Insights Static Quiz -282, 2019–Economy

Solution: c)

Marginal Standing Facility (MSF) was announced by the Reserve Bank of India (RBI) in its Monetary Policy (2011-12) and refers to the penal rate at which banks can borrow money from the central bank over and above what is available to them through the LAF window.

MSF is always fixed above the repo rate. The MSF would be a penal rate for banks and the banks can borrow funds by pledging government securities within the limits of the statutory liquidity ratio.

As on April 03, 2019, Repo Rate is 6.25% and MSF is 6.5% (MSF was originally intended to be 1% above the repo rate).

Solution: c)

The WPI and the CPI baskets are different, both at the weightage assigned to food, fuel and manufactured items as well as at the broken-down level of these segments. The weight of food in CPI is higher than in WPI.

The WPI inflation does not capture price changes of services but the CPI does.

WPI inflation is released by Office of the Economic Adviser (OEA), Department for Promotion of Industry and Internal Trade (DPIIT).

CPI for Industrial workers CPI(IW), CPI for Rural Labourers (RL) and CPI for Agricultural Labourers CPI(AL) are compiled by Labour Bureau.

CPI(Urban), CPI(Rural) and CPI Combined are compiled by Central Statistical Organisation (CSO).

Solution: d)

Controller General of Accounts (CGA), in the Department of Expenditure, Ministry of Finance, is the Principal Accounting Adviser to Government of India and is responsible for establishing and maintaining a technically sound Management Accounting System.

The Office of CGA prepares monthly and annual analysis of expenditure, revenues, borrowings and various fiscal indicators for the Union Government.

Controller General of Accounts derives his mandate from Article 150 of the Constitution. This statutory mandate as incorporated in the Allocation of Business Rules 1961 brings out the duties and responsibilities of CGA.

Controller General of Accounts (CGA) is:

• The Principal Advisor on Accounting matters to the Union Government
• Responsible for establishing and managing a technically sound Management Accounting System
• Responsible for preparation and submission of the accounts of the Union Government
• Responsible for exchequer control and internal audits

Source

Solution: c)

Externalities occur when producing or consuming a good cause an impact on third parties not directly related to the transaction.

Externalities can either be positive or negative.

Positive Externality

A farmer grows apple trees. An external benefit is that he provides nectar for a nearby beekeeper who gains increased honey as a result of the farmers’ orchard. The beekeeper provides an external benefit to the apple grower because his bees help to fertilise the apple tree.

Negative Externality

Making furniture by cutting down rainforests in the Amazon leads to negative externalities to other people. Firstly, it harms the indigenous people of the Amazon rainforest. It also leads to higher global warming as there are fewer trees to absorb carbon dioxide.

Solution: d)

The government of Pakistan has decided to launch Panda Bonds to raise loans from Chinese capital markets.

A Panda bond is a Chinese renminbi-denominated bond from a non-Chinese issuer, sold in the People’s Republic of China. These bonds were first issued in 2005 by the International Finance Corporation and the Asian Development Bank.