Insights Static Quiz -239, 2019
Economy
INSIGHTS STATIC QUIZ 2019
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Question 1 of 5
1. Question
Consider the following statements about Reserve Bank of India.
- The bank was set up based on the recommendations of the Hilton–Young Commission.
- Performs merchant banking function for the central and the state governments; also acts as their banker.
- Manages the Foreign Exchange Management Act, 1999.
- Issues and exchanges or destroys currency and coins not fit for circulation.
Which of the above statements is/are correct?
Correct
Solution: d)
Main Functions
Monetary Authority:
- Formulates, implements and monitors the monetary policy.
- Objective: maintaining price stability while keeping in mind the objective of growth.
Regulator and supervisor of the financial system:
- Prescribes broad parameters of banking operations within which the country’s banking and financial system functions.
- Objective: maintain public confidence in the system, protect depositors’ interest and provide cost-effective banking services to the public.
Manager of Foreign Exchange
- Manages the Foreign Exchange Management Act, 1999.
- Objective: to facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India.
Issuer of currency:
- Issues and exchanges or destroys currency and coins not fit for circulation.
- Objective: to give the public adequate quantity of supplies of currency notes and coins and in good quality.
Developmental role
- Performs a wide range of promotional functions to support national objectives.
Related Functions
- Banker to the Government: performs merchant banking function for the central and the state governments; also acts as their banker.
- Banker to banks: maintains banking accounts of all scheduled banks.
Incorrect
Solution: d)
Main Functions
Monetary Authority:
- Formulates, implements and monitors the monetary policy.
- Objective: maintaining price stability while keeping in mind the objective of growth.
Regulator and supervisor of the financial system:
- Prescribes broad parameters of banking operations within which the country’s banking and financial system functions.
- Objective: maintain public confidence in the system, protect depositors’ interest and provide cost-effective banking services to the public.
Manager of Foreign Exchange
- Manages the Foreign Exchange Management Act, 1999.
- Objective: to facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India.
Issuer of currency:
- Issues and exchanges or destroys currency and coins not fit for circulation.
- Objective: to give the public adequate quantity of supplies of currency notes and coins and in good quality.
Developmental role
- Performs a wide range of promotional functions to support national objectives.
Related Functions
- Banker to the Government: performs merchant banking function for the central and the state governments; also acts as their banker.
- Banker to banks: maintains banking accounts of all scheduled banks.
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Question 2 of 5
2. Question
Consider the following statements about Rural Infrastructure Development Fund (RIDF).
- Government of India created the RIDF in NABARD.
- The eligible activities are classified into Agriculture and related sector, Social sector and rural connectivity.
- Panchayat Raj Institutions, Self Help Groups (SHGs) and NGOs are also eligible to receive funds.
Which of the above statements is/are correct?
Correct
Solution: d)
The RIDF was set up by the Government in 1995-96 for financing ongoing rural Infrastructure projects. The Fund is maintained by the National Bank for Agriculture and Rural Development (NABARD). Domestic commercial banks contribute to the Fund to the extent of their shortfall in stipulated priority sector lending to agriculture. The main objective of the Fund is to provide loans to State Governments and State-owned corporations to enable them to complete ongoing rural infrastructure projects.
At present, there are 37 eligible activities under RIDF as approved by GoI. The eligible activities are classified under three broad categories i.e.
- Agriculture and related sector
- Social sector
- Rural connectivity
Eligible Institutions
- State Governments / Union Territories
- State Owned Corporations / State Govt. Undertakings
- State Govt. Sponsored / Supported Organisations
- Panchayat Raj Institutions/Self Help Groups (SHGs)/ NGOs
(provided the projects are submitted through the nodal department of State Government, i.e Finance Department)
Incorrect
Solution: d)
The RIDF was set up by the Government in 1995-96 for financing ongoing rural Infrastructure projects. The Fund is maintained by the National Bank for Agriculture and Rural Development (NABARD). Domestic commercial banks contribute to the Fund to the extent of their shortfall in stipulated priority sector lending to agriculture. The main objective of the Fund is to provide loans to State Governments and State-owned corporations to enable them to complete ongoing rural infrastructure projects.
At present, there are 37 eligible activities under RIDF as approved by GoI. The eligible activities are classified under three broad categories i.e.
