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UPSC CSE Prelims 2023 — Economy Questions with Answers

All 15 Economy previous-year questions from UPSC CSE Prelims 2023, each with the correct answer and a full explanation. Practise them as a free, timed mock test with instant scoring.

1. Q1.Economy

   Consider the following statements: Statement-I: Interest income from the deposits in Infrastructure Investment Trusts (InvITs) distributed to their investors is exempted from tax, but the dividend is taxable. Statement-II: InvITs are recognized as borrowers under the 'Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002'. Which one of the following is correct in respect of the above statements?

   • a)Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I
   • b)Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I
   • c)Statement-I is correct but Statement-II is incorrect
   • d)Statement-I is incorrect but Statement-II is correct
2. Q2.Economy

   Consider the following statements: Statement-I: In the post-pandemic recent past, many Central Banks worldwide, had carried out interest rate hikes. Statement-II: Central Banks generally assume that they have the ability to counteract the rising consumer prices via monetary policy means. Which one of the following is correct in respect of the above statements?

   • a)Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I
   • b)Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I
   • c)Statement-I is correct but Statement-II is incorrect
   • d)Statement-I is incorrect but Statement-II is correct
3. Q3.Economy

   Which one of the following activities of the Reserve Bank of India is considered to be part of 'sterilization'?

   • a)Conducting 'Open Market Operations'
   • b)Oversight of settlement and payment systems
   • c)Debt and cash management for the Central and State Governments
   • d)Regulating the functions of Non-banking Financial Institutions
4. Q4.Economy

   Consider the following markets: 1. Government Bond Market 2. Call Money Market 3. Treasury Bill Market 4. Stock Market How many of the above are included in capital markets?

   • a)Only one
   • b)Only two
   • c)Only three
   • d)All four
5. Q5.Economy

   Which one of the following best describes the concept of 'Small Farmer Large Field'?

   • a)Resettlement of a large number of people, uprooted from their countries due to war, by giving them a large cultivable land which they cultivate collectively and share the produce
   • b)Many marginal farmers in an area organize themselves into groups and synchronize and harmonize selected agricultural operations
   • c)Many marginal farmers in an area together make a contract with a corporate body and surrender their land to the corporate body for a fixed term for which the corporate body makes a payment of agreed amount to the farmers
   • d)A company extends loans, technical knowledge and material inputs to a number of small farmers in an area so that they produce the agricultural commodity required by the company for its manufacturing process and commercial production
6. Q6.Economy

   Consider the following statements: 1. The Government of India provides Minimum Support Price for niger (Guizotia abyssinica) seeds. 2. Niger is cultivated as a Kharif crop. 3. Some tribal people in India use niger seed oil for cooking. How many of the above statements are correct?

   • a)Only one
   • b)Only two
   • c)All three
   • d)None
7. Q7.Economy

   Consider the investments in the following assets: 1. Brand recognition 2. Inventory 3. Intellectual property 4. Mailing list of clients How many of the above are considered intangible investments?

   • a)Only one
   • b)Only two
   • c)Only three
   • d)All four
8. Q8.Economy

   Consider the following: 1. Demographic performance 2. Forest and ecology 3. Governance reforms 4. Stable government 5. Tax and fiscal efforts For the horizontal tax devolution, the Fifteenth Finance Commission used how many of the above as criteria other than population area and income distance?

   • a)Only two
   • b)Only three
   • c)Only four
   • d)All five
9. Q9.Economy

   Consider the following infrastructure sectors: 1. Affordable housing 2. Mass rapid transport 3. Health care 4. Renewable energy On how many of the above does UNOPS Sustainable Investments in Infrastructure and Innovation (S3i) initiative focus for its investments?

   • a)Only one
   • b)Only two
   • c)Only three
   • d)All four
10. Q10.Economy

    Consider the following statements with reference to India: 1. According to the 'Micro, Small and Medium Enterprises Development (MSMED) Act, 2006', the 'medium enterprises' are those with investments in plant and machinery between Rs. 15 crore and Rs. 25 crore. 2. All bank loans to the Micro, Small and Medium Enterprises qualify under the priority sector. 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
11. Q11.Economy

    With reference to Central Bank digital currencies, consider the following statements: 1. It is possible to make payments in a digital currency without using US dollar or SWIFT system. 2. A digital currency can be distributed with a condition programmed into it such as a time-frame for spending it. 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
12. Q12.Economy

    In the context of finance, the term 'beta' refers to

    • a)the process of simultaneous buying and selling of an asset from different platforms
    • b)an investment strategy of a portfolio manager to balance risk versus reward
    • c)a type of systemic risk that arises where perfect hedging is not possible
    • d)a numeric value that measures the fluctuations of a stock to changes in the overall stock market
13. Q13.Economy

    Consider the following statements: 1. The Self-Help Group (SHG) programme was originally initiated by the State Bank of India by providing microcredit to the financially deprived. 2. In an SHG, all members of a group take responsibility for a loan that an individual member takes. 3. The Regional Rural Banks and Scheduled Commercial Banks support SHGs. How many of the above statements are correct?

    • a)Only one
    • b)Only two
    • c)All three
    • d)None
14. Q14.Economy

    Consider the following statements: Statement-I: Switzerland is one of the leading exporters of gold in terms of value. Statement-II: Switzerland has the second largest gold reserves in the world. Which one of the following is correct in respect of the above statements?

    • a)Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I
    • b)Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I
    • c)Statement-I is correct but Statement-II is incorrect
    • d)Statement-I is incorrect but Statement-II is correct
15. Q15.Economy

    Consider the following statements: Statement-I: India accounts for 3.2% of global export of goods. Statement-II: Many local companies and some foreign companies operating in India took advantage of India's 'Production-linked Incentive' scheme. Which one of the following is correct in respect of the above statements?

    • a)Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I
    • b)Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I
    • c)Statement-I is correct but Statement-II is incorrect
    • d)Statement-I is incorrect but Statement-II is correct