Insights Static Quiz -257, 2019
Economy
INSIGHTS STATIC QUIZ 2019
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Question 1 of 5
1. Question
Consider the following statements about Most-favoured-nation (MFN) principle.
- MFN means that every time a country lowers a trade barrier or opens up a market, it has to do so for the same goods or services from all its trading partners.
- Countries cannot set up a free trade agreement that applies only to goods traded within the group.
- Countries can give developing countries special access to their markets.
Which of the above statements is/are correct?
Correct
Solution: c)
MFN means that every time a country lowers a trade barrier or opens up a market, it has to do so for the same goods or services from all its trading partners — whether rich or poor, weak or strong.
Some exceptions are allowed. For example, countries can set up a free trade agreement that applies only to goods traded within the group — discriminating against goods from outside. Or they can give developing countries special access to their markets. Or a country can raise barriers against products that are considered to be traded unfairly from specific countries. And in services, countries are allowed, in limited circumstances, to discriminate. But the agreements only permit these exceptions under strict conditions.
Incorrect
Solution: c)
MFN means that every time a country lowers a trade barrier or opens up a market, it has to do so for the same goods or services from all its trading partners — whether rich or poor, weak or strong.
Some exceptions are allowed. For example, countries can set up a free trade agreement that applies only to goods traded within the group — discriminating against goods from outside. Or they can give developing countries special access to their markets. Or a country can raise barriers against products that are considered to be traded unfairly from specific countries. And in services, countries are allowed, in limited circumstances, to discriminate. But the agreements only permit these exceptions under strict conditions.
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Question 2 of 5
2. Question
Which of the following are part of capital receipts for the Government of India
- Loans raised by Government from RBI and public
- Dividend on investments made by Government
- Disinvestment receipts
- Borrowings by Government through sale of Treasury Bills
Select the correct code:
Correct
Solution: b)
The capital receipts are loans raised by Government from public, called market loans, borrowings by Government from Reserve Bank and other parties through sale of Treasury Bills, loans received from foreign Governments and bodies, disinvestment receipts and recoveries of loans from State and Union Territory Governments and other parties.
Revenue Budget consists of the revenue receipts of Government (tax revenues and other revenues like interest and dividend on investments made by Government, fees, and other receipts for services rendered by Government) and the expenditure met from these revenues.
Incorrect
Solution: b)
The capital receipts are loans raised by Government from public, called market loans, borrowings by Government from Reserve Bank and other parties through sale of Treasury Bills, loans received from foreign Governments and bodies, disinvestment receipts and recoveries of loans from State and Union Territory Governments and other parties.
Revenue Budget consists of the revenue receipts of Government (tax revenues and other revenues like interest and dividend on investments made by Government, fees, and other receipts for services rendered by Government) and the expenditure met from these revenues.
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Question 3 of 5
3. Question
Consider the following statements about National Payments Corporation of India (NPCI).
- It is a “Not for Profit” Company under the provisions of Section 8 of Companies Act 2013.
- It is set up to provide infrastructure to the entire Banking system in India for physical as well as electronic payment and settlement systems.
- National Financial Switch (NFS) and Cheque Truncation System (CTS) are the flagship products of NPCI.
Which of the above statements is/are correct?
Correct
Solution: d)
National Payments Corporation of India (NPCI), an umbrella organisation for operating retail payments and settlement systems in India, is an initiative of Reserve Bank of India (RBI) and Indian Banks’ Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007, for creating a robust Payment & Settlement Infrastructure in India.
Considering the utility nature of the objects of NPCI, it has been incorporated as a “Not for Profit” Company under the provisions of Section 25 of Companies Act 1956 (now Section 8 of Companies Act 2013), with an intention to provide infrastructure to the entire Banking system in India for physical as well as electronic payment and settlement systems. The Company is focused on bringing innovations in the retail payment systems through the use of technology for achieving greater efficiency in operations and widening the reach of payment systems.
National Financial Switch (NFS) and Cheque Truncation System (CTS) continues to be the flagship products of NPCI. Unified Payments Interface (UPI) has been termed as the revolutionary product in payment system and Bharat Bill Payment System (BBPS) has also been launched in pilot mode. The other products include RuPay Credit Card, National Common Mobility Card (NCMC) and National Electronic Toll Collection (NETC). With these products the aim is to transform India into a ‘less-cash’ society by touching every Indian with one or other payment services.
Incorrect
Solution: d)
National Payments Corporation of India (NPCI), an umbrella organisation for operating retail payments and settlement systems in India, is an initiative of Reserve Bank of India (RBI) and Indian Banks’ Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007, for creating a robust Payment & Settlement Infrastructure in India.
Considering the utility nature of the objects of NPCI, it has been incorporated as a “Not for Profit” Company under the provisions of Section 25 of Companies Act 1956 (now Section 8 of Companies Act 2013), with an intention to provide infrastructure to the entire Banking system in India for physical as well as electronic payment and settlement systems. The Company is focused on bringing innovations in the retail payment systems through the use of technology for achieving greater efficiency in operations and widening the reach of payment systems.
National Financial Switch (NFS) and Cheque Truncation System (CTS) continues to be the flagship products of NPCI. Unified Payments Interface (UPI) has been termed as the revolutionary product in payment system and Bharat Bill Payment System (BBPS) has also been launched in pilot mode. The other products include RuPay Credit Card, National Common Mobility Card (NCMC) and National Electronic Toll Collection (NETC). With these products the aim is to transform India into a ‘less-cash’ society by touching every Indian with one or other payment services.
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Question 4 of 5
4. Question
Consider the following statements about Cash Reserve Ratio (CRR).
- It is the fraction of the total Net Demand and Time Liabilities (NDTL) of a Scheduled Commercial Bank in India that has to maintain as cash deposit with the RBI.
- It applies uniformly to all banks in the country irrespective of an individual bank’s financial situation or size.
- Non-Bank Financial Corporations (NBFCs) also come under the purview of CRR.
- Banks are paid interest for parking the required cash under CRR.
Which of the above statements is/are correct?
Correct
Solution: a)
Cash Reserve Ratio refers to the fraction of the total Net Demand and Time Liabilities (NDTL) of a Scheduled Commercial Bank held in India, that it has to maintain as cash deposit with the Reserve Bank of India (RBI). The requirement applies uniformly to all banks in the country irrespective of an individual bank’s financial situation or size. In contrast, certain countries e.g. China stipulates separate reserve requirements for ‘large’ and ‘small’ banks.
As per the RBI Act 1934, all Scheduled Commercial Banks (that includes public and private sector banks, foreign banks, regional rural banks and co-operative banks) are required to maintain a cash balance on average with the RBI on a fortnightly basis to cater to the CRR requirement. Non-Bank Financial Corporations (NBFCs) are outside the purview of this reserve requirement.
Presently, banks are not paid any interest on behalf of the RBI for parking the required cash. If a bank fails to meet its required reserve requirements, the RBI is empowered to impose a penalty by charging a penal interest rate.
Incorrect
Solution: a)
Cash Reserve Ratio refers to the fraction of the total Net Demand and Time Liabilities (NDTL) of a Scheduled Commercial Bank held in India, that it has to maintain as cash deposit with the Reserve Bank of India (RBI). The requirement applies uniformly to all banks in the country irrespective of an individual bank’s financial situation or size. In contrast, certain countries e.g. China stipulates separate reserve requirements for ‘large’ and ‘small’ banks.
As per the RBI Act 1934, all Scheduled Commercial Banks (that includes public and private sector banks, foreign banks, regional rural banks and co-operative banks) are required to maintain a cash balance on average with the RBI on a fortnightly basis to cater to the CRR requirement. Non-Bank Financial Corporations (NBFCs) are outside the purview of this reserve requirement.
Presently, banks are not paid any interest on behalf of the RBI for parking the required cash. If a bank fails to meet its required reserve requirements, the RBI is empowered to impose a penalty by charging a penal interest rate.
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Question 5 of 5
5. Question
Consider the following statements about Central Board of Indirect Taxes and Customs.
- Central Board of Indirect Taxes and Customs is a part of Department of Economic Affairs, Ministry of Finance.
- It deals with the tasks of formulation of policy concerning prevention of smuggling and administration of matters relating to Central Goods & Services Tax, IGST and Narcotics.
Which of the above statements is/are correct?
Correct
Solution: b)
Central Board of Indirect Taxes and Customs (erstwhile Central Board of Excise & Customs) is a part of the Department of Revenue under the Ministry of Finance, Government of India. It deals with the tasks of formulation of policy concerning levy and collection of Customs, Central Excise duties, Central Goods & Services Tax and IGST, prevention of smuggling and administration of matters relating to Customs, Central Excise, Central Goods & Services Tax, IGST and Narcotics to the extent under CBIC’s purview. The Board is the administrative authority for its subordinate organizations, including Custom Houses, Central Excise and Central GST Commissionerates and the Central Revenues Control Laboratory.
Incorrect
Solution: b)
Central Board of Indirect Taxes and Customs (erstwhile Central Board of Excise & Customs) is a part of the Department of Revenue under the Ministry of Finance, Government of India. It deals with the tasks of formulation of policy concerning levy and collection of Customs, Central Excise duties, Central Goods & Services Tax and IGST, prevention of smuggling and administration of matters relating to Customs, Central Excise, Central Goods & Services Tax, IGST and Narcotics to the extent under CBIC’s purview. The Board is the administrative authority for its subordinate organizations, including Custom Houses, Central Excise and Central GST Commissionerates and the Central Revenues Control Laboratory.