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UPSC CSAT TOPIC WISE SOLUTION ANSWER WITH DETAILS यूपीएससी सीएसएटी विषयवार समाधान उत्तर विवरण के साथ







Economy

2023

1. Consider the following statements:

Statement-I: Interest income from the deposits in Infrastructure Investment Trusts (InvITs) distributed to their investors is exempted from tax, but the dividend is taxable.

Statement-II: InviTs are recognized as borrowers under the 'Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002'.

Which one of the following is correct in respect of the above statements?

(a) Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-1

(b) Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-1

(c) Statement-1 is correct but Statement-II is incorrect

(d) Statement-I is incorrect Statement-II is correct

2. Consider the following statements :

Statement-I: In the post-pandemic recent past, many Central Banks worldwide had carried out interest rate hikes.

Statement-II: Central Banks generally assume that they have the ability to counteract the rising consumer prices via monetary policy means.

Which one of the following is correct in respect of the above statements?

(a) Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-1

(b) Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-1

(c) Statement-I is correct but Statement-II is incorrect

(d) Statement-I is incorrect but Statement-II is correct

3. Consider the following statements:

Statement-I: Carbon markets are likely to be one of the most widespread tools in the fight against climate change.

Statement-II: Carbon markets transfer resources from the private sector to the State.

Which one of the following is correct in respect of the above statements?

(a) Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I

(b) Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I

(c) Statement-I is correct but Statement-II is incorrect

(d) Statement-I is incorrect but Statement-II is correct

4. Which one of the following activities of the Reserve Bank of India is considered to be part of 'sterilization’?

(a) Conducting 'Open Market Operations'

(b) Oversight of settlement and payment systems

(c) Debt and cash management for the Central and State Governments

(d) Regulating the functions of Non-banking Financial Institutions

5. Consider the following markets:

  1. Government Bond Market

  2. Call Money Market

  3. Treasury Bill Market

  4. Stock Market

How many of the above are included in capital markets?

(a) Only one

(b) Only two

(c) Only three

(d) All four

6. Which one of the following best describes the concept of 'Small Farmer Large Field'?

(a) Resettlement of a large number of people, uprooted from their countries due to war, by giving them a large cultivable land which they cultivate collectively and share the produce

(b) Many marginal farmers in an area organize themselves into groups and synchronize and harmonize selected agricultural operations

(c) Many marginal farmers in an area together make a contract with a corporate body and surrender their land to the corporate body for a fixed term for which the corporate body makes a payment of agreed amount to the farmers

(d) A company extends loans, technical knowledge and material inputs to a number of small farmers in an area so that they produce the agricultural commodity required by the company for its manufacturing process and commercial production

7. Consider the following statements:

  1. The Government of India provides Minimum Support Price for niger (Guizotia abyssinica) seeds.

  2. Niger is cultivated as a Kharif crop.

  3. Some tribal people in India use niger seed oil for cooking.

How many of the above statements are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

8. Consider the investments in the following assets:

  1. Brand recognition

  2. Inventory

  3. Intellectual property

  4. Mailing list of clients

How many of the above are considered intangible investments?

(a) Only one

(b) Only two

(c) Only three

(d) All four

9. In the context of finance, the term ‘beta’ refers to

(a) the process of simultaneous buying and selling of an asset from different platforms

(b) an investment strategy of a portfolio manager to balance risk versus reward

(c) a type of systemic risk that arises where perfect hedging is not possible

(d) a numeric value that measures the fluctuations of a stock to changes in the overall stock market

10. Consider the following statements:

  1. The Self-Help Group (SHG) programme was originally initiated by the State Bank of India by providing microcredit to the financially deprived.

  2. In an SHG, all members of a group take responsibility for a loan that an individual member takes.

  3. The Regional Rural Banks and Scheduled CommercialBanks support SHGs.

How many of the above statements are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

11. Consider the following heavy industries:

  1. Fertilizer plants

  2. Oil refineries

  3. Steel plants

Green hydrogen is expected to play a significant role in decarbonizing how many of the above industries?

(a) Only one

(b) Only two

(c) All three

(d) None

12. Consider, the following statements:

Statement-I: India accounts for 3.2% of global export of goods.

Statement-II: Many local companies and some foreign companies operating in India have taken advantage of India's ‘Production-linked Incentive’ scheme.

Which one of the following is correct in respect of the above statements?

(a) Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I

(b) Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I

(c) Statement-I is correct but Statement-II is incorrect

(d) Statement-I is incorrect but Statement-II is correct

13. Consider the following statements with reference to India :

  1. According to the ‘Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, the ‘medium enterprises’ are those with investments in plant and machinery between `15 crore and `25 crore.

