UPSC Essentials | Daily subject-wise quiz : Economy MCQs on Balance of Payments, least developed countries and more (Week 138)

2. Reserve Bank of India compiles and releases the official BoP statistics.

3. It is published once every year.

How many of the statements given above are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

Explanation

— The Balance of Payments (BoP) is a statistical statement that systematically records a nation’s economic transactions with the rest of the world over a specific period, including merchandise, services, and capital transfers. Hence, statement 1 is correct.

— Reserve Bank of India (RBI) compiles and releases the official BoP statistics. Hence, statement 2 is correct.

— BoP data is currently released for every quarter, with the current account balance (CAB) being the most keenly-watched figure. The CAB denotes the net of payments made and received by Indians for the trade of goods and services with the rest of the world and the flow of remittances, and other similar payments, in and out of the country. Hence, statement 3 is not correct.

Therefore, option (b) is the correct answer.

QUESTION 2

The Reserve Bank of India (RBI) supports the Indian Rupee through:

1. Selling/buying foreign currency

2. Managing foreign exchange reserves

3. Permitting investments in corporate bonds and commercial papers from balances in Special Rupee Vostro Accounts used for trade settlements

Select the correct answer using the codes given below:

(a) 1 and 2 only

(b) 1 only

(c) 2 and 3 only

(d) 1, 2 and 3

Explanation

— The rupee recovered to an intraday high of 89.08 on Monday and finished the session at 89.23, after plunging to the near-90 mark against the US dollar last week. On Tuesday, the rupee maintained the momentum, closing at 89.22 against the dollar, as the Reserve Bank of India stepped in to defend the domestic currency.

— The Reserve Bank of India (RBI) supports the Indian rupee through a variety of measures, including direct market intervention (selling/buying foreign currency), managing foreign exchange reserves, and implementing policies aimed at internationalising the rupee.

— Recent policy reforms (October 2025) aim to promote larger foreign use of the rupee. These include allowing authorised banks to provide rupee loans to non-residents in certain neighbouring countries for trade purposes, allowing investments in corporate bonds and commercial papers from balances in Special Rupee Vostro Accounts used for trade settlements, and developing transparent reference rates for major trading partners’ currencies to facilitate direct quoting.

Therefore, option (d) is the correct answer.

QUESTION 3

With reference to the least developed countries (LDCs), consider the following statements:

1. They are low-income countries confronting severe structural impediments to sustainable development.

2. The list of LDCs is reviewed every five years by the Committee for Development Policy (CDP).

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

— Least developed countries (LDCs) are low-income countries that face significant structural barriers to sustainable development. Hence, statement 1 is correct.

— They are extremely sensitive to economic and environmental shocks, with low levels of human capital. The Committee for Development Policy (CDP) reviews the list of LDCs every three years and currently includes 44 nations. Hence, statement 2 is not correct.

— LDCs have unique access to certain international support measures, particularly those related to development assistance and trade.

Therefore, option (a) is the correct answer.

(Source: policy.desa.un.org)

QUESTION 4

With reference to the deposit insurance, consider the following statements:

1. The insurance cover of Rs 5 lakh per depositor is for all accounts held by the depositor in all branches of the insured bank.

2. The DICGC insures commercial banks and primary cooperative societies.

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 DICGC aims to safeguard “small depositors” from the risk of losing their savings in the event of a bank failure.

— The insurance cover of Rs 5 lakh per depositor applies to all accounts held by the depositor at all branches of the insured bank. Hence, statement 1 is correct.

— The DICGC insures all commercial banks, including foreign bank branches in India, local area banks, regional rural banks, and cooperative banks. However, the DICGC does not cover primary cooperative societies. Hence, statement 2 is not correct.

— Savings, fixed, current, and recurring deposits are all protected. The DICGC does not insure deposits made by foreign, central, or state governments, as well as interbank deposits.

Therefore, option (a) is the correct answer.

QUESTION 5

With reference to the Goods and Services Tax (GST), consider the following statements:

1. It was introduced in 2017.

2. It subsumed several state and central-level indirect taxes, such as octroi, luxury tax, value added tax, entry tax, etc., into a single unified structure.

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 Goods and Services Tax Council, in its 56th meeting, cleared some reforms to the GST regime. The two main changes are that the four slabs — 5%, 12%, 18% and 28% — have been brought down to two, 5% and 18%, and a new 40% slab has been introduced.

— The Goods and Services tax was introduced in 2017. Hence, statement 1 is correct.

— It subsumed several state and central-level indirect taxes, such as octroi, luxury tax, value added tax, entry tax, etc., into a single unified structure, where one tax was charged at the destination level. Hence, statement 2 is correct.

Therefore, option (c) is the correct answer.

Previous Daily Subject-Wise-Quiz

Daily Subject-wise quiz — History, Culture, and Social Issues (Week 133)

Daily subject-wise quiz — Polity and Governance (Week 138)

Daily subject-wise quiz —  Science and Technology (Week 138)

Daily subject-wise quiz — Economy (Week 137)

Daily subject-wise quiz — Environment and Geography (Week 137)

Daily subject-wise quiz – International Relations (Week 137)

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