DAY – 36 & 37: Insights Self Study Guide for UPSC Prelims + Mains – 2015

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DAY – 36 & 37: Insights Self Study Guide for Prelims + Mains – 2015

15 & 16 July 2015

Following Questions are Based on this TIMETABLE


Economic Survey Chapters will be Covered Tomorrow

Descriptive Questions

CLICK on the Questions to Post Your Answers.

1) What are the instruments of monetary policy of RBI? How does RBI stabilize money supply against exogenous shocks? Examine. (200 Words)

NCERT Class XII, Introductory Macroeconomics, Chapter – 4

2) Discuss how the government mobilises resource to finance deficits and examine the issues arising out of this move. (200 Words)

NCERT Class XII, Introductory Macroeconomics, Chapter – 5

3) Differentiate between balance of trade and current account balance. (150 Words)

NCERT Class XII, Introductory Macroeconomics, Chapter – 6


Multiple Choice Questions Quiz

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    With reference to High Powered Money, consider the following statements:

    1. It consists of currency and deposits held by the Government of India and commercial banks with RBI

    Sir,i think it should be wrong because it doesn’t mention about currency held by public..

    pls clarify if i am wrong…..

    • Egoist Singh

      statement says consists of not equals to ,
      currency n deposits r its component irrespective of other components

    • Sepoy No 1446


      Its wrong.

      High powered money is all the cash in the economy.

    • Akshay

      Yes me too… High powered money is the money that is created by RBI and not the above thing. The above thing is Narrow money….

      • himadree kaushik

        Bank’s deposit with RBI wouldn’t be included in narrow money. It’ll just have demand deposits of public with RBI, currency held by public and other deposits (of public) with RBI.

    • Yashaswi

      Hi Samrat Ashoka,

      PG41, NCERT Macroeconomics …. “It consists of currency (notes and coins in circulation with the public and vault cash of commercial banks) and deposits held by the government of India and commercial banks with RBI”

      So the word ‘currency’ indicates it is that which is held by public as well as commercial banks (in their vault). Sir did not mention the bracketed information. Nothing wrong with that.

  • Jedi

    Was it Eco survey and NIOS today as per syllabus right?

  • kavitha

    🙁 Im very poor in economy ……thank you INSIGHTS

    • Yashaswi

      Thanking insights for you being poor in economy? Seriously? 😛

      When you find time, sit and study the XII grade NCERT Macroeconomics – you’ll have to spend a lot of time on it if you haven’t before – i was/am terrible at economy. But this book helped strengthen my basics in the subject.

      • Paranjay

        XII economy book old or new ?

        • Yashaswi


      • kavitha

        thank you yashaswi..i’ll do it………..:-)

      • somya agarwal

        Absolutely correct yashaswi…so was the case with me…but I now I find myself in a comfortable place so far…

  • suchak

    Q.10 – A high fiscal deficit is always inflationary – I think it true…Fiscal Deficit is not always inflationary but “High” Fiscal may be always inflationary

    • Pukhraj Sahu

      A high fiscal deficit may not always be inflationary, it would be inflationary only if major chunk of it goes to non-developmental or unplanned expenditure.

      • Yashaswi

        Then the second statement too must be wrong:
        “when government increases spending or cuts taxes, it results in price rise” – increase in spending will result in price rise only if it is not asset-creating. Though, cutting taxes would result in price rise.

        • Yashaswi

          Now even if it is asset-creating expenditure, price rise may take place. In construction goods. But considering it in isolation, it won’t have too much of an impact in overall price rise.
          Such interpretations may be far-fetched, but fact remains- this stuff just bugs me too much.

          • Kartik

            Right even I think so ! However , I do feel that usage of phrases like “may , can , always” help to get a clear picture of answer.

          • Pukhraj Sahu

            No, assets created would be counter-inflationary. Think of an asset, say road, its construction would lead to faster, easier and smoother movement of goods, services and people. Would that lead to inflation or otherwise? Same logic goes to all assets creating expenditure.

            • Yashaswi

              Yes, in the long run, it would be beneficial.

            • The Imp

              in case of huge amount of construction going on there will be market shortage of construction goods like steel, Cement and also labour . so Coost of those thing will go up right .
              Last year I read one news that GOI was talking to the cement manufacturing cos to set up dedicated plants to tackle the market shortge which may come up when NHAI goes ambitious expansion programs .

        • Pukhraj Sahu

          When the government cuts tax rate, people have more money to dispose of which results in increased purchase power leading to price rise. Also with increased government spending money circulation in the economy increases which may lead to price rise (of course not always). But then, neither the question says always, so it would be appropriate to assume it correct

  • velma

    Is insights questions are of upsc standard ?or bit higher?

    • Akshay

      They are of UPSC standard

    • Intekhab Hassan


  • Paranjay

    Great job….qus are upto the level

  • manoj gupta

    Great job sir

  • Tavitinaidu Kalla

    Thank you very much sir.

  • Kartik

    Can anyone please clarify this ?

    I have read “The President has no constitutional
    discretion”. Is it true ?

    Because while reading the constitutional discretion of Governor,
    I do find the below statement as a part of it:-

    “Seeking information from the chief minister with regard to
    administrative and legislative matters of the state”.

    But even the president has this power i.e. “he can seek any
    information relating to the administration of affairs of the union, and
    proposals for legislation from the prime minister”.

    So, can’t we say the president has above discretion as a
    part of constitutional discretion?

    • V Kumar

      first president has discretionary power 1) He can appoint PM on his discretion when no political party get clear majority and ask him to secure majority. 2) he has discretion of dissolved the loksabha or invite other party to proof majority when council of minister lost majority and still loksabha term not expired 3) Pocket vito

      regarding your point of ‘seeking information from chief minister’ same is with president also but book does not term it as power.

      • Kartik

        Whatever you have mentioned above is SITUATIONAL discretionary powers except third statement. It is fine. Lakmikanth book explicitly says ” President has no constitutional discretion though GOVERNOR has”. There, comes my query. In Governor module , “Seeking information from the chief minister with regard to
        administrative and legislative matters of the state” has been mentioned as CONSTITUTIONAL discretion. So, why can’t President has one when he can also seek any
        information relating to the administration of affairs of the union, and
        proposals for legislation from the prime minister. Hope my question is clear..

        • Sudanita Sanchez

          That is probably because …. President as being part of the parliament can seek any information regrading the legislative matters as well as the administrative and executive matters if the union govt. Responsible to the parliament. So that is by the virtue of being part of the parliament.

          However in the case of governor, who is an agent of the centre, as a result he takes care of the interests of the union. And therefore the governor asking for any matters of the state govt., is independent and discretionary on the behalf of the union.
          So it is sort of a superintendence over the state govt. This is evident from
          – the power of the governor to impose presidents rule without taking the state cabinet into confidence not even the CM.
          so there is a fundamental difference .

          I hope the clarification is if any use to U.

          • Kartik

            Thanks !! I do see the thin line what you points out to differentiate between the power of two.

          • Kartik

            Hi Sudanita
            Would you mind having a look at below query ?


            1. Mr. X should not hold any office of profit.

            2. Mr. Y should not hold any office under the union
            government or the state government or any other public authority.


            I. Do both of the above sentences carry same/precise

            II. Additionally, does “Mr. X/Y” can’t even open a
            private pharmacy shop under his supervision?

  • vijaykanth

    i got 4/8 🙁 feeling low

  • KK

    Thank u Insights 🙂