UPSC Essentials: Daily subject-wise quiz — Economy (Week 3)

QUESTION 1

Which of the following is not a function of the Reserve Bank of India (RBI)?

(a) It acts as regulator and supervisor of the financial system.

(b) It manages foreign exchange.

(c) It provides a loan facility to the business and ensures economic growth.

(d) It issues, exchanges, and destroys the currency notes.

QUESTION 2

This crop is sown during the early winters in Northern India. The longer the crop is in the field, the more starch and proteins the grains will accumulate, and the higher the yields. The optimum temperature range for ideal germination of its seed is 20-25 degree Celsius though the seeds can germinate in the temperature range 3.5 to 35 degree Celsius.

The above description refers to which of the following crops?

(a) Mustard

(b) Sunflower

(c) Paddy

(d) Wheat

QUESTION 3

Consider the following statements about Financial Stability Report, 2022:

1. Gross non-performing loans (GNPAs) of the banking system have declined.

2. The report witnessed improvement in the capital-to-risk-weighted asset ratio.

Select the correct answer using the codes given below:

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

QUESTION 4

Consider the following statements about Consumer Price Index (CPI):

1. The CPI-based inflation data is compiled by the Department for Promotion of Industry and Internal Trade and the Ministry of Commerce and Industry.

2. CPI is dominated by the prices of manufactured goods.

3. CPI takes into account the change in the prices of services.

Select the correct answer using the codes given below:

(a) 1 and 2 only

(b) 2 only

(c) 1 and 3 only

(d) 3 only

QUESTION 5

Consider the following statements about Unified Payment Interface (UPI):

1. It enables a user to send or receive money using a Virtual Payment Address (VPA) created by the customer.

2. It supports  Person-to-Person (P2P) payments only.

3. It has been linked with PayNow, a payment system in the UAE.

Select the correct answer using the codes given below:

(a) 1 and 3 only

(b) 1 and 2 only

(c) 1 only

(d) 1, 2 and 3

QUESTION 6

The T+1 settlement cycle was in the news recently. It is best defined as:

(a) It is a trade-related settlement that must be done within a day of the completion of a transaction.

(b) An agreement between a bank and an insurance company.

(c) It is a settlement for unsecured short-term borrowing in the interbank market.

(d) The settlement which drags down export demand and overall domestic demand.

QUESTION 7

With reference to Liquid Natural Gas, consider the following statements:

1. Natural gas is reduced to a liquid state through intense cooling to around -161 degrees Celsius.

2. The gas is 600 times smaller than the original volume and is half the weight of water.

3. The cost of producing LNG and liquefaction is very cheap.

Select the correct answer using the codes given below:

(a) 1 only

(b) 1 and 3 only

(c) 1, 2 and 3

(d) 1 and 2 only

QUESTION 8

Consider the following statements about Landlord Port:

1. The port authority acts as a regulatory body while the operations on the port are carried out by private companies.

2. Jawaharlal Nehru Port of Mumbai is the first 100 per cent landlord major port.

Select the correct answer using the codes given below:

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

ANSWERS TO MCQs

1. (c)

FYI:

— The Reserve Bank of India was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934.

Main Functions

— It formulates, implements and monitors the monetary policy for maintaining price stability while keeping in mind the objective of growth.

— It acts as regulator and supervisor of the financial system. It prescribes broad parameters of banking operations within which the country’s banking and financial system functions for maintaining public confidence in the system, protecting depositors’ interest and providing cost-effective banking services to the public.

— It manages the Foreign Exchange Management Act, 1999 to facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India.

— It issues, exchanges and destroys currency notes as well as puts into circulation coins minted by the Government of India to give the public adequate quantity of supplies of currency notes and coins and in good quality.

— It introduces and upgrades safe and efficient modes of payment systems in the country to meet the requirements of the public at large for maintaining public confidence in the payment and settlement system.

— It acts as Banker to the Government and performs merchant banking functions for the central and the state governments.

— It maintains the banking accounts of all scheduled banks.

Therefore, option (c) is the correct answer.

Source: http://www.rbi.org.in

2. (d)

FYI:

— Wheat is grown in a variety of soils of India. Soils with a clay loam or loam texture, good structure and moderate water holding capacity are ideal for wheat cultivation. 

— Wheat is sown in Punjab, Haryana and Rajasthan during the first half of November and in Uttar Pradesh by the end of November.

— The optimum temperature range for ideal germination of wheat seed is 20-25 C though the seeds can germinate in the temperature range 3.5 to 35 c.

— The longer the crop is in the field now, the more starch and proteins the grains will accumulate, and higher the yields.

— The crop is ready for harvest once the grains have ripened and moisture levels are reduced to 12-13% by rising temperatures.

Therefore, option (d) is the correct answer.

Other Source: farmer.gov.in

3. (c)

FYI:

— According to the Reserve Bank of India’s latest financial stability report, gross non-performing loans (GNPAs) of the banking system have declined from 7.4 per cent in March 2021 to a six-year low of 5.9 per cent in March 2022. Hence, statement 1 is correct.