  2. All bank loans to the Micro, Small and Medium Enterprises qualify under the priority sector.

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

14. With reference to Central Bank digital currencies, consider the following statements:

  1. It is possible to make payments in a digital currency without using US dollar or SWIFT system.

  2. A digital currency can be distributed with condition programmed into it such as a time-frame for spending it.

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

2022

1. Consider the following statements:

1. Gujarat has the largest solar park in India.

2. Kerala has a fully solar powered International Airport.

3. Goa has the largest floating solar photovoltaic project in India.

Which of the statements given above is/are correct?

(a) 1 and 2

(b) 2 only

(c) 1 and 3

(d) 3 only

2. Consider the following statements:

1. Tight monetary policy of US Federal Reserve could lead to capital flight.

2. Capital flight may increase the interest cost of firms with existing External Commercial Borrowings (ECBs).

3. Devaluation of domestic currency decreases the currency risk associated with ECBS.

Which of the statements given above are correct?

(a) 1 and 2 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

3. Consider the following statements:

1. In India, credit rating agencies are regulated by Reserve Bank of India.

2. The rating agency popularly known as ICRA is a public limited company.

3. Brickwork Ratings is an Indian credit rating agency.

Which of the statements given above are correct?

(a) 1 and 2 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

4. With reference to the 'Banks Board Bureau (BBB)', which of the following statements are correct?

1. The Governor of RBI is the Chairman of BBB.

2. BBB recommends for the selection of heads for Public Sector Banks.

3. BBB helps the Public Sector Banks in developing strategies and capital raising plans.

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

5. With reference to Convertible Bonds, consider the following statements:

1. As there is an option to exchange the bond for equity, Convertible Bonds pay a lower rate of interest.

2. The option to convert to equity affords the bondholder a degree of indexation to rising consumer prices.

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

6. In India, which one of the following is responsible for maintaining price stability by controlling inflation?

(a) Department of Consumer Affairs

(b) Expenditure Management Commission

(c) Financial Stability and Development Council

(d) Reserve Bank of India

7. With reference to Non-Fungible Token (NFTs), consider the following statements:

1. They enable the digital representation of physical assets.

2. They are unique cryptographic tokens that exist on a blockchain.

3. They can be traded or exchanged at equivalency and therefore can be used as a medium of commercial transactions.

Which of the statements given above are correct?

(a) 1 and 2 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

8. With reference to the Indian economy, consider the following statements:

1. An increase in Nominal Effective Exchange Rate (NEER) indicates the appreciation of rupee.

2. An increase in the Real Effective Exchange Rate (REER) indicates an improvement in trade competitiveness.

3. An increasing trend in domestic inflation relative to inflation in other countries is likely to cause an increasing divergence between NEER and REER.

Which of the above statements are correct?

(a) 1 and 2 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

9. With reference to the Indian economy, consider the following statements:

1. If the inflation is too high, Reserve Bank of India (RBI) is likely to buy government securities.

2. If the rupee is rapidly depreciating, RBI is likely to sell dollars in the market.

3. If interest rates in the USA or European Union were to fall, that is likely to induce RBI to buy dollars.

Which of the statements given above are correct?

(a) 1 and 2 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

Ans: (b)

10. With reference to the Indian economy, what are the advantages of "Inflation-Indexed Bonds (IIBs)"?

1. Government can reduce the coupon rates on its borrowing by way of IIBs.

2. IIBS provide protection to the investors from uncertainty regarding inflation.

3. The interest received as well as capital gains on IIBs are not taxable.

Which of the statements given above are correct?

(a) 1 and 2 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

11. With reference to foreign-owned e-commerce firms operating in India, which of the following statements is/are correct?

1. They can sell their own goods in addition to offering their platforms as market-places.

2. The degree to which they can own big sellers on their platforms is limited.

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

12. Which of the following activities constitute real sector in the economy?

1. Farmers harvesting their crops

2. Textile mills converting raw cotton into fabrics

3. A commercial bank lending money to a trading company.

4. A corporate body issuing Rupee Denominated Bonds overseas.

Select the correct answer using the code given below:

(a) 1 and 2 only

(b) 2, 3 and 4 only

(c) 1, 3 and 4 only

(d) 1, 2, 3 and 4

13. Which one of the following situations best reflects "Indirect Transfers" often talked about in media recently with referece to India?

(a) An Indian company investing in a foreign enterprise and paying taxes to the foreign country on the profits arising out of its investment.

(b) A foreign company investing in Indian and paying taxes to the country of its base on the profits arising out of its investment.

(c) An Indian company purchases tangible assests in a foreign country and sells such assets after their value increases and transfers the proceeds to India.

(d) A foreign compnay transfers shares and such shares derive their substantial value from assest located in India.

14. With reference to the expenditure made by an organization or a company, which of the following statements is/are correct?

