UPSC Essentials brings to you its initiative of subject-wise quizzes. These quizzes are designed to help you revise some of the most important topics from the static part of the syllabus. Attempt today’s subject quiz on the Economy to check your progress. 🚨Click Here to read the UPSC Essentials magazine for August 2025. Share your views and suggestions in the comment box or at manas.srivastava@indianexpress.com🚨 QUESTION 1 The bond yields typically fall when: 1. there is higher government borrowing 2. interest rates are reduced 3. bond prices increases Select the correct answer using the codes given below: (a) 1 and 2 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3 Explanation — In an unexpected turn of events, India's 10-year benchmark government bond yield has climbed by around 26 basis points in the last month, despite the Reserve Bank of India (RBI) lowering its key policy rate — the repo rate — by 100 basis points to 5.50 percent over the previous seven months. The yield was quoted at 6.60 percent on Monday, down from 6.62 percent the previous week, indicating investor concern and shifting market mood. — This rise in yields comes down to two key factors: the RBI’s hawkish stance on inflation and concerns over higher government borrowing due to proposed tax reforms. — Although bond yields typically fall when interest rates are reduced, the market’s reaction has been different this time. — When bond yields rise, it usually indicates falling bond prices, reflecting investor selling pressure. Therefore, option (b) is the correct answer. QUESTION 2 With reference to the Quality Control Orders (QCOs), consider the following statements: 1. These are government notifications that make it mandatory for manufacturers to secure BIS certification before selling or importing specified products. 2. They are administered by the Ministry of Finance. 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 Explanation — A high-level committee set up after Prime Minister Narendra Modi’s Independence Day call for next-generation reforms will this week take up industry concerns over certification requirements under Quality Control Orders (QCOs) administered by the Bureau of Indian Standards (BIS). Hence, statement 2 is not correct. — QCOs are government notifications that make it mandatory for manufacturers to secure BIS certification before selling or importing specified products. Hence, statement 1 is correct. — The committee, headed by former Cabinet Secretary and current NITI Aayog member Rajiv Gauba, will review the hurdles industries face in obtaining these approvals and examine bottlenecks in standards and processes that affect productivity and competitiveness. Therefore, option (a) is the correct answer. QUESTION 3 Which of the following statements is not correct about the Monetary Policy Committee (MPC)? (a) The MPC meets with a quorum of four members. (b) The MPC is required to meet at least four times per year. (c) The government has directed the MPC to keep consumer price index (CPI) inflation at 4 percent within a +/- 2 percent range. (d) The Prime Minister serves as Chairman ex officio. Explanation — Section 45ZB of the modified RBI Act of 1934 establishes an empowered six-member monetary policy committee (MPC) to be appointed by the Central Government via announcement in the Official Gazette. The first such MPC was established on September 29, 2016. — The government has directed the MPC to keep consumer price index (CPI) inflation at 4 percent within a +/- 2 percent range. — The Governor of the Reserve Bank of India serves as Chairman ex officio. — The MPC calculates the policy repo rate needed to meet the inflation objective. — The MPC is required to meet at least four times per year. — The MPC meets with a quorum of four members. — Each MPC member has one vote, and if there are equal votes, the Governor has a second or casting vote. Therefore, option (d) is the correct answer. (Other Source: www.rbi.org.in) QUESTION 4 With reference to the Production Linked Incentive (PLI) Scheme, consider the following statements: 1. It seeks to strengthen the manufacturing backbone and reduce reliance on imports. 2. Automobiles and Auto Components are not included in the PLI scheme. 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 Explanation — The PLI Scheme, which was launched in 2020, is more than just a policy; it is a strategic step towards self-sufficiency. — The PLI Scheme, which aligns with Atmanirbhar Bharat’s goal and the larger Make in India effort, aims to strengthen the manufacturing backbone, reduce dependency on imports, and balance growth with sustainability. Hence, statement 1 is correct. — The effort targets industries such as electronics, textiles, pharmaceuticals, and autos, and provides financial incentives that are directly related to measurable outcomes such as increased output and incremental sales. — Production Linked Incentive (PLI) Schemes are for 14 key sectors, including Mobile Manufacturing and Specified Electronic Components, Critical Key Starting Materials/Drug Intermediaries & Active Pharmaceutical Ingredients, Manufacturing of Medical Devices, Automobiles and Auto Components, Pharmaceuticals Drugs, Speciality Steel, Telecom & Networking Products, Electronic/Technology Products, White Goods (ACs and LEDs), Food Products, Textile Products: MMF segment, and technical textiles, High efficiency solar PV modules, Advanced Chemistry Cell (ACC) Battery, and Drones and Drone Components. Hence, statement 2 is not correct. Therefore, option (a) is the correct answer. (Other Source: pib.gov.in) QUESTION 5 Consider the following statements about Debt-to-GDP Ratio: 1. It is a metric that compares a country’s public debt to its gross domestic product. 2. India has set a target to decline in the debt-to-GDP ratio to 50±1 per cent by March 31, 2031. 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 Explanation — The debt-to-GDP ratio compares a country’s public debt to its GDP. It accurately assesses a country’s ability to repay its debts by comparing what it owes to what it produces. The debt-to-GDP ratio is commonly expressed as a percentage, but it may alternatively be understood as the number of years required to service debt assuming all GDP is allocated to debt payments. Hence, statement 1 is correct. — Sudan, primarily due to prolonged conflict and significant economic challenges, surpassed Japan, having the highest debt-to-GDP ratio in the world, at 252 per cent. — China is ranked 21st, with a 96% public debt ratio, which is lower than that of other wealthy countries. India’s debt-to-GDP ratio of 80 per cent ranks 31st internationally. The central government aims to reduce the ratio to 50±1 per cent by March 31, 2031. Hence, statement 2 is correct. Therefore, option (c) is the correct answer. (Other Source: www.investopedia.com) Previous Daily Subject-Wise-Quiz Daily Subject-wise quiz — History, Culture, and Social Issues (Week 124) Daily subject-wise quiz — Polity and Governance (Week 126) Daily subject-wise quiz — Science and Technology (Week 126) Daily subject-wise quiz — Economy (Week 125) Daily subject-wise quiz — Environment and Geography (Week 125) Daily subject-wise quiz – International Relations (Week 125) Subscribe to our UPSC newsletter and stay updated with the news cues from the past week. Stay updated with the latest UPSC articles by joining our Telegram channel – IndianExpress UPSC Hub, and follow us onInstagramand X.