- Agriculture and related sector
- Social sector
- Rural connectivity
Eligible Institutions
- State Governments / Union Territories
- State Owned Corporations / State Govt. Undertakings
- State Govt. Sponsored / Supported Organisations
- Panchayat Raj Institutions/Self Help Groups (SHGs)/ NGOs
(provided the projects are submitted through the nodal department of State Government, i.e Finance Department)
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Question 3 of 5
3. Question
Consider the following statements about ‘Fiat Money’.
- It is a currency that a government has declared to be legal tender.
- It is backed by a physical commodity.
- Its value increases during hyperinflation.
Which of the above statements is/are incorrect?
Correct
Solution: b)
Fiat money is currency that a government has declared to be legal tender, but it is not backed by a physical commodity. The value of fiat money is derived from the relationship between supply and demand rather than the value of the material from which the money is made. Because fiat money is not linked to physical reserves, it risks becoming worthless due to hyperinflation.
Incorrect
Solution: b)
Fiat money is currency that a government has declared to be legal tender, but it is not backed by a physical commodity. The value of fiat money is derived from the relationship between supply and demand rather than the value of the material from which the money is made. Because fiat money is not linked to physical reserves, it risks becoming worthless due to hyperinflation.
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Question 4 of 5
4. Question
Consider the following statements about fugitive economic offender.
- It is an individual who has committed some specified offence(s) involving an amount of one hundred crore rupees or more and has absconded from India.
- He is declared so by a ‘Special Court’ set up under the Prevention of Corruption Act, 1988.
- The property of a fugitive economic offender, resulting from the proceeds of crime, including benami property, can be confiscated once he is declared so by the Court.
- Properties abroad are not liable for confiscation.
Which of the above statements is/are incorrect?
Correct
Solution: b)
A fugitive economic offender is an individual who has committed some specified offence(s) involving an amount of one hundred crore rupees or more and has absconded from India or refused to come back to India to avoid or face criminal prosecution in India.
A Fugitive Economic Offender is a person declared so by a ‘Special Court’ set up under the Prevention of Money-laundering Act (PMLA), 2002 against whom an arrest warrant has been issued in respect of any of the economic offences provided in the schedule to Fugitive Economic Offenders Bill, 2018 and who has left India so as to avoid criminal prosecution, or being abroad, refuses to return to India to face criminal prosecution.
The property of a fugitive economic offender, resulting from the proceeds of crime, including benami property, can be confiscated once he is declared so by the Court. Properties abroad are also liable for confiscation.
Incorrect
Solution: b)
A fugitive economic offender is an individual who has committed some specified offence(s) involving an amount of one hundred crore rupees or more and has absconded from India or refused to come back to India to avoid or face criminal prosecution in India.
A Fugitive Economic Offender is a person declared so by a ‘Special Court’ set up under the Prevention of Money-laundering Act (PMLA), 2002 against whom an arrest warrant has been issued in respect of any of the economic offences provided in the schedule to Fugitive Economic Offenders Bill, 2018 and who has left India so as to avoid criminal prosecution, or being abroad, refuses to return to India to face criminal prosecution.
The property of a fugitive economic offender, resulting from the proceeds of crime, including benami property, can be confiscated once he is declared so by the Court. Properties abroad are also liable for confiscation.
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Question 5 of 5
5. Question
Consider the following statements about Consumer Food Price Index (CFPI).
- It is a measure of change in retail prices of food products consumed by a defined population group in a given area
- It is released by Central Statistics Office (CSO) for three categories -rural, urban and combined.
- Cereals and products constitute more than 50 percent weight within CFPI.
Which of the above statements is/are correct?
Correct
Solution: a)
Consumer Food Price Index (CFPI) is a measure of change in retail prices of food products consumed by a defined population group in a given area with reference to a base year.
The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation (MOSPI) started releasing Consumer Food Price Indices (CFPI) for three categories -rural, urban and combined – separately on an all India basis with effect from May, 2014.
Like Consumer Price Index (CPI), the CFPI is also calculated on a monthly basis and methodology remains the same as CPI. The base year presently used is 2012.
Cereals and products constitute the maximum weight within CFPI in all three categories -rural, urban and combined.
Incorrect
Solution: a)
Consumer Food Price Index (CFPI) is a measure of change in retail prices of food products consumed by a defined population group in a given area with reference to a base year.
The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation (MOSPI) started releasing Consumer Food Price Indices (CFPI) for three categories -rural, urban and combined – separately on an all India basis with effect from May, 2014.
Like Consumer Price Index (CPI), the CFPI is also calculated on a monthly basis and methodology remains the same as CPI. The base year presently used is 2012.
Cereals and products constitute the maximum weight within CFPI in all three categories -rural, urban and combined.
