Prelims MCQs Quiz 27 : Economy


1. In India, which of the following is/are a mechanism of deficit financing?
1. borrowing from RBI.
2. borrowing from commercial banks.
3. issuing fresh currency notes.
Select the correct answer using the codes given below.
a) 1 and 2 only
b) 1 and 3 only
c) 2 and 3 only
d) 1, 2 and 3

Answer & Explanation

2. International Development Association (IDA) is called the ‘soft’ window of the World Bank (WB) because
a) it lends for software and It development
b) taking loans from it is very easy
c) its loans are interest free
d) none

Answer & Explanation

3. Development expenditure would include
1. expenditure on building roads.
2. debt service liabilities.
3. grants-in-aid.
Select the correct answer using the codes given below.
a) 1 and 2 only
b) 1 and 3 only
c) 2 and 3 only
d) 1, 2 and 3

Answer & Explanation

4. With reference to narrow money, consider the following statements :
1. They are highly liquid.
2. Banks run their lending programme mainly with this money.
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

Answer & Explanation

5. 100 people went for a job in a company. The company told them that while there is a vacancy, none of them posses the skill required for the job. What kind of unemployment would this be called?
a) disguised unemployment
b) structural unemployment
c) cyclical unemployment
d) none

Answer & Explanation

6. Credit Default Swaps (CDS) can be beneficial for an economy as they
1. helps in redistribution of loans.
2. enhance investment opportunities
3. leads to loan waivers.
Select the correct answer using the codes given below.
a) 1 and 2 only
b) 1 and 3 only
c) 2 and 3 only
d) 1, 2 and 3

Answer & Explanation

7. Twin deficit in a economy means
a) high current account deficit and high fiscal deficit.
b) high capital account deficit and high fiscal deficit.
c) high current account deficit and high capital account deficit.
d) high budget deficit and high fiscal deficit.

Answer & Explanation

8. The current account of the balance of payments (BoP) includes
1. foreign aid.
2. foreign institutional investments.
3. remittances.
Select the correct answer using the codes given below.
a) 1 and 2 only
b) 1 and 3 only
c) 3 only
d) 2 and 3 only

Answer & Explanation

9. Which of the following prices is/are fixed by the central government?
1. Maximum Retail Price (MRP)
2. Minimum Support Price (MSP)
3. Fair and Remunerative Price (FRP)
Select the correct answer using the codes given below.
a) 1 and 2 only
b) 1 and 3 only
c) 2 only
d) 2 and 3 only

Answer & Explanation

10. Consider the following statements about Securities Transaction Tax (STT)
1. The point of incidence and impact of STT is not same.
2. Government securities are exempted from STT.
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

Answer & Explanation

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Please read these important articles about prelims preparation

1. How UPSC asks current affairs in GS Prelims

2. How to practice prelims MCQs for UPSC

3. Applying logic in UPSC General Studies Prelims

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