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SOLUTIONS – INSIGHTS REVISION TEST for Preliminary Exam 2018: Test – 57(Economy)


INSIGHTS REVISION TEST for Preliminary Exam 2018: Test – 57(Economy)


1. Consider the following about girl’s education in India:

  1. Digital Gender Atlas for Advancing Girls’ Education has been made with the support of UNICEF
  2. Shagun portal has been specifically designed around the progress made around the atlas

Which of the above statements is/are correct:

a) 1 only

b) 2 only

c) Both 1 and 2

d) None of the above


Digital Gender Atlas for Advancing Girls’ Education: Department of School Education and Literacy has prepared a Digital Gender Atlas for Advancing Girls’ Education in the country on its website. The tool, which has been developed with the support of UNICEF, (hence statement 1 is correct) will help identify low performing geographic pockets for girls, particularly from marginalized groups such as scheduled castes, schedule tribes and Muslims, on specific gender related education indicators. In order to plan and execute educational interventions, the purpose of the Gender Atlas is to help identify and ensure equitable education with a focus on vulnerable girls, including girls with disabilities.

ShaGun portal – an Initiative to monitor the implementation of SSA: MHRD has developed a web portal called ShaGun (from the words Shaala and Gunvatta). (hence statement 2 is incorrect)

2. Which of the following is NOT a sub-programme under Sarva Shiksha Abhiyaan

a) Vidyanjali

b) Pade Bharat Bade Bharat

c) Rastriya aavishkar abhiyaan

d) Atal Tinkering Labs

Solution: d

Sub-Programmes under SSA

  1. a) The Padhe Bharat Badhe Bharat (PBBB), a sub-programme of the SSA, in classes I and II is focusing on foundational learning in early grades with an emphasis on reading, writing and comprehension and mathematics.
  2. b) The Rashtriya Aavishkar Abhiyan (RAA), also under the SSA, aims to motivate and engage children of the age group 6-18 years, in science, mathematics and technology by observation, experimentation, inference drawing and model building, through both inside and outside classroom activities.
  3. c) Vidyanjali, another sub-programme under SSA, was launched to enhance community and private sector involvement in Government run elementary schools across the country.
  4. d) ShaGun portal – an Initiative to monitor the implementation of SSA: MHRD has developed a web portal called ShaGun (from the words Shaala and Gunvatta)

The Government of India has setup the Atal Innovation Mission (AIM) at NITI Aayog. Realizing the need to create scientific temper and cultivate the spirit of curiosity and innovation among young minds, AIM proposes to support the establishment of a network of Atal Tinkering Laboratories (ATL). ATL is a workspace where young minds can give shape to their ideas through hands-on do-it-yourself mode and learn innovation skills.

3. Consider the following about Rastriya Madhyamik Shiksha Abhiyaan:

  1. Shaala Siddhi is a tool to track School Standards and Evaluation Framework
  2. Shala Darpan is a monitoring school management systems to students, parents and communities

Which of the above statements is/are correct:

a) 1 only

b) 2 only

c) Both 1 and 2

d) None of the above

Solution: c

Shaala Siddhi: School Standards and Evaluation Framework and its web portal was launched in 2015. It is a comprehensive instrument for school evaluation leading to school improvement. Developed by the National University of Educational Planning and Administration (NUEPA), it aims to enable schools to evaluate their performance in a more focused and strategic manner and facilitate them to make professional judgments for improvement. The programme’s objective is to establish an agreed set of standards and benchmarks for each school, by focussing on key performance domains and their core standards. 

(hence statement 1 is correct)

Shala Darpan: The “Shaala Darpan Project” to cover all the 1099 Kendriya Vidyalayas was launched in June, 2015. The objective of this project is to provide services based on school management systems to students, parents and communities. Under school information services, the following list of services will be enabled i.e., school profile management, student profile management, employee information, student attendance, leave management, report cards, curriculum tracking custom, SMS alerts for parents / administrators on student and teacher attendance.

(hence statement 2 is correct)

4. Ishan uday and Ishan Vikas schemes are mainly to promote inclusive higher education for:

a) SC and STs

b) Minorities

c) North East

d) LWE districts

Solution: c

Ishan Uday– The UGC has launched a special scholarship scheme for students of north east region, Ishan Uday from the academic session 2014-15. The Scheme envisages grant of 10,000 scholarships to students from the region whose parental income is below 4.5 lakh per annum and would be provided scholarship ranging from ₹ 3,500 to ₹ 5,000 per month for studying at under graduate level in colleges/ universities of the country.

Ishan Vikas Academic Exposure for North Eastern Students The programme has been launched with a plan to bring selected college and school students from the north eastern states into close contact with IITs, NITs and IISERs during their vacation periods for academic exposure.

