UPSC Essentials | Daily subject-wise quiz : Economy MCQs on stablecoins, geothermal energy and more (Week 128)

QUESTION 1

With reference to the stablecoins, consider the following statements:

1. They are a form of cryptocurrency designed to maintain a stable value in relation to a certain asset.

2. They are generally used for transactional purposes.

3. They enable cheap and fast transactions without the need for intermediaries in traditional payment mechanisms.

How many of the statements given above are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

Explanation

— Crypto groups in the UK have rallied against the Bank of England’s proposal to restrict stablecoin ownership in the country, saying it would put the nation at a disadvantage and be costly and unwieldy to implement.

— Stablecoins are a form of cryptocurrency designed to maintain a stable value in relation to a certain asset. Unlike Bitcoin and other such cryptocurrencies that experience price volatility, stablecoins are typically pegged to a traditional currency such as the US dollar. Hence, statement 1 is correct.

— Stablecoins are not generally used for transactional purposes, but instead by crypto investors to park their profits without converting them back into real money. Hence, statement 2 is not correct.

— They enable cheap and fast transactions without the need for intermediaries in traditional payment mechanisms. Their ownership is simultaneously registered in digital ledgers, eliminating the costs and lengthy processing times involved with traditional cross-border transitions. Hence, statement 3 is correct.

— There are primarily four types of stablecoins, of which three are pegged to a different asset, such as fiat currency, meaning the government-issued currency authorised as legal tender; commodities such as gold, silver or oil; or even cryptocurrencies.

— There are primarily four types of stablecoins, of which three are pegged to a different asset, such as fiat currency, meaning the government-issued currency authorised as legal tender; commodities such as gold, silver or oil; or even cryptocurrencies.

Therefore, option (b) is the correct answer.

QUESTION 2

Which of the following is/are the reasons for the low import of corn from the United States?

1. India allows up to 0.5 mt of corn imports annually at 15%, with quantities beyond that attracting 50% duty.

2. India does not permit any import of corn that is genetically modified (GMO).

3. High transportation costs

Select the correct answer using the codes given below:

(a) 1 only

(b) 1 and 2 only

(c) 2 and 3 only

(d) 1, 2 and 3

Explanation

— Out of India’s total corn (maize) imports of 0.97 million tonnes (mt) in 2024-25, a major chunk came from Myanmar (0.53 mt) and Ukraine (0.39 mt). Some quantity was also imported from the US, but it was minuscule at 1,100 tonnes.

— There are two reasons why India’s corn imports aren’t much. The first has to do with tariffs. India allows up to 0.5 mt of corn imports annually at 15%, with quantities beyond that attracting 50% duty. Secondly, it does not permit any import of corn that is genetically modified (GMO). Hence, statements 1 and 2 are correct and statement 3 is not correct.

— For the US, India is a huge potential market for corn, given its rising consumption of animal products – milk, eggs, fish and meat – with an increase in population and per capita GDP that would, in turn, drive demand for feed and ingredients such as maize and soyabean meal.

Therefore, option (b) is the correct answer.

QUESTION 3

With reference to the Bima Sugam, consider the following statements:

1. It is a unified digital marketplace for insurance.

2. It has been initiated by Irdai.

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

— After months of anticipation, Bima Sugam, envisioned as the world’s largest online marketplace for insurance products and services, has officially gone live. The launch was announced by the Bima Sugam India Federation (BSIF) with the unveiling of its official website.

— Bima Sugam is a unified digital marketplace for insurance, designed to bring insurers, intermediaries, and customers onto a single platform. Hence, statement 1 is correct.

— The BSIF clarified that the rollout of the platform’s features will follow a phased approach. Initially, the website will serve as an information and guidance hub, while full-fledged transactions will be enabled over the coming months as insurers and ecosystem partners complete necessary integrations. This approach will also give the insurance ecosystem adequate time to adapt to the new system.

— Bima Sugam, initiated by Irdai, is being hailed as a groundbreaking initiative in the global insurance industry. While many countries have digital channels for insurance, the creation of a single, unified marketplace of this scale is unprecedented. The idea is simple but ambitious: all insurance needs — life, health, and general insurance, including motor, travel, property, and agricultural policies — can be accessed on one platform. Hence, statement 2 is correct.

Therefore, option (c) is the correct answer.

QUESTION 4

Low and stable inflation is widely considered crucial to:

(a) sustaining high economic growth

(b) reducing foreign exchange reserves

(c) discouraging domestic and foreign investment

(d) increasing volatility in financial markets

Explanation

— With the September 18 deadline for submitting views on the Reserve Bank of India’s (RBI) discussion paper on its monetary policy framework fast approaching, former members of the Monetary Policy Committee (MPC) are largely in favour of retaining the targets as per the existing Flexible Inflation Target (FIT) regime and want to continue to focus on keeping headline Consumer Price Index (CPI) inflation at 4 per cent in the medium term.

— Low and stable inflation is widely considered crucial to sustaining high economic growth. If prices rise rapidly, consumers’ ability to buy goods and services is eroded; on the other hand, very muted price increases reduce the incentive for producers to keep supplying their goods and services as profits don’t rise enough to compensate them for their effort.

Therefore, option (a) is the correct answer.

QUESTION 5

Consider the following statements about Geothermal energy:

1. It taps the earth’s heat from hot water springs on the surface or reservoirs deep underground, using steam to spin turbines and generate electricity.

2. The IEA estimates India’s geothermal market potential to grow to 4.2 GW by 2035.

3. It has low upfront costs and exploration risks.

How many of the statements given above are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

Explanation

— India’s new national policy on geothermal energy seeks to build on interest from research firms in the United States, Iceland, and Norway to test its commercial viability in the country, Ministry of New and Renewable Energy (MNRE) Secretary Santosh Kumar Sarangi said.

— Geothermal energy taps the earth’s heat from hot water springs on the surface or reservoirs deep underground, using steam to spin turbines and generate electricity. It is a renewable source and can also be harnessed from hot rocks for heating and cooling, greenhouses, and aquaculture. Hence, statement 1 is correct.

— India has an estimated 10.6 gigawatts (GW) of geothermal potential, which could rise with further exploration. Key sites lie in the Himalayan Geothermal Province — covering Uttarakhand, Himachal Pradesh, Ladakh, Jammu and Kashmir, and Arunachal Pradesh — as well as the Cambay Graben in Gujarat, home to several abandoned oil wells, and the Andaman and Nicobar Islands.

— The IEA estimates India’s geothermal market potential to grow to 4.2 GW by 2035 and nearly 100 GW by 2045. Hence, statement 2 is correct.

— Geothermal energy faces high upfront costs and exploration risks — it takes about Rs 36 crore to develop one megawatt (MW) of capacity. The National Policy on Geothermal Energy aims to financially support R&D and pilot projects, along with streamlining efforts across stakeholders, including the Ministry of Petroleum and Natural Gas and state governments. A viability gap funding (VGF) scheme is also being explored. Hence, statement 3 is not correct.

Therefore, option (b) is the correct answer.

Previous Daily Subject-Wise-Quiz

Daily Subject-wise quiz — History, Culture, and Social Issues (Week 124)

Daily subject-wise quiz — Polity and Governance (Week 128)

Daily subject-wise quiz —  Science and Technology (Week 128)

Daily subject-wise quiz — Economy (Week 127)

Daily subject-wise quiz — Environment and Geography (Week 127)

Daily subject-wise quiz – International Relations (Week 127)

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