QUIZ – 2020: INSIGHTS STATIC QUIZ, 27 March 2020 – Economy

Solution: c)

Liabilities of Reserve Bank

Notes Issued: The currency notes issued by the Reserve Bank are the Reserve Bank’s liability.

Notes in Circulation

Notes held in the Banking Department

Deposits: These represent the cash balances maintained with the Reserve Bank by the Central and State Governments, banks, all India financial institutions, such as, Export Import Bank (EXIM Bank) and NABARD, foreign central banks, international financial institutions, and the balance in different accounts relating to the Employees’ Provident Fund, Gratuity and Superannuation Funds.

Paid-up Capital and Reserve Fund: The Capital of the Bank, of ` 0.05 billion, is held by the Government of India and reserve funds i.e. Credit (Long-term Operations) Fund, National Agricultural Credit (Stabilisation) Fund, National Industrial Credit (Long-term Operations) Fund of the Bank are part of other liability.

Source

Solution: c)

Managed float regime is the current international financial environment in which exchange rates fluctuate from day to day, but central banks attempt to influence their countries’ exchange rates by buying and selling currencies to maintain a certain range.

Objective of this intervention is to minimise the fluctuation in the exchange rate of rupee.

Solution: c)

Revenue receipts are of two types viz. Tax Revenue and Non-tax revenue.

Tax revenues are either direct taxes or indirect taxes. Income Tax, Corporate tax, Gift Tax, Wealth Tax and Property tax etc. are direct taxes. Sales tax, Value Added Tax (VAT), Goods and Services tax (GST) are indirect tax.

Non-Tax Revenue Receipts are those revenue receipts which are not generated by Taxing the public. They include:

Money which the Government earns as “Dividends and profits” from public enterprises (PSUs). Interest which the Government earns on the money lent by it to external or internal borrowers.

Money received through stamp printing, currency printing, medal printing etc.

Money which the government accrues as fees, fines, penalties etc.

Grants the Government of India receives from the external sources.

In case of the state Governments, it may be the internal grant from the central Government.

Solution: d)

MSP is announced for selected crops (22 mandated crops: 14 crops of the kharif season viz. paddy, jowar, bajra, maize, ragi, arhar, moong, urad, groundnut-inshell, soyabean, sunflower, sesamum, nigerseed and cotton; 6 rabi crops viz. wheat, barley, gram, masur(lentil), rapeseed/mustard and safflower ; and two other commercial crops viz. jute and copra; MSPs of toria and de-husked coconut are fixed on the basis of the MSPs of rapeseed/mustard and copra, respectively)

Fair and Remunerative Price (FRP) is announced for sugarcane

MSP price is kept relatively lower than market price.

Solution: d)

Statement 1: If high growth results in an imbalance of supply and demand (greater than supply), then inflation is likely. On the other hand, if supply outstrips demand due to high growth, prices will be depressed.

Statement 2: High growths are necessary for reducing poverty, but high growths may not always reduce poverty.

The benefits of high growth may be restricted to the top earners of the population and little or no benefit may accrue to the BPL.

Also, whether Economic growth results in increase in per capita income depends on whether the population of the country has grown or not. If population growth has outpaced economic growth rate, then per capita income will reduce.