MCQ for test-6-29-october-2023

Which among the following factors can have a positive impact on India’s Balance of Trade?

1. Depreciation of rupee value against US Dollar

2. Imposing Minimum Import Price on raw materials

3. Adopting contractionary monetary policy by the RBI

4. Increase in external borrowing by the Government

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What could be the effects on the Indian economy if the value of the Chinese Yuan slips against the US dollar?

1. The rate of the Indian rupee will appreciate with respect to the US dollar.

2. Tourists’ inflows and outflows from India, will increase drastically.

3. Indian exports will become competitive in the global markets.

Which of the statements given above is/are correct?

Consider the following statements with reference to forex reserves:

1. It may include foreign currencies, bonds, treasury bills, and other government securities.

2. Foreign currency assets constitute the largest component of India's Forex Reserves.

3. Currently India holds the largest forex reserves in the world.

Which of the statements given above are correct?

Consider the following statements with reference to Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI):

1. An increase in net FPI outflows improves the Balance of Payments (BoP) position of an economy.

2. If the investment holding in an FDI comes below 10%, then the holdings are reclassified as FPI.

3. Unlike FDI, FPI investors have no control over ventures or direct ownership of property or a stake in a company.

Which of the statements given above is/are correct?

Non-Resident Indians are permitted to invest in which of the following sectors?

1. Small Savings Schemes

2. Real Estate

3. Government securities

4. Mutual funds

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Consider the following statements with reference to the external debt of India:

1. The external debt to GDP ratio has steadily decreased since the enactment of the Fiscal Responsibility and Budget Management Act, 2003.

2. Non-Resident Deposits are a part of India’s external debt.

3. Currently, the private sector external debt in India is higher than the Government debt.

Which of the statements given above is/are correct?

Consider the following statements with reference to Forward Exchange Rate:

1. It is the rate of exchange for a future dated foreign exchange market transaction.

2. Its adoption helps in avoiding the exchange rate risks of foreign currencies.

3. Forward premium occurs when the forward exchange rate is quoted lower than the spot exchange rate.

Which of the statements given above are correct?

Consider the following statements with reference to the Line of Credit (LOC) extended by the Government of India:

1. It is a one-time development grant provided to developing countries by the Indian Government.

2. Under it, goods and services for at least 75% of the value of the contract must be sourced from India.

3. The full amount extended through LOCs should exclusively be on a Government-to-Government basis.

4. Bangladesh has been the recipient of the largest concessional credit given by India to any single country.

Which of the statements given above are correct?

Consider the following statements with reference to Performance Budgeting:

1. Funding is based on program efficiency and necessity rather than budget history.

2. It was first introduced in 2015 in the Central Ministries in India.

Which of the statements given above is/are correct?

Which of the following receipts are classified under the category of non-debt capital receipts of the Union Government?

1. Proceedings from strategic disinvestment

2. Issuance of Special Securities to Public Sector Banks

3. Issue of bonus shares to investors of government companies

4. Grants-in-aid from international financing institutions

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Which of the following best explains the term ‘deferred tax’?

Consider the following statements with reference to Current Account Deficit (CAD):

1. Depreciation in the value of Indian rupee against US Dollar has a positive impact on India’s CAD.

2. Liberalising External Commercial Borrowing norms for corporates can directly lead to reduction in India’s CAD.

3. Insurances paid on Indian exports are included under invisibles while calculating CAD.

4. The Fiscal Responsibility and Budget Management Act, 2003 provides a statutory framework for reducing CAD in India.

Which of the statements given above are correct?

Which of the following situations can make India’s exports more competitive?

1. Devaluation of rupee

2. Increase in the rate of inflation in India

3. Increase in productivity of India's workforce

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Which of the following could be the implications on the Indian economy, if the Organization of the Petroleum Exporting Countries (OPEC) decides to increase their crude oil production?

1. Demand-pull Inflation will occur.

2. Increase in India’s Current Account Deficit.

3. Appreciation of Indian Rupee against US dollar.

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Consider the following statements with reference to Liberalised Remittance Scheme (LRS):

1. All resident individuals, including minors, are allowed to freely remit up to USD 2,50,000 per financial year.

2. The remitted amount can be used to buy immovable properties in an overseas market.

3. The scheme is not available to corporates and partnership firms.

Which of the statements given above is/are correct?

Consider the following statement:

1. Inferior goods due to their quality become more desirable as the standard of living of consumers increases.

2. Veblen goods are high-quality goods whose demand increases with an increase in price.

3. Demand for Giffen goods increases even when their prices rise, regardless of a consumer's standard of living.

4. Demand for Normal goods will rise with the increase in the standard of living of consumers.

Which of the statements given above are not correct?

Fiscal consolidation is one of the objectives of India’s economic policy. Which among the following would help in fiscal consolidation?

1. Increasing taxes

2. Getting more loans

3. Reducing subsidies

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Which one of the following best describes the term ‘Effective Capital Expenditure’?

Consider the following statements with reference to Fiscal Responsibility and Budget Management (FRBM) Act, 2003:

1. It mandates the Government to bring down the Current Account Deficit to zero within a certain period.

2. It permits exceeding the fiscal deficit targets only in the case of a Financial Emergency imposed under the Indian Constitution.

3. Borrowings by the Public Sector Undertakings (PSUs) are exempted from the purview of this Act.

Which of the statements given above is/are correct?

Which of the following are likely consequences if the Indian Rupee has full Capital Account Convertibility?

1. Increase in financial market liquidity

2. Access to Foreign Capital becomes easy

3. Volatility in the exchange rate

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Which of the following can be the most likely causes for the decline in the Forex Reserve of India?

1. Rise in crude oil prices

2. Dollar sell-off by Reserve Bank of India (RBI)

3. Outflow of Foreign Portfolio Investment (FPI)

4. Quantitative Easing by USA Federal Reserve

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Consider the following statements with reference to Government’s dividend receipts from the Central Public Sector Enterprise (CPSE):

1. Dividends and profits received from the CPSE form a part of capital receipts of the Government.

2. There is no minimum ceiling of dividends that a CPSE is mandated to pay the Government.

3. Indian Railways is not required to pay dividends to the Central Government.

Which of the statements given above is/are correct?

If the US Central Bank raises the interest rate, which of the following is the likely impact on the Indian economy?

Which one of the following statements best describes the term ‘Fiscal Drag’?

Which one of the following statements is correct in the context of ‘off-budget borrowing’ by the Government of India?