1. Acquiring new technology is capital expenditure.

2. Debt financing is considered capital expenditure, while equity financing is considered revenue expenditure.

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

15. With reference to the Indian economy, consider the following statements:

1. A share of the household financial savings goes towards government borrowings.

2. Dated securities issued at marked-related rates in auctions form a large component of internal debt.

Which of the above statements is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

2021

1. The money multiplier in an economy increases with which one of the following?

(a) Increase in the Cash Reserve Ratio in the banks

(b) Increase in the Statutory Liquidity Ratio in the banks

(c) Increase in the banking habit of the people

(d) Increase in the population of the country

2. With reference to Indian economy, demand-pull inflation can be caused/increased by which of the following?

  1. Expansionary policies

  2. Fiscal stimulus

  3. Inflation-indexing wages

  4. Higher purchasing power

  5. Rising interest rates

Select the correct answer using the code given below.

(a) 1, 2 and 4 only

(b) 3, 4 and 5 only

(c) 1, 2, 3 and 5 only

(d) 1, 2, 3, 4 and 5

3. With reference to India, consider the following statements:

  1. Retail investors through demat account can invest in ‘Treasury Bills’ and ‘Government of India Debt Bonds’ in primary market.

  2. The ‘Negotiated Dealing System-Order Matching’ is a government securities trading platform of the Reserve Bank of India.

  3. The ‘Central Depository Services Ltd.’ is jointly promoted by the Reserve Bank of India and the Bombay Stock Exchange.

Which of the statements given above is/are correct?

(a) 1 only

(b) 1 and 2 only

(c) 3 only

(d) 2 and 3 only

4. In India, the central bank’s function as the ‘lender of last resort’ usually refers to which of the following?

  1. Lending to trade and industry bodies when they fail to borrow from other sources

  2. Providing liquidity to the banks having a temporary crisis

  3. Lending to governments to finance budgetary deficits

Select the correct answer using the code given below.

(a) 1 and 2 only

(b) 2 only

(c) 2 and 3 only

(d) 3 only

5. Consider the following statements:

  1. The Governor of the Reserve Bank of India (RBI) is appointed by the Central Government.

  2. Certain provisions in the Constitution of India give the Central Government the right to issue directions to the RBI in public interest.

  3. The Governor of the RBI draws his power from the RBI Act.

Which of the above statements are correct?

(a) 1 and 2 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

6. With reference to casual workers employed in India, consider the following statements:

  1. All casual workers are entitled for Employees Provident Fund coverage.

  2. All casual workers are entitled for regular working hours and overtime payment.

  3. The government can by a notification specify that an establishment or industry shall pay wages only through its bank account.

Which of the above statements are correct?

(a) 1 and 2 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

7. Which among the following steps is most likely to be taken at the time of an economic recession?

(a) Cut in tax rates accompanied by increase in interest rate

(b) Increase in expenditure on public projects

(c) Increase in tax rates accompanied by reduction of interest rate

(d) Reduction of expenditure on public project

8. Consider the following statements:

Other things remaining unchanged, market demand for a good might increase if

  1. Price of its substitute increase

  2. Price of its complement increase

  3. The good is an inferior good and income of the consumers increases

  4. Its price falls

Which of the above statements are correct?

(a) 1 and 4 only

(b) 2, 3 and 4 only

(c) 1, 3 and 4 only

(d) 1, 2 and 3 only

9. With reference to ‘Urban Cooperative Banks’ in India, consider the following statements:

  1. They are supervised and regulated by local boards set up by the State Governments.

  2. They can issue equity shares and preference shares.

  3. They were brought under the purview of the Banking Regulation Act, 1949 through an Amendment in 1966.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

10. Indian Government Bond Yields are influenced by which of the following?

  1. Actions of the United States Federal Reserve

  2. Actions of the Reserve Bank of India

  3. Inflation and short-term interest rates

Select the correct answer using the code given below.

(a) 1 and 2 only

(b) 2 only

(c) 3 only

(d) 1, 2 and 3

11. Consider the following:

  1. Foreign currency convertible bonds

  2. Foreign institutional investment with certain conditions

  3. Global depository receipts

  4. Non-resident external deposits

Which of the above can be included in Foreign Direct Investments?

(a) 1, 2 and 3 only

(b) 3 only

(c) 2 and 4 only

(d) 1 and 4 only

12. Consider the following statements:

The effect of devaluation of a currency is that it necessarily

  1. Improves the competitiveness of the domestic exports in the foreign markets

  2. Increases the foreign value of domestic currency

  3. Improves the trade balance

Which of the above statements is/are correct?

(a) 1 only

(b) 1 and 2 only

(c) 3 only

(d) 2 and 3 only

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