UPSC Prelim English Quiz
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Day 58 - 14 Jan - UPSC Prelim English Quiz Solution

Based on UPSC Syllabus and Current Affairs

Subject: Economics

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  • Q 1. Economic growth in India measured by GDP at

    • a) Constant market prices
    b) Current market price
    c) Factor cost at constant price
    d) Factor cost at market price
    Solution:   a Explaination   
  • Economic growth in India measured by GDP at Constant market prices


  • Q 2. Consider the following statements regarding Financial Stability and Development Council (FSDC)
      1. It came into existence on the recommendation of Raghuram Rajan committee 2008.
      2. The main functions of FSDC are making inter-regulatory coordination, financial inclusion and financial stability.
    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
    Solution:   c Explaination   
  • FSDC has replaced the High Level Coordination Committee on Financial Markets (HLCCFM), which was facilitating regulatory coordination, though informally, prior to the setting up of FSDC. The technical committee under HLCCFM for RBI regulated entities, though at a modest level, had set up a Financial Conglomerate Monitoring Mechanism since 2004. The secretariat of HLCCFM was in Ministry of Finance (Capital Market Division, Department of Economic Affairs)
  • The Chairman of the FSDC is the Finance Minister of India and its members include the heads of the financial sector regulatory authorities (i.e, SEBI, IRDA, RBI, PFRDA and FMC) , Finance Secretary and/or Secretary, Department of Economic Affairs (Ministry of Finance), Secretary, (Department of Financial Services, Ministry of Finance) and the Chief Economic Adviser. The commodities markets regulator, Forward Markets Commission (FMC) was added to the FSDC in December 2013 subsequent to shifting of administrative jurisdiction of commodities market regulation from Ministry of consumer Affairs to Ministry of Finance. The Joint Secretary (Capital Markets Division, Department of Economic Affairs, Ministry of Finance) was the Secretary of the Council till August 2013. Now this post is being held by the Additional Secretary in the Ministry of Finance.


  • Q 3. Which are the instruments of money market?
      1. Certificate of deposit
      2. Commercial Paper
      3. Commercial Bills
      4. Commercial Bills
    Which of the statements given above are correct?

    • a) 1 only
    b) 2 and 3 only
    c) 1, 2 and 3 only
    d) 1, 2, 3 and 4
    Solution:   d Explaination   
  • Money market refers to short term financial capital generally upto 1 year. COD has a maturity between 14 days to 1 year, commercial paper is used to meetshort term debt obligations and issued toa high net worth company. Commercial Bills are unsecured security which areused by one merchant firm to another against a credit transactions. Treasury bond have a maturity period of 14, 91, 182,364.


  • Q 4. Which of the following statements about RBI are correct?
      1. Established on the recommendation of Hilton young committee.
      2. Paid up capital was Rs. 50 crore.
    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
    Solution:   a   
  • RBI initial paid up capital was 5 crore not 50 crores.


  • Q 5. Consider the following statements regarding GDP
      1. It is value added by all the firms in the economy.
      2. It is final value of goods and services produced in the economy.
      3. It is the sum of the final consumption and investment expenditure.
      4. Net income received by all factors of production.
    Which of the statements given above are correct?

    • a) 1 and 2 only
    b) 1, 2 and 3 only
    c) 1, 2 and 4 only
    d) 1, 2, 3 and 4 only
    Solution:   a Explaination   
  • An economy produces two types of final goods i.e. consumption and capital goods. GDP is the sum of the final value of all goods and services.
  • Upto the 10th Lok Sabha, both the Speaker and the Deputy Speaker were usually from the ruling party. Since the 11th Lok Sabha, there has been a consensus that the Speaker comes from the ruling party (or ruling alliance) and the post of Deputy Speaker goes to the main opposition party. It is not mentioned in any statute. Hence, statement 2 is not correct.


  • Q 6. Fixed deposit in the bank incurs which type of liability to banks?

    • a) Time liability and demand liability
    b) Time liability
    c) Demand liability
    d) None of the above
    Solution:   b   
  • Saving a/c incurs demand and time liability, current account incurs demand liability. Recurring deposit also incurs time liability.


  • Q 7. What are true about RBI?

    • a) RBI can print unlimited currency.
    b) Currency is printed on the basis of proportional reserve system.
    c) Currency is printed on the basis of minimum reserve system which was adopted in 1956.
    d) RBI is a non–statutory body.
    Solution:   c   
  • Currency is printed on the basis of minimum reserve system which was adopted in 1956.


  • Q 8. FDI requires govt. approval from which agency?

    • a) SEBI
    b) Department of Industrial Policy and Promotion
    c) RBI
    d) Foreign Investment and Promotion Board
    Solution:   d   
  • Foreign Investment and Promotion Board(FIPB) under department of economic(Ministry of Finance) offers single window clearance for applications in FDI.