QUIZ – 2020: INSIGHTS STATIC QUIZ, 4 April 2020 – Economy

Solution: b)

Under Article 112 of the Constitution of India, the Annual Financial Statement has to distinguish expenditure of the Government on revenue account from other expenditures. Government Budget, therefore, comprises of Revenue Budget and Capital Budget.

Capital Budget consists of capital receipts and capital payments.

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.

Capital payments consist of capital expenditure on acquisition of assets like land, buildings, machinery, equipment, as also investments in shares, etc., and loans and advances granted by Central Government to State and Union Territory Governments, Government companies, Corporations and other parties.

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Solution: c)

Banking regulator RBI had bought eight tonnes of gold after almost nine years. The RBI last bought 200 tonnes of gold from the International Monetary Fund in November 2009.

Of the 566 tonnes gold reserves, 292 tonnes is held as backing for Notes issued and the balance 274 tonnes (265.49 tonnes) is treated as an asset of the Banking Department.

The RBI’s decision to buy gold is significant because unlike many other central banks such as the People’s Bank of China, RBI does not regularly trade in gold, although the RBI Act permits it to do so.
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Solution: d)

REITs are similar to mutual funds. While mutual funds provide for an opportunity to invest in equity stocks, REITs allow one to invest in income-generating real estate assets.

They are collective investment vehicles that operate and manage property portfolios and give returns to investors. Securities and Exchange Board of India (Sebi) mandated that all REITS be listed on exchanges and make an initial public offer to raise money.

REITs can reduce the risk related to your property investments as 80 per cent of the value of the REIT should be in completed and rent-generating assets. They are required to be run by professional managements with specified years of experience notified by SEBI.

A REIT can be launched as an initial public offer (IPO). An investor can apply for investment in the REIT through his demat account, either online or by filling up the IPO form and indicating demat account details. After the issue is closed, the REIT will allot units to eligible investors.

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Solution: c)

Economic efficiency is when every scarce resource in an economy is used and distributed among producers and consumers in a way that produces the most economic output and benefit to consumers.

Economic efficiency can involve efficient production decisions within firms and industries, efficient consumption decisions by individual consumers, and efficient distribution of consumer and producer goods across individual consumers and firms.

It is not necessary that income levels will be equal when resources are efficiently allocated.

Solution: a)

Statement 1: Depreciation is the gradual decrease in the economic value of the capital stock of a firm, nation or other entity. It can happen either by physical depreciation like wear and tear or obsolescence or by changes in the demand for the services of the capital in question.

Statement 2: Capital stock is anything that adds to the productive capacity of the economy. Spending on infrastructure actually increase the capital stock of the nation.