DAY – 2 ( INSTA REVISION TEST – 2 )INSTA REVISION PLAN 3.0, 2021

Solution: B

Consumer Price Index in India is published monthly by the Central Statistical Organization (CSO). Consumer Price Indices (CPI) measure changes over time in the general level of prices of goods and services that households acquire for consumption.

National Consumer Price Index Numbers

• Current Status
  • At the national level, there are four Consumer Price Index (CPI) numbers. These are:
    • CPI for Industrial Workers (IW),
    • CPI for Agricultural Labourers (AL), CPI for Rural Labourers (RL) and
    • CPI for Urban Non-Manual Employees (UNME).
  • The base years of the current series of CPI(IW), CPI(AL) and CPI(RL), and CPI(UNME) are 1982, 1986-87 and 1984-85, respectively.
  • While the first three are compiled and released by the Labour Bureau in the Ministry of Labour.
  • the fourth one is released by the Central Statistical Organisation in the Ministry of Statistics and Programme Implementation.

Who publishes WPI in India and what does it show?

Analysts use the numbers to track the supply and demand dynamics in industry, manufacturing and construction. The numbers are released by the Economic Advisor in the Ministry of Commerce and Industry. An upward surge in the WPI print indicates inflationary pressure in the economy and vice versa.

The Index of Industrial Production (IIP) is an index which shows the growth rates in different industry groups of the economy in a stipulated period of time. The IIP index is computed and published by the Central Statistical Organisation (CSO) on a monthly basis.

Solution: B

The Index of Eight Core Industries (ICI)

The monthly Index of Eight Core Industries (ICI) is a production volume index. ICI measures collective and individual performance of production in selected eight core industries viz. Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement and Electricity.

The Index is compiled and released by Office of the Economic Adviser (OEA), Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce & Industry.

The base year of the ICI has been revised to 2011-12 from 2004-05 in alignment with the new series of IIP. Combined weight of these eight core industries is 40.27 percent of IIP with base 2011-12. The Index is calculated by using the Laspeyre’s formula of weighted arithmetic mean of quantity relatives.

Solution: C

Following methods are used by government to fight Inflation

1. Monetary Policy Measures
   • To fight Inflation, RBI must increase When SLR is increased, Banks are required to maintaining a higher amount with themselves in safe and liquid assets —- > Thus Bank’s ability to lend to market decreases —-> Lending rates will increase. Liquidity in the market decreases —> Thus inflation is contained
   • To fight Inflation, RBI must increase When CRR is increased, Banks are required to maintaining a higher cash balance with the RBI —- > Thus Bank’s ability to lend to market decreases —->Liquidity in the market decreases.  Lending rates will increase.  —> Thus inflation is contained
   • During high levels of inflation, RBI increases Repo Rate to bring down flow of money in the economy. Rise in Repo rate disincentives banks to borrow from RBI. Thus liquidity in the market decreases. The lending rates increase making borrowing a costly affair for businesses and industries, which in turn slows down investment and money supply in the market. It helps in controlling inflation
   • To fight high levels of inflation, RBI increases reverse Repo rate. It makes it attractive for the bank to park funds with the RBI (More certainty of return + more interest rate) rather than to lend to the private sector. It thus  reduces the liquidity in the market and increases the interest rate on borrowing.  Private players will find it costly to borrow and thus investment decreases. It helps to contain inflation. Hence, statement 2 is incorrect.

2. Fiscal Policy Measures

• When inflation is high, the government reduces public expenditure. Decline in public expenditure affects private investment and results in decline of aggregate demand.
• In case of high inflation, government may resort to increasing personal or corporate taxes to reduce household expenditure/ private investment. Rise in taxation leaves lesser money with the people for consumption (and private players for investment). This would lead to decline in aggregate demand and help in containing rising inflation.
• These other measures include direct price controls, check over speculation and hoarding, use of buffer stocks, ban on exports, imports to augment the domestic supply and ban on futures trading in commodities.

Solution: D

All the above statements are correct.

Demand-Pull Inflation

This type of inflation is caused due to an increase in aggregate demand in the economy.

Causes of Demand-Pull Inflation:

• A growing economy or increase in the supply of money – When consumers feel confident, they spend more and take on more debt. This leads to a steady increase in demand, which means higher prices.
• Asset inflation or Increase in Forex reserves– A sudden rise in exports forces a depreciation of the currencies involved.
• Government spending or Deficit financing by the government – When the government spends more freely, prices go up.
• Due to fiscal stimulus.
• Increased borrowing.
• Depreciation of rupee.
• Low unemployment rate.

Effects of Demand-Pull Inflation:

• Shortage in supply
• Increase in the prices of the goods (inflation).
• The overall increase in the cost of living.

Cost-Push Inflation:

This type of inflation is caused due to various reasons such as:

• Increase in price of inputs
• Hoarding and Speculation of commodities
• Defective Supply chain
• Increase in indirect taxes
• Depreciation of Currency
• Crude oil price fluctuation
• Defective food supply chain
• Low growth of Agricultural sector
• Food Inflation
• Interest rates increased by RBI

Cost pull inflation is considered bad among the two types of inflation. Because the National Income is reduced along with the reduction in supply in the Cost-push type of inflation.

Solution: D

What Is Stagflation?

