MPPSC 2016 — Economy Questions with Answers
All 28 Economy previous-year questions from MPPSC 2016, each with the correct answer and a full explanation. Practise them as a free, timed mock test with instant scoring.
Practice Economy as a timed test →- Q1.Indices and Reports
Which of the following is/are the indicator/indicators used by IFPRI to compute the Global Hunger Index Report?
- a)1 only
- b)2 and 3 only
- c)1, 2 and 3
- d)1 and 3 only
Explanation: The Global Hunger Index by IFPRI uses undernourishment, child wasting/stunting, and child mortality among its indicators. All three listed are used, so the answer is 1, 2 and 3.
- Q2.Fiscal Policy
There has been a persistent deficit budget year after year. Which action/actions of the following can be taken by the Government to reduce the deficit?
- a)1 only
- b)2 and 3 only
- c)1 and 3 only
- d)1, 2, 3 and 4
Explanation: Reducing revenue expenditure (1) and rationalizing subsidies (3) cut spending and reduce the deficit. New welfare schemes (2) raise spending and reducing import duty (4) lowers revenue, both worsening the deficit. Hence only 1 and 3.
- Q3.Banking
The establishment of 'Payment Banks' is being allowed in India to promote financial inclusion. Which of the following statements is/are correct in this context?
- a)1 and 2 only
- b)1 and 3 only
- c)2 only
- d)1, 2 and 3
Explanation: Mobile telecom firms and supermarket chains can promote Payment Banks (1 correct). Payment Banks may issue debit cards but NOT credit cards (2 wrong). They cannot do lending (3 correct). Hence 1 and 3 only.
- Q4.Government Schemes
Which one of the following is a purpose of 'UDAY', a scheme of the Government?
- a)1 and 2 only
- b)2 and 4 only
- c)3 and 4 only
- d)4 only
Explanation: UDAY (Ujwal DISCOM Assurance Yojana) aims at the financial turnaround and revival of debt-laden power distribution companies (DISCOMs). Hence option (d).
- Q5.Money and Banking
With reference to 'IFC Masala Bonds', sometimes seen in the news, which of the following statements is/are correct?
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Explanation: IFC is indeed an arm of the World Bank Group (1 correct). Masala bonds are rupee-denominated bonds issued outside India, but statement 2 as framed (financing for the public and private sector) was treated as incorrect in the official key. Hence only 1 is correct.
- Q6.International Trade
In the context of which of the following do you sometimes find the terms 'amber box, blue box and green box' in the news?
- a)WTO affairs
- b)SAARC affairs
- c)UNFCCC affairs
- d)India-EU negotiations
Explanation: Amber, blue and green boxes are categories of agricultural subsidies under the WTO Agreement on Agriculture. Hence WTO affairs, option (a).
- Q7.Budget
Which of the following is/are included in the capital budget of the Government of India?
- a)1 only
- b)2 and 3 only
- c)1 and 3 only
- d)1, 2 and 3
Explanation: Capital expenditure on assets, loans received from foreign governments (capital receipts), and loans/advances to States/UTs all form part of the capital budget. All three are included.
- Q8.International Institutions
Recently, which one of the following currencies has been proposed to be added to the basket of IMF's SDR?
- a)Ruble
- b)Rand
- c)Indian Rupee
- d)Renminbi
Explanation: The Chinese Renminbi (Yuan) was added to the IMF's SDR basket in 2016. Hence option (d).
- Q9.International Institutions
With reference to the International Monetary and Financial Committee (IMFC), consider the following statements:
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Explanation: The IMFC advises the IMF on the global economy and its work programme, and the World Bank attends IMFC meetings as an observer. Both statements are correct.
- Q10.External Sector
Which of the following best describes the term 'import cover', sometimes seen in the news?
- a)It is the ratio of the value of imports of a country to its Gross Domestic Product.
- b)It is the total value of imports of a country in a year.
- c)It is the ratio of the value of exports and imports between countries.
- d)It is the number of months of imports that could be paid for by a country's international reserves.
Explanation: Import cover measures how many months of imports a country's foreign exchange reserves can finance. Hence option (d).
- Q11.Government Schemes
With reference to 'Pradhan Mantri Fasal Bima Yojana', consider the following statements:
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Explanation: PMFBY premiums are not uniform 2% for all crops/seasons (Kharif 2%, Rabi 1.5%, commercial/horticultural 5%), so 1 is wrong. It does cover post-harvest losses from cyclones and unseasonal rains (2 correct). Hence only 2.
- Q12.Agriculture
Why does the Government of India promote the use of 'Neem-coated Urea' in agriculture?
- a)Neem oil released in the soil increases nitrogen fixation by soil microorganisms.
- b)Neem coating slows down the rate of dissolution of urea in the soil.
- c)Nitrous oxide, which is a greenhouse gas, is not at all released into the atmosphere from crop fields.
- d)It is a combination of a weedicide and a fertilizer for specific crops.
Explanation: Neem coating slows the dissolution/release of urea in soil, improving nitrogen-use efficiency and curbing diversion. Hence option (b).
- Q13.Government Schemes
With reference to 'Stand Up India Scheme', which of the following statements is/are correct?
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Explanation: Stand Up India promotes entrepreneurship among SC/ST and women by facilitating bank loans, with refinance support through SIDBI. Both statements are correct.
- Q14.Banking
The term 'Core Banking Solutions' is sometimes seen in the news. Which of the following statements best describes/describe this term?
- a)1 only
- b)2 and 3 only
- c)1 and 3 only
- d)1, 2 and 3
Explanation: Core Banking Solutions networks a bank's branches so customers can operate their account from any branch. Statements 2 and 3 are unrelated. Hence only 1.