— The report shows that banks have witnessed an improvement in their capital position, with the capital to risk weighted assets ratio rising to 16.7 per cent at the end of March 2022. Hence, statement 2 is correct.

— Bad loans have also declined even in sectors such as engineering goods, gems and jewellery, and construction.

— The report shows that the share of large borrowers in the banks’ loan portfolio has been declining, falling to less than 48 per cent of banks total advances, indicating a “reduction in concentration and diversification of borrowers”.

Therefore, option (c) is the correct answer.

4. (d)

FYI:

— The two most-often used inflation rates in the country are the wholesale price index (WPI) and the consumer price index (CPI) based on inflation rate.

— The CPI-based inflation data is compiled by the Ministry of Statistics and Programme Implementation while the WPI-based inflation data is put together by the Department for Promotion of Industry and Internal Trade and Ministry of Commerce and Industry. Hence, statement 1 is not correct.

— The WPI is dominated by the prices of manufactured goods while the CPI is dominated by the prices of food articles. Hence, statement 2 is not correct.

— The WPI does not take into account the change in prices of services, but CPI does. Hence, statement 3 is correct.

— If services such as transport, education, recreation and amusement gets costlier, then retail inflation will rise but there will be no impact on wholesale price inflation.

Therefore, option (d) is the correct answer.

5. (c)

FYI:

Unified Payments Interface (UPI)

— It is India’s mobile-based fast payment system, which enables a user to send or receive money using a Virtual Payment Address (VPA) created by the customer.

— It eliminates the risk of sharing bank account details by the remitter. UPI supports both Person-to-Person (P2P) and Person-to-Merchant (P2M) payments.

PayNow

— It is a fast payment system in Singapore which enables peer-to-peer funds transfer service, available to retail customers through participating banks and Non-Bank Financial Institutions (NFIs) in Singapore.

— It allows users to send and receive instant funds from one bank or e-wallet account to another in Singapore by using just their mobile number, Singapore National Registration Identity Card (NRIC)/Foreign Identification Number (FIN), or VPA.

UPI-PayNow

— The UPI-PayNow linkage is a significant milestone in the development of infrastructure for cross-border payments between India and Singapore.

— It closely aligns with the G20’s financial inclusion priorities of driving faster, cheaper and more transparent cross-border payments.

Therefore, option (c) is the correct answer.

6. (a)

FYI:

— The T+1 settlement cycle means that trade-related settlements must be done within a day, or 24 hours, of the completion of a transaction. For example, under T+1, if a customer bought shares on Wednesday, they would be credited to the customer’s demat account on Thursday.

Benefits of T+1

— The shorter trade settlement cycle that is set to be implemented augurs well for the Indian equity markets from a liquidity perspective.

— This will also help investors in reducing the overall capital requirements with the margins getting released on T+1 day, and in getting the funds in the bank account within 24 hours of the sale of shares.

— The shift will boost operational efficiency as the rolling of funds and stocks will be faster.

Therefore, option (a) is the correct answer.

7. (d)

FYI:

— LNG is natural gas reduced to a liquid state (liquefaction) through intense cooling to around -161 degrees Celsius (-259 Fahrenheit). Hence, statement 1 is correct.

— This liquid gas is 600 times smaller than the original volume and is half the weight of water. Hence, statement 2 is  correct.

— The compressed fossil fuel consisting of methane which is a potent greenhouse gas  that can be transported around the world by ship.

— The cooling, liquefying and transport processes, as well as the post-transport regasification procedures requires a lot of energy. 10-25% of the energy of the gas is being lost during the liquefaction process,

— Despite LNG’s export potential, the high cost of liquefaction and producing LNG has limited its market. Hence, statement 3 is not correct.

Therefore, option (d) is the correct answer.

8. (c)

FYI:

— The landlord port is characterised by its mixed public-private orientation. Under this model, the port authority acts as regulatory body and as landlord, while port operations (especially cargo handling) are carried out by private companies.

— Jawaharlal Nehru Port becomes the first 100% Landlord Major Port of India. The Jawaharlal Nehru port is one of the major ports owned by the Shipping Ministry.

— The central government-run Jawaharlal Nehru Port Authority (JNPA) signed a concession agreement with J M Baxi Ports and Logistics Ltd to upgrade, equip and operate and manage its Shallow Water Berth (SWB) and Coastal Berth (CB) terminals through public-private partnership (PPP).

— The SWB and CB terminals will be upgraded and managed by a special protection vehicle (SPV) named ‘Nhava Sheva Distribution Terminal Private Limited’ formed by J M Baxi group.

Therefore, option (c) is the correct answer.

Other Source: pib.gov.in

Previous Quizzes:

Polity and Governance (Week 1)

Polity and Governance (Week 2)

History, Culture, and Social Issues (Week 1)

History, Culture, and Social Issues (Week 2)

UPSC Weekly Quiz (Current Affairs)

UPSC Essentials: Daily subject-wise quiz — Economy (Week 2)

Environment, Geography, Science and Technology (Week 1)

International Relations (Week 1)

Tomorrow’s Quiz: International Relations

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