Stagflation is characterized by slow economic growth and relatively high unemployment—or economic stagnation—which is at the same time accompanied by rising prices (i.e. inflation). Stagflation can be alternatively defined as a period of inflation combined with a decline in gross domestic product (GDP).

Headline Inflation

Headline Inflation is the measure of total inflation within an economy. It includes price rise in food, fuel and all other commodities.

Core Inflation

Core inflation is also a term used to denote the extend of inflation in an economy. But Core inflation does not consider the inflation in food and fuel. This is a concept derived from headline inflation.

Skewflation means the skewness of inflation among different sectors of the economy — some sectors are facing huge inflation, some none and some deflation.

Solution: D

Delimitation Commission:

• The Delimitation Commission is appointed by the President of India and works in collaboration with the Election Commission of India.
• Composition:
• Retired Supreme Court judge
• Chief Election Commissioner
• Respective State Election Commissioners.
• Functions:
• To determine the number and boundaries of constituencies to make population of all constituencies nearly equal.
• To identify seats reserved for Scheduled Castes and Scheduled Tribes, wherever their population is relatively large.
• The Delimitation Commission in India is a high-power body whose orders have the force of law and cannot be called in question before any court.
• When the orders of the Delimitation Commission are laid before the LokSabha or State Legislative Assembly, they cannot affect any modifications in the orders.

Solution: C

Recognition of National Parties:

• The Election Commission registers political parties for the purpose of elections and grants them recognition as national or state parties on the basis of their poll performance.
• The other parties are simply declared as registered unrecognised parties.
• The recognition granted by the Commission to the parties determines their right to certain privileges like allocation of the party symbols, provision of time for political broadcasts on the state-owned television and radio stations and access to electoral rolls.
• Every national party is allotted a symbol exclusively reserved for its use throughout the country.
• The NPP is the eighth party to get that recognition — after INC, BJP, BSP, NCP, CPI, CPI(M) and TMC — and the first from the Northeast

Conditions for Recognition as a National Party:

A party is recognised as a national party if any of the following conditions is fulfilled:

• If it secures six per cent of valid votes polled in any four or more states at a general election to the Lok Sabha or to the legislative assembly; and, in addition, it wins four seats in the Lok Sabha from any state or states; or
• If it wins two per cent of seats in the Lok Sabha at a general election; and these candidates are elected from three states; or
• If it is recognised as a state party in four states.

Solution: C

National Payments Corporation of India

• The National Payments Corporation of India (NPCI) serves as an umbrella body for the operation of retail payment in India.
• This organization was established by the Reserve Bank of India along with the Indian Bank’s Association.
• This organization was founded in the year 2008 under the Payment and Settlement Systems Act, 2007.
• NPCI has been incorporated as a ‘not for profit’ company under section 8 of Companies Act 2013.

Solution: C

United Nations Conference on Trade and Development (UNCTAD):

• UNCTAD is a permanent intergovernmental body established by the United NationsGeneral Assembly in 1964.
• It is part of the UN Secretariat. It reports to the UN General Assembly and the Economic and Social Council,but has its own membership, leadership, and budget. It is also a part of the United Nations Development Group.

Objectives and roles:

It supports developing countries to access the benefits of a globalized economy more fairly and effectively. Along with other UN departments and agencies, it also measures the progress made in the Sustainable Development Goals, as set out in Agenda 2030.

Reports published by UNCTAD are:

• Trade and Development Report
• World Investment Report
• Technology and Innovation Report
• Digital Economy Report

Solution: A

The Ministry of Health and Family Welfare has launched a campaign called Social Awareness and Action to Neutralise Pneumonia Successfully (SAANS). The aim is to reduce child mortality due to pneumonia, which contributes to around 15% of deaths of children under the age of five annually.

WASTHYA Portal (Tribal Health and Nutrition Portal): It is a one-stop solution presenting all information pertaining to tribal health and nutrition related to Scheduled Tribe people. Launched by Ministry of Tribal Affairs

Nasha Mukt Bharat campaign Launched for on the occasion of “International Day Against Drug Abuse and Illicit Trafficking”. Launched by the Ministry of Social Justice and Empowerment.

Solution: A

Cash Management Bills (CMBs) are short term bills issued by central government to meet its immediate cash needs.

The bills are issued by the RBI on behalf of the government. Hence the CMBs are short-term money market instruments that help the government to meet its temporary cash flow mismatches.

CMBs are eligible as SLR securities. Investment in CMBs is also recognized as an eligible investment in Government securities by banks for SLR purpose under Section 24 of the Banking Regulation Act, 1949.

Solution: C

Currency futures are a transferable futures contract that specifies the price at which a currency can be bought or sold at a future date. Currency futures contracts are legally binding and counterparties that are still holding the contracts on the expiration date must trade the currency pair at a specified price on the specified delivery date. Currency future contracts allow investors to hedge against foreign exchange risk. Thus, it is being promoted by SEBI.

Insider trading is defined as a malpractice wherein trade of a company’s securities is undertaken by people who by virtue of their work have access to the otherwise non- public information which can be crucial for making investment decisions. Thus, it is highly discouraged by the Securities and Exchange Board of India to promote fair trading in the market for the benefit of the common investor.
Start-up companies with a potential to grow need a certain amount of investment. Wealthy investors like to invest their capital in such businesses with a long-term growth perspective. This capital is known as venture