5. Under a managed floating exchange rate system, the nation’s monetary authorities intervene in foreign exchange markets to

a) Smooth out short-run and long run fluctuations in exchange rates

b) Keep exchange rates fixed among a group of nations

c) Smooth out short-run fluctuations in exchange rates

d) Keep exchange rates flexible

Solution: c

A managed or dirty float is a flexible exchange rate system in which the government or the country’s central bank may occasionally intervene in order to direct the country’s currency value into a certain direction. This is generally done in order to act as a buffer against economic shocks and hence soften its effect in the economy.

6. Match the following:

List – I                                                   List – II

  1. WTO                                            1. Provide finance to correct disequilibrium in balance of payments.
  2. IMF                                             2. Generally forbids the use of quantitative restrictions in trade.
  3. SAARC                                         3. Sanction of soft loans
  4. IDA                                             4. Promotes trade among South Asian Countries


    A B C D

a) 1 2 3 4

b) 2 3 4 1

c) 2 1 4 3

d) 3 2 4 1

Solution: c

7. The European Union has achieved all of the following, except

a) Adopted a common fiscal policy for member nations

b) Established a common system of agricultural price supports

c) Disbanded all tariffs between its member countries

d) Levied common tariffs on products imported from nonmembers

Solution: a

It is often proposed that the European Union should adopt a form of fiscal union. Most member states of the EU participate in economic and monetary union (EMU), based on the euro currency, but most decisions about taxes and spending remain at the national level. Therefore, although the European Union has a monetary union, it does not have a fiscal union.

8. Which of the following are the role of Finance Commissions in India? 

  1. To make recommendations on the distribution of tax proceeds between Centre and States.
  2. To make Recommendations on levying, removing or restructuring of taxes.
  3. To recommend Grants-in-aid under Article 275 of the Constitution
  4. To recommend plan and other grants under Article 282 of the Constitution


a) 1 and 2 only

b) 1 and 3 only

c) 1, 3 and 4 only

d) 1, 2, 3 and 4

Solution: b

Functions of Finance Commission

  1. Distribution of net proceeds of taxes between Center and the States, to be divided as per their respective contributions to the taxes.
  2. Determine factors governing Grants-in-Aid to the states and the magnitude of the same.
  3. To make recommendations to the president as to the measures needed to augment the Fund of a State to supplement the resources of the panchayats and municipalities in the state on the basis of the recommendations made by the finance commission of the state.
  4. Any other matter related to it by the president in the interest of sound finance.
  5. A finance commission is an autonomous body which is governed by the government of India.

9. Margin requirement specified under which instruments of monetary policy?

a) Variable Reserve Requirement

b) Statutory Liquidity Requirement

c) Selective Credit Controls

d) Open Market Operations

Solution: c

Selective credit control refers to qualitative method of credit control by the central bank. The method aims, unlike general or quantitative methods, at the regulation of credit taken for specific purposes or branches of economic activity. It aims at encouraging good credit, i.e., development credit while at the same time discouraging bad credit, i.e., speculative credit.

PSL: priority sector lending

DIRs: Differential interest rates


10. About minimum support price, find out the correct combinations:

  1. If market price is higher, farmers will sell to the government.
  2. It ensures minimum assured price for the produce of the farmers.
  3. It helps in food security mission.
  4. This is highly rewarding to farmers because they earn huge profits on their produce.



a) 1, 2 and 4 only

b) 2, 3 and 4 only

c) 2 and 4 only

d) 2 and 3 only

Solution: d

Minimum Support Price (MSP) is a form of market intervention by the Government of India to insure agricultural producers against any sharp fall in farm prices. The minimum support prices are announced by the Government of India at the beginning of the sowing season for certain crops on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP). MSP is price fixed by Government of India to protect the producer – farmers – against excessive fall in price during bumper production years. The minimum support prices are a guarantee price for their produce from the Government. The major objectives are to support the farmers from distress sales and to procure food grains for public distribution. In case the market price for the commodity falls below the announced minimum price due to bumper production and glut in the market, government agencies purchase the entire quantity offered by the farmers at the announced minimum price and maintains public stocks.

11.Which of the followings have been important in growth of rice and wheat output in India after initiating green revolution programme?

  1. Changes in cropping pattern
  2. Improved yields
  3. Crop insurance
  4. Increased area under cultivation


a) 2, 3 and 4 only

b) 1, 2 and 4 only

c) 1, 2 and 3 only

d) 1, 3 and 4 only

Solution: b

Crop insurance density still remains very low and Pradhan mantra Fasal Bima Yojana was launched to further crop insurance in India.

12. Predatory pricing policy is designed to

a) Drive competitors out of business

b) Maximise profits

c) Encourage entrants into the market

d) Attain least cost output

Solution: a

Predatory Pricing – the pricing of goods or services at such a low level that other firms cannot compete and are forced to leave the market.

13. Which of the following is correct about the ‘Hindu Growth Rate’?

a) This is about economic growth of the Hindu population.

b) Shows economic disparities among different social groups in India.

c) Reflects low growth performance of the Indian economy during 1950-80.

d) Hints at accelerated growth in India since 1980

Solution: c

The Hindu rate of growth is a term referring to the low annual growth rate of the planned economy of India before the liberalisation of 1991, which stagnated around 3.5% from 1950s to 1980s, while per capita income growth averaged 1.3%.

