Insights Static Quiz -64, 2018
Economics
INSIGHTS IAS QUIZ ON STATIC SYLLABUS - 2018
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Question 1 of 5
1. Question
Factor income is an important constituent of production. Which of the following are factor incomes
- Rent
- Profits
- Interests
- Subsidies
Select the right code
Correct
Answer – a
- Factor income is the oncome accuring to the owner of factor of production in return of services rendered for production. Any income which does not generate from participation in production is called as transfer or non-factor income, example subsidies.
- Since there are four factors of production – land, capital, labour and entrepreneurship, and therefore incomes corresponding to these factors – rent, interest, wages and profit are called as factor incomes
Incorrect
Answer – a
- Factor income is the oncome accuring to the owner of factor of production in return of services rendered for production. Any income which does not generate from participation in production is called as transfer or non-factor income, example subsidies.
- Since there are four factors of production – land, capital, labour and entrepreneurship, and therefore incomes corresponding to these factors – rent, interest, wages and profit are called as factor incomes
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Question 2 of 5
2. Question
With respect to investment, consider the following
- Investment in mutual funds is an indirect way to invest in stocks.
- An adult citizen of India can invest in stocks directly of a company listed in NSE with or without broker
Select from the following codes
Correct
Answer – a
- Mutual funds are a congregation of investments in multiple stocks with varying percentages, managed by a professional investor. In any case, any investment in mutual fund is an investment in stocks.
- Any citizen or resident or foreign investor has to register himself/herself with a registered broker with SEBI to trade or invest in stocks. Zerodha, Sharekhan are such brokers.
Incorrect
Answer – a
- Mutual funds are a congregation of investments in multiple stocks with varying percentages, managed by a professional investor. In any case, any investment in mutual fund is an investment in stocks.
- Any citizen or resident or foreign investor has to register himself/herself with a registered broker with SEBI to trade or invest in stocks. Zerodha, Sharekhan are such brokers.
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Question 3 of 5
3. Question
Which of the following mechanisms can help to contain food inflation
- Increasing import duties on food articles
- More procurement by FCI
- Imposing stock limit
Select the right code
Correct
Answer – b
- If food articles are allowed to be imported, it may contain inflation as the demand for imports will be higher only if their price is lesser than domestic produce. Import duties will only curtail their import, and hence will not help food inflation
- The procurement by FCI reduces the supply to the market, thus increasing inflation. However if the stocks with FCI are released strategically in the market based upon contingency of supply at a particular time, it also helps in containing food inflation.
- The stock limits make way for the enhanced supply in the market, which is critical for level food prices
Incorrect
Answer – b
- If food articles are allowed to be imported, it may contain inflation as the demand for imports will be higher only if their price is lesser than domestic produce. Import duties will only curtail their import, and hence will not help food inflation
- The procurement by FCI reduces the supply to the market, thus increasing inflation. However if the stocks with FCI are released strategically in the market based upon contingency of supply at a particular time, it also helps in containing food inflation.
- The stock limits make way for the enhanced supply in the market, which is critical for level food prices
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Question 4 of 5
4. Question
Which of the following may contribute in increasing fiscal deficit
- Building of roads by the government agency
- Implementation of State Pay Commission
Select the right code
Correct
Answer – c
- Construction of roads by a government agency at any tier will use public investment, thus crowding out private investment as well. This is one particular reason due to which most of the costruction is done through PPP mode. However in the long run, even public investment in infrastructure is good for the macroeconomy, notwithstanding the temporary impact on fiscal numbers.
- The implementation of state pay commission will lead to increase in wages and salaries of government employees. The burden on the exchequer will only increase henceforth resulting in fiscal deficit.
Incorrect
Answer – c
- Construction of roads by a government agency at any tier will use public investment, thus crowding out private investment as well. This is one particular reason due to which most of the costruction is done through PPP mode. However in the long run, even public investment in infrastructure is good for the macroeconomy, notwithstanding the temporary impact on fiscal numbers.
- The implementation of state pay commission will lead to increase in wages and salaries of government employees. The burden on the exchequer will only increase henceforth resulting in fiscal deficit.
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Question 5 of 5
5. Question
Which of the following will lead to cost push inflation for a particular industry
- Rising NPAs of banks
- Shortage of skilled labour
Selct the right statements
Correct
Answer – c
- Cost push inflation refers to the type in which the rise of prices is due to rise in costs of factors of production – entrepreneurship, land, capital and labour.
- As the NPAs of banks increase, they will be asking for stringent regulations and higher credit rate, which will make capital costly. Thus it is cost push inflation type.
- If there is shortage of labour, the wages demanded by the available will be higher, thus pushing cost of production higher. Hence it is also cost push type.
Incorrect
Answer – c
- Cost push inflation refers to the type in which the rise of prices is due to rise in costs of factors of production – entrepreneurship, land, capital and labour.
- As the NPAs of banks increase, they will be asking for stringent regulations and higher credit rate, which will make capital costly. Thus it is cost push inflation type.
- If there is shortage of labour, the wages demanded by the available will be higher, thus pushing cost of production higher. Hence it is also cost push type.
