UPSC Essentials | Daily subject-wise quiz | Economy (Week 34)

1. Low government borrowing

2. Low interest rate

3. Higher crude oil price

How many of the above lead to high bond yield?

(a) Only one

(b) Only two

(c) All three

(d) None

QUESTION 2

With reference to the Mineral Security Partnership (MSP), consider the following statements:

1. It is a US-led collaboration of 14 countries that aims to catalyse public and private investment in critical mineral supply chains globally.

2. It was launched to accelerate the development of diverse and sustainable critical energy minerals supply chains globally.

3. India is not a part of the Mineral Security Partnership.

How many of the statements given above are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

QUESTION 3

With reference to the Periodic Labour Force Survey (PLFS) 2022-2023, consider the following statements:

1. The Unemployment Rate for 2022-23 has increased as compared to 2021-22.

2. Labour Force Participation Rate for females above 15 years of age has increased from 2021-22 to 2022-23.

3. Worker population ratio has decreased in 2022-23 as compared to 2021-22.

How many of the statements given above are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

QUESTION 4

The pink bollworm (Pectinophora gossypiella) is a monophagous pest that feeds mainly on which crop?

(a) Mustard

(b) Paddy

(c) Wheat

(d) Cotton

QUESTION 5

With reference to the trade settlement, consider the following statements:

1. A trade settlement is said to be complete once purchased securities of a listed company are delivered to the buyer and the seller gets the money.

2. The cycle of T+1 means trade-related settlements happen within 24 hours of the actual transactions.

How many of the statements given above are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

ANSWERS TO THE MCQs

1. (a)

FYI:

— Reaching its highest point since July 2007, the yield on US 10-year government bonds—the global benchmark for asset prices—rose to 5.02 per cent.

— In India, the yield on 10-year government bonds is already at a high of 7.38 per cent, a rise on 24 basis points in the last one month.

— There are various factors like rising crude oil prices, inflation risks and interest rate signals from the US Federal Reserve have contributed to the hardening of bond yields. If inflation is likely to rise, investors will demand higher yields on their bond investments. Hence, 3 is correct.

— Higher government borrowing is also a reason for the rise in bond yields. Hence, 1 is not correct.

— The rise indicates that the cost of funds in the financial system is rising and interest rates are on the upswing. Hence, 2 is not correct.

— The rising bond yield means the government will have to pay more as yield (or return to the investors), leading to a rise in cost of borrowings.

— This will have an overall impact on the financial system, putting upwards pressure on the general interest rates in the banking system.

Therefore, option (a) is the correct answer.

2. (b)

FYI:

— India has been inducted into the Mineral Security Partnership (MSP). Hence, statement 3 is not correct.

— It is a US-led collaboration of 14 countries that aims to catalyse public and private investment in critical mineral supply chains globally. Hence, statement 1 is correct.

— The US enthusiastically welcomes India as the newest partner in the MSP, to accelerate the development of diverse and sustainable critical energy minerals supply chains globally while agreeing to the principles of the MSP including environmental, social, and governance standards. Hence, statement 2 is correct.

— The inclusion of India becomes important in light of the fact that a major component of New Delhi’s growth plan is driven by an ambitious shift in the mobility sector that involves the conversion of a sizable portion of both public and private transportation to electric cars.

— The focus is on supply chains for minerals including cobalt, nickel, lithium, and the 17 “rare earth” minerals. While cobalt, nickel, and lithium are necessary for electric car batteries, rare earth minerals are essential in tiny amounts for producing semiconductors and high-end electronics.

— Rare earth comprises 17 elements and are classified as light RE elements (LREE) and heavy RE elements (HREE). Some REs are available in India such as lanthanum, cerium, neodymium, praseodymium and samarium.

Therefore, option (b) is the correct answer.

3. (a)

FYI:

— The Ministry of Statistics and Programme Implementation released the results of the Periodic Labour Force Survey for the period July 2022 to June 2023. It is the sixth PLFS report and each tracks a 12 month period between July and June.

— The annual PLFS — as well as its predecessor, the quinquennial Employment-Unemployment Surveys — are conducted by the National Sample Survey Office in order to get an understanding about the state of employment in India.

Latest findings

Unemployment Rate (UER)

— The UER has fallen significantly — from 6.6% to 5.1% over the last year (that is, July to June cycle).

Labour Force Participation Rate (LFPR)

— The LFPR is a measure of the total population demanding work, and it is presented as a proportion of the total population that is above 15 years of age.

LFPR for women

— The female LFPR has gone up over the years but there were two discrete step-ups — one in 2019-20 (when India’s GDP growth rate had slowed down to less than 4% and this was before the Covid pandemic hit) and second in 2022-23 when it rose to 31.6%.

(Note: Employment is defined as per Current Weekly Status (CWS). Source: PLFS various rounds, State of Working India 2023, Indian Express Research)

Worker Population Rate (WPR)

— The WPR is the percentage of persons employed among the persons in the population.

— The WPR for women has been going up but two main spikes have been in 2019-20 and 2022-23.

Therefore, option (a) is the correct answer.

4. (d)

FYI:

— Cotton (Gossypium hirsutum L.) is the most important commercial crop known as the “King of natural fibre” and is also known as “White Gold” around the world.

— India is the only country that grows all four cultivated cotton species as well as their intra- and inter-specific hybrids.

— Pink Bollworm (Pectinophora gossypiella) is a monophagous pest that feeds mainly on cotton.

Therefore, option (d) is the correct answer.

5. (c)

FYI:

— Settlement is a two-way process involving transferring funds and securities on the settlement date.

— A trade settlement is said to be complete once purchased securities of a listed company are delivered to the buyer and the seller gets the money. Hence, statement 1 is correct.

— The current cycle of T+1 means trade-related settlements happen within a day, or 24 hours of the actual transactions. Hence, statement 2 is correct.

— India became the second country in the world to start the T+1 settlement cycle in top-listed securities after China, bringing in operational efficiency, faster fund remittances, share delivery, and ease for stock market participants.

— The technology for implementation of one-hour trade settlement exists but for instantaneous trade settlement, the system needs some additional technology development, which may take more time.

— If an investor sells assets within the current T+1 settlement cycle, the proceeds are deposited to the investor’s account the next day. If an investor sells a share in one-hour settlement, the money is deposited to their account within an hour, and the buyer receives the shares in their demat account within an hour.

Therefore, option (c) is the correct answer.

Previous Daily Subject-Wise-Quiz

Daily subject-wise quiz — Polity and Governance (Week 34)

Daily Subject-wise quiz — History, Culture, and Social Issues (Week 34)

Daily subject-wise quiz — Environment, Geography, Science and Technology (Week 34)

Daily subject-wise quiz — Economy (Week 33)

Daily subject-wise quiz – International Relations (Week 33)

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