It was a concept given by Prof. Raj Krishna

14. The idea of indicative planning was first adopted in which Five year Plan of India?

a) Second Plan

b) Fifth Plan

c) Seventh Plan

d) Eighth Plan

Solution: d

Indicative planning is a form of economic planning implemented by a state in an effort to solve the problem of imperfect information in market and mixed economies in order to increase economic performance.

India’s Eighth Plan was unique in the sense that it attempted to manage the transition from a centrally planned economy to a market-ori­ented economy without tearing the socio-cultural framework of the country, or to be more specific, our social commitments to the under- privileged sections. The Eighth Plan men­tioned that planning would have to be reoriented so as to make it indicative.

15. Consider the following statements:

  1. Phillips curve is an inverse relationship between the rate of unemployment and the rate of inflation in an economy
  2. Engel’s Law observes that as income rises the proportion of income spent on food falls even if the actual expenditure on food rises

Which of the above statement is/are correct?

a) 1 only

b) 2 only

c) 1 and 2 only

d) None of the above

Solution: c

The Phillips curve shows the relationship between unemployment and inflation in an economy. It states that inflation and unemployment have a stable and inverse relationship. The theory claims that with economic growth comes inflation, which in turn should lead to more jobs and less unemployment. (hence statement 1 is correct)

Engel’s law is an observation in economics stating that as income rises, the proportion of income spent on food falls, even if absolute expenditure on food rises. In other words, the income elasticity of demand of food is between 0 and 1. The law was named after the statistician Ernst Engel (1821–1896). (hence statement 2 is correct)

16. Hedging in the foreign exchange market refers to:

a) An act of devaluation

b) Covering a risk of fluctuations in the foreign exchange rates in future

c) Not covering a risk of fluctuations in the foreign exchange rates in future

d) An act of revaluation

Solution: b

hedge is an investment to reduce the risk of adverse price movements in an asset. Normally, a hedge consists of taking an offsetting position in a related security, such as a futures contract.

17. Core inflation has been described as:

a) Headline inflation − food inflation

b) Headline inflation − (food inflation + fuel inflation)

c) Headline inflation − fuel inflation

d) Food inflation + Fuel inflation

Solution: b

Core  inflation is the change in costs of goods and services, but does not include those from the food and energy sectors. This measure of inflation excludes these items because their prices are much more volatile.


18. Primary deficit is measured by:

a) Fiscal deficit − interest payments

b) Budget deficit − interest payments

c) Budget deficit + total borrowings

d) Total Revenue expenditure −total revenue receipts

Solution: a

Primary deficit refers to difference between fiscal deficit of the current year and interest payments on the previous borrowings. Primary Deficit = Fiscal Deficit – Interest Payments. The total borrowing requirement of the government includes the interest commitments on accumulated debts.

19. Consider the following statements in relation to Gender Budgeting and answer from the code given below:

  1. ‘Gender analysis’ of the budget
  2. Preparing a separate budget for women
  3. Government of India adopted gender budgeting in 2005 – 06


a) 1 and 2 only

b) 1 and 3 only

c) 2 and 3 only

d) 1, 2 and 3

Solution: b

Gender Budgeting is a powerful tool for achieving gender mainstreaming so as to ensure that benefits of development reach women as much as men. It is not an accounting exercise but an ongoing process of keeping a gender perspective in policy/ programme formulation, its implementation and review. GB entails dissection of the Government budgets to establish its gender differential impacts and to ensure that gender commitments are translated in to budgetary commitments.

Since 2005-06, the Expenditure Division of the Ministry of Finance has been issuing a note on Gender Budgeting as a part of the Budget Circular every year. This is compiled and incorporated in the form of Statement 20 as a part of the Expenditure Budget Document Volume 1 by the Expenditure Division of the Ministry of Finance. This GB Statement comprises two parts- Part A and Part B.

Part A reflects Women Specific Schemes, i.e. those which have 100% allocation for women.

Part B reflects Pro Women Schemes, i.e. those where at least 30% of the allocation is for women.


20. Which organisation in India has been given the responsibility to monitor the progress of sustainable development goals?

a) Reserve Bank of India

b) Central Statistical Office

c) NITI Aayog

d) National Sample Survey office

Solution: c

National Action on the SDGs in India

NITI Aayog, the Government of India’s premier think tank, has been entrusted with the task of coordinating the SDGs. NITI Aayog has undertaken a mapping of schemes as they relate to the SDGs and their targets, and has identified lead and supporting ministries for each target. They have adopted a government-wide approach to sustainable development, emphasising the interconnected nature of the SDGs across economic, social and environmental pillars. States have been advised to undertake a similar mapping of their schemes, including centrally sponsored schemes.

In addition, the Ministry of Statistics and Programme Implementation (MoSPI) has been leading discussions for developing national indicators for the SDGs. State governments are key to India’s progress on the SDG Agenda and several of them have already initiated action on implementing the SDGs.