UPSC Essentials | Daily subject-wise quiz : Economy MCQs on RoDTEP, SDRs and more (Week 58)

1. It is a $1.2 billion contract signed in 2021 by the US government and Google.

2. The aim is to provide the US government with cloud computing and artificial intelligence services.

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

(a) Only 1

(b) Only 2

(c) Both 1 and 2

(d) Neither 1 nor 2

QUESTION 2

Consider the following currencies and answer the question below:

1. US dollar

2. Euro

3. Chinese Yuan

4. Japanese Yen

5. British Pound

The IMF lends money to the economies in peril in the form of Special Drawing Rights (SDRs), which is a basket of currencies. Which of the above currencies are included in this basket?

(a) 1, 2, 3 only

(b) 1, 2, 4, 5 only

(c) 1, 2, 4, 5 only

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

QUESTION 3

Consider the following statements with reference to Remission of Duties and Taxes on Exported Products (RoDTEP) scheme.

1. US and EU through this scheme lifted tax for India on certain items like paper file folders, common alloy aluminum sheet and forged steel fluid.

2.It replaced the WTO-incompatible MEIS scheme, which had faced several challenges from WTO members.

Which of the above statement/s is/are true?

(a) Only 1

(b) Only 2

(c) Both 1 and 2

(d) Neither 1 nor 2

QUESTION 4

Consider the following statements:

1. The Volatility Index is a measure of the market’s expectation of volatility over the near term.

2. India VIX is a volatility index computed by the BSE based on the order book of NIFTY Options. 

3. The higher the India VIX values, the higher the expected volatility and vice versa.

How many of the statements give above is/are correct?

(a) Only one

(b) Only two

(c) All three

(d) None 

QUESTION 5

Consider the following statements:

1. Reverse repo rate refers to the rate at which the RBI lends to commercial banks.

2. The interest rate that the RBI pays commercial banks when they park their excess cash with the central bank is called the repo rate.

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

ANSWERS TO THE MCQs

1 (d)

FYI:

Google fired at least 20 more workers in the aftermath of protests over technology the company is supplying the Israeli government amid the Gaza war, bringing the total number of terminated staff to more than 50, a group representing the workers said.

It’s the latest sign of internal turmoil at the tech giant centered on “Project Nimbus,” a $1.2 billion contract signed in 2021 for Google and Amazon to provide the Israeli government with cloud computing and artificial intelligence services. Hence, both statements are not true.

Therefore, (d) is the correct answer.

2 (d)

FYI:

The IMF lends money to the economies in peril in the form of Special Drawing Rights (SDRs), which is a basket of five currencies — US dollar, Euro, Chinese Yuan, Japanese Yen and British Pound. It can be executed in the form of loans, cash, bonds, or stock purchases.

Therefore, (d) is the correct answer.

3 (b)

FYI:

The union government does not intend to relook at its Remission of Duties and Taxes on Exported Products (RoDTEP) scheme after the United States (US) and the European Union (EU) last year imposed countervailing duties on four Indian products citing breach of World Trade Organization (WTO) norms, a government official said.

The US and EU had imposed countervailing duties (CVDs) on paper file folders, common alloy aluminum sheet and forged steel fluid after an anti-subsidy investigation. CVDs are tariffs on imported goods that are imposed to offset subsidies given by the exporting country’s government, aimed at protecting the domestic industry.

The RoDTEP scheme, announced in January 2021, refunds embedded duties and taxes, such as VAT on fuel used in transportation, mandi tax and duty on electricity. It replaced the WTO-incompatible Merchandise Exports from India Scheme (MEIS) scheme, which had faced several challenges from WTO members.

Therefore, (b) is the correct answer.

4 (b)

FYI: 

— The Volatility Index, VIX or the Fear Index, is a measure of the market’s expectation of volatility over the near term. Hence, statement 1 is correct. 

— The Volatility Index is a measure of the amount by which an underlying index is expected to fluctuate in the near term, (calculated as annualised volatility, denoted in percentage e.g. 20 per cent) based on the order book of the underlying index options.

— India VIX is a volatility index computed by the NSE based on the order book of NIFTY Options. For this, the best bid-ask quotes of near and next-month NIFTY options contracts, which are traded on the F&O segment of NSE are used.  Hence, statement 2 is not correct. 

— India VIX indicates the investor’s perception of the market’s volatility in the near term i.e. it depicts the expected market volatility over the next 30 calendar days. The higher the India VIX values, the higher the expected volatility and vice versa, as per NSE. Hence, statement 3 is correct. 

Therefore, (b) is the correct answer.

5 (c)

FYI:

— Repo rate refers to the rate at which the RBI lends to commercial banks. When interest rates are raised, it makes money more expensive, thereby resulting in reduction of demand in the economy and bringing down inflation. Hence, statement 1 is not correct.

—  The interest rate that the RBI pays commercial banks when they park their excess cash with the central bank is called the reverse repo rate. Hence, statement 2 is not correct.

Therefore, (c) is the correct answer.

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