Consider the following statements about Financial Intelligence Unit – India (FIU-IND). 1. FIU-IND is a regulatory authority

responsible for receiving, processing, analyzing and disseminating information relating to suspect financial transactions.

2. FIUs exchange information with other FIUs on the basis of reciprocity or mutual agreement.

3. It maintains national data base on cash transactions and suspicious transactions.

Which of the above statements is/are correct?

(a) 1, 2

(b) 2, 3 (c) 3 only (d) 1, 2, 3

49. Which of the following are not the

components of Non tax revenue receipts? 1. Government earning Dividends and

profits from PSUs. 2. Goods and Services Tax (GST) 3. State governments receiving grants

from the Central Government 4. Wealth Tax 5. Value Added Tax (VAT)

Select the correct code: (a) 1, 3 (b) 1, 2, 3 (c) 2, 4, 5 (d) 3, 4, 5

50. Gross Capital formation will

increase if: 1. Gross Domestic Savings increases 2. Gross Domestic Consumption

increases 3. GDP increases

Select the correct answer using the codes given below.

(a) 1 only

(b) 1 and 2 only (c) 1 and 3 only (d) None

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