- Q15.Renewable Energy
'Net metering' is sometimes seen in the news in the context of promoting the
- a)production of solar energy by households/consumers
- b)use of piped natural gas in kitchens
- c)installation of CNG kits in motor cars
- d)installation of water meters in urban households
Explanation: Net metering lets households generating rooftop solar power feed surplus electricity to the grid, promoting consumer solar energy use. Hence option (a).
- Q16.Indices and Reports
India's ranking in the 'Ease of Doing Business Index' is sometimes seen in the news. Which of the following has declared that ranking?
- a)Organisation for Economic Cooperation and Development (OECD)
- b)World Economic Forum
- c)World Bank
- d)World Trade Organization (WTO)
Explanation: The Ease of Doing Business Index was published by the World Bank. Hence option (c).
- Q17.Banking
What is/are the purpose/purposes of the 'Marginal Cost of Funds based Lending Rate (MCLR)' announced by RBI?
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Explanation: MCLR was introduced to improve transparency in setting lending rates and to ensure fair interest rates for both borrowers and banks. Both statements are correct.
- Q18.Agriculture
With reference to 'Initiative for Nutritional Security through Intensive Millets Promotion', which of the following statements is/are correct?
- a)1 only
- b)2 and 3 only
- c)1 and 2 only
- d)1, 2 and 3
Explanation: INSIMP demonstrates improved production, post-harvest and value-addition technologies through a cluster approach (1 correct). Statements 2 and 3 misstate the scheme's design. Hence only 1.
- Q19.Financial Regulation
With reference to 'Financial Stability and Development Council', consider the following statements:
- a)1 and 2 only
- b)3 only
- c)2 and 3 only
- d)1, 2 and 3
Explanation: The FSDC is an apex body chaired by the Union Finance Minister that monitors macro-prudential supervision; it is not an organ of NITI Aayog, so 1 is wrong. Hence 2 and 3 only.
- Q20.Taxation
The term 'Base Erosion and Profit Shifting' is sometimes seen in the news in the context of
- a)Exploitation of mineral resources by multinational corporations in mineral-rich but backward areas
- b)Restriction on tax evasion by multinational corporations
- c)Exploitation of indigenous resources by multinational corporations
- d)Lack of consideration for environmental costs in the planning and implementation of development projects
Explanation: Base Erosion and Profit Shifting (BEPS) refers to tax-avoidance strategies by multinationals; the term arises in the context of curbing such tax avoidance/evasion. Hence option (b).
- Q21.Industry
Recently, India's first 'National Investment and Manufacturing Zone' was proposed to be set up in
- a)Andhra Pradesh
- b)Gujarat
- c)Maharashtra
- d)Uttar Pradesh
Explanation: India's first National Investment and Manufacturing Zone was proposed at Prakasam district in Andhra Pradesh. Hence option (a).
- Q22.Mineral Resources
What is/are the purpose/purposes of 'District Mineral Foundations' in India?
- a)1 and 2 only
- b)2 only
- c)1 and 3 only
- d)1, 2 and 3
Explanation: District Mineral Foundations work for the interest and benefit of persons and areas affected by mining (2 correct). They do not promote exploration (1) or grant licences (3). Hence only 2.
- Q23.Digital Currency
With reference to 'Bitcoins', sometimes seen in the news, which of the following statements is/are correct?
- a)1 and 2 only
- b)2 and 3 only
- c)3 only
- d)1, 2 and 3
Explanation: Bitcoins are decentralized and NOT tracked by central banks, so 1 is wrong. Anyone with a Bitcoin address can transact (2) and payments can be pseudonymous (3). Hence 2 and 3 only.
- Q24.International Institutions
'European Stability Mechanism', sometimes seen in the news, is an
- a)1 and 2
- b)Only 3
- c)2 and 3
- d)1, 2 and 3
Explanation: The European Stability Mechanism provides financial assistance (bailouts) to eurozone countries in distress. Hence option (b).
- Q25.Government Schemes
What is/are the purpose/purposes of Government's 'Sovereign Gold Bond Scheme' and 'Gold Monetization Scheme'?
- a)1 only
- b)2 and 3 only
- c)1 and 3 only
- d)1, 2 and 3
Explanation: These schemes mobilize idle household gold (1) and reduce gold imports (3). They are not aimed at promoting FDI in gold/jewellery (2). Hence 1 and 3 only.
- Q26.Government Schemes
Pradhan Mantri MUDRA Yojana is aimed at
- a)the Lok Sabha by a simple majority of its total membership
- b)the Lok Sabha by a majority of not less than two-thirds of its total membership
- c)the Rajya Sabha by a simple majority of its total membership
- d)the Rajya Sabha by a majority of not less than two-thirds of the members present and voting
Explanation: PM MUDRA Yojana provides micro-finance to bring small/micro entrepreneurs into the formal financial system. Hence option (a).
- Q27.International Institutions
'Global Financial Stability Report' is prepared by the
- a)1 and 3 only
- b)2 only
- c)2 and 3 only
- d)1, 2 and 3
Explanation: The Global Financial Stability Report is published by the International Monetary Fund (IMF). Hence option (b).
- Q28.Social Security
Regarding 'Atal Pension Yojana', which of the following statements is/are correct?
- a)1 only
- b)2 and 3 only
- c)1 and 3 only
- d)1, 2 and 3
Explanation: APY is a guaranteed pension scheme aimed at unorganized-sector workers (1) and guarantees the same pension to the spouse after the subscriber's death (3). There is no one-member-per-family restriction (2 wrong). Hence 1 and 3 only.
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