UPSC Essentials: Daily subject-wise quiz — Economy (Week 2)

Each day, we will cover one new subject. Attempt today’s subject quiz on Economy to check your progress. Come back tomorrow to solve the MCQs on International Relations. Don’t miss checking the answers and explanations at the end of the quiz.

QUESTION 1

In India, which of the following released the Report on Municipal Finances?

(a) Ministry of Finance

(b) Reserve Bank of India

(c) State Government

(d) NITI Aayog

QUESTION 2

Consider the following statements about National Coal Index (NCI):

1. It is a price index combining the prices of coal from all the sales channels- Notified Prices, Auction Prices and Import Prices.

2. It is released annually.

3. Wholesale Price Index does not have a component of imported coal was the main reason for the introduction of NCI.

Select the correct answer using the codes given below –

(a) 1 and 3 only

(b) 2 only

(c) 1 and 2 only

(d) 1, 2 and 3

QUESTION 3

Consider the following statements about Single Nodal Agency (SNA):

1. It is a system which tracks transfer of funds to states for central sector schemes and utilisation of funds by central agencies.

2. It has a centralised core and a decentralised periphery giving freedom to the States and agencies in implementation of schemes.

3. It has been launched by the Ministry of Finance.

Select the correct answer using the codes given below: 

(a) 1 and 2 only

(b) 1 and 3 only

(c) 1, 2 and 3

(d) 2 and 3 only

QUESTION 4

With reference to the Financial Services Institutions Bureau (FSIB), consider the following statements: 

1. It has been constituted by the Central Government for appointment of whole time directors and non-executive chairperson in Public Sector Banks and financial institutions.

2. It has replaced the Bank Board Bureau (BBB).

Select the correct answer using the codes given below – 

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

QUESTION 5

Ben Bernanke, Douglas Diamond and Philip Dybvig were recently in the news. They received Sveriges Riksbank Prize in Economic Sciences, 2022 for: 

(a) Improvements to auction theory and inventions of new auction formats.

(b) Research on banks and financial crises.

(c) Their methodological contributions to the analysis of causal relationships.

(d) Empirical contributions to labour economics.

QUESTION 6

Which of the following statements is not correct about Central Bank Digital Currency (CBDC)?

(a) It has been launched by the Reserve Bank of India.

(b) It is the same as the fiat currency, and is non-exchangeable with the fiat currency.

(c) It is a fungible legal tender, for which holders need not have a bank account.

(d) It will appear as ‘liability’ (currency in circulation) on the RBI’s balance sheet.

QUESTION 7

With reference to the Millets, consider the following statements:

1. They are highly adaptive to a wide range of ecological conditions and thrive well in rain-fed; arid climates and they have minimal requirement of water, fertilisers, and pesticides.

2. They are gluten-free and have a low glycemic index but lack protein.

3. The United Nations has declared 2022 as the International Year of Millets.

Select the correct answer using the codes given below:

(a) 1 and 2 only

(b) 1 only

(c) 1 and 3 only

(d) 1, 2 and 3

QUESTION 8

Consider the following statements about Minimum Support Price (MSP) –

1. These are declared only for the Rabi cropping season.

2. They are declared once a year.

3. The MSPs are announced by the Union government on the recommendations of the Commission for Agricultural Costs and Prices (CACP).

Select the correct answer using the codes given below –

(a) 1 and 2 only

(b) 2 only

(c) 3 only

(d) 1 and 3 only

ANSWERS TO MCQs

1. (b)

FYI:

—  RBI has released the Report on Municipal Finances in which it has highlighted several lacunae in the working of municipal corporations, stating that there has been no appreciable improvement in their functioning despite institutionalisation of the structure of local governance in India.

—  The availability and quality of essential services for urban populations in India has consequently remained poor.

—  The report stated that most municipalities only prepare budgets and review actuals against budget plans but do not use their audited financial statements for balance sheet and cash flow management, resulting in significant inefficiencies.

—  The RBI has said municipal corporations should adopt sound and transparent accounting practices with proper monitoring and documentation of various receipt and expenditure items.

Therefore, option (b) is the correct answer.

2. (a)

FYI:

—  National Coal Index is a price index combining the prices of coal from all the sales channels- Notified Prices, Auction Prices and Import Prices. Hence, statement 1 is correct.

— This index was created to provide a benchmark for revenue-sharing contracts being executed after the auctions for commercial mining of coal

— The index is released every month by the Ministry of Coal, Government of India. Hence, statement 2 is not correct.

— The NCI was  introduced as the wholesale price index (WPI) for coal has no component of imported coal. Hence, statement 3 is correct.

Therefore, option (a) is the correct answer.

(Other Source: coal.nic.in/index.php/en/nominated-authority/national-coal-index)

3. (d)

FYI:

— Single Nodal Agency (SNA) dashboard is a system which tracks transfer of funds to states for centrally sponsored schemes and utilisation of funds by central agencies.

— The SNA dashboard of the Public Financial Management System (PFMS), launched by the Ministry of Finance as part of the Azadi Ka Amrit Mahotsav.

— It has a centralised core and a decentralised periphery giving freedom to the States and agencies in implementation of schemes.

— It will make governance more transparent and realise better value for every rupee sent by the Centre by ‘just-in-time’ money release.

Therefore, option (d) is the correct answer.

(Other Source: pib.gov.in)

4. (c)

FYI:

— Appointments Committee of the Cabinet (ACC) has approved a government resolution for establishing the Financial Services Institutions Bureau (FSIB) in place of the Banks Board Bureau (BBB). Hence, statement 2 is correct.

—  It has been constituted by the Central Government for appointment as whole-time directors (WTDs) and non-executive chairpersons (NECs) on the Boards of Directors in Public Sector Banks, financial institutions and Public Sector Insurers. Hence, statement 1 is correct.

Therefore, option (c) is the correct answer.

(Other Source: fsib.org.in)

5. (c)

FYI:

— The Sveriges Riksbank Prize in Economic Sciences for 2022 was awarded to three American economists, Ben S Bernanke, Douglas W Diamond and Philip H Dybvi for significantly improving our understanding of the role of banks in the economy, particularly during financial crises.

— The foundations of this research were laid by Ben Bernanke, Douglas Diamond and Philip Dybvig in the early 1980s. Their analyses have been of great practical importance in regulating financial markets and dealing with financial crises.

Therefore, option (b) is the correct answer.

(Other Source: http://www.nobelprize.org/prizes/economic-sciences/2022/summary/)

6. (b)

FYI:

— CBDC is a legal tender issued by the RBI in digital form. It is the same as the fiat currency, and is exchangeable one-to-one with the fiat currency.

—  It is a fungible legal tender, for which holders need not have a bank account. The e-rupee will be in the form of a digital token representing a claim on the central bank, and will effectively —  function as the digital equivalent of a banknote that can be transferred electronically from one holder to another.

—  It will appear as ‘liability’ (currency in circulation) on the RBI’s balance sheet.

Therefore, option (b) is the correct answer.

7. (b)

FYI:

—  Millets are a group of nutritiously rich, drought tolerant and mostly grown in the arid and semi-arid regions of India.

—  They are highly adaptive to a wide range of ecological conditions and thrive well in rain-fed; arid climates and they have minimal requirement of water, fertilisers, and pesticides. Hence, statement 1 is correct.

—  The United Nations has declared 2023 as the International Year of Millets. Hence, statement 3  is not correct.

—  The millets are also known as “coarse cereals” or “cereals of the poor”. Indian Millets are nutritionally superior to wheat and rice as they are rich in protein, vitamins and minerals. Hence, statement 2 is not correct.

— They are also gluten-free and have a low glycemic index, making them ideal for people with celiac disease or diabetes.

Therefore, option (b) is the correct answer.

(Other Source: apeda.gov.in)

8. (c)

 

FYI:

—  Minimum Support Price (MSP) is a form of market intervention by the Government of India to insure agricultural producers against any sharp fall in farm prices.

—  The minimum support prices are announced by the Government of India at the beginning of the sowing season for certain crops. Hence, statements 1 and 2 are not correct. 

 They are announced on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP). Hence, statement 3 is correct.

—  MSP is price fixed by the Government of India to protect the producer – farmers – against excessive fall in price during bumper production years.

—  The major objectives are to support the farmers from distress sales and to procure food grains for public distribution.

Therefore, option (c) is the correct answer.

Previous Quizzes:

Polity and Governance,

History, Culture, and Social Issues

UPSC Weekly Quiz (Current Affairs)

Environment, Geography, Science and Technology

Tomorrow’s Quiz: International Relations 

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