QUIZ – 2020: INSIGHTS STATIC QUIZ, 24 January 2020 – Economy

Solution: c)

In a capitalist society the goods produced are distributed among people not on the basis of what people need but on the basis of Purchasing Power—the ability to buy goods and services.

In a socialist society the government decides what goods are to be produced in accordance with the needs of society. It is assumed that the government knows what is good for the people of the country and so the desires of individual consumers are not given much importance. The government decides how goods are to be produced and how they should be distributed. In principle, distribution under socialism is supposed to be based on what people need and not on what they can afford to purchase.

Solution: c)

The primary motive of the colonial government behind this policy of systematically deindustrialising India was two-fold. The intention was, first, to reduce India to the status of a mere exporter of important raw materials for the upcoming modern industries in Britain and, second, to turn India into a sprawling market for the finished

products of those industries so that their continued expansion could be ensured to the maximum advantage of their home country — Britain.

Solution: b)

If a nation has the same stock of land, labour and capital, and yet it achieves high rates of GDP growth consistently. If inputs are same, how does output increase over time?

Either the individual productivities of factors would have increased, or the total combined productivity of the economy has increased.

This can happen either by better technology, better infrastructure etc that improve the total factor productivity of the economy. Suppose, now a factory requires 10 hours to produce a good. With better techniques of production, the same can be achieved in 2 hours.

Technology growth and efficiency are regarded as two of the biggest sub-sections of Total Factor Productivity.

Solution: d)

Primary Deficit: We must note that the borrowing requirement of the government includes interest obligations on accumulated debt. To obtain an estimate of borrowing on account of current expenditures exceeding revenues, we need to calculate what has been called the primary deficit. It is simply the fiscal deficit minus the interest payments

Gross primary deficit = Gross fiscal deficit – net interest liabilities

Net interest liabilities consist of interest payments minus interest receipts by the government on net domestic lending.

Solution: a)

An IFSC is thus a jurisdiction that provides world class financial services to non-residents and residents, to the extent permissible under the current regulations, in a currency other than the domestic currency (Indian rupee) of the location where the IFSC is located.

Products and Services at IFSCs:

• Fund Raising for individuals, corporations and governments (sovereign and sub sovereign)
• Asset Management and Global Portfolio Diversification
• Personal Wealth Management (PWM) for high-net worth individuals (HNWIs).
• Global Tax Management and Cross- border Tax Liability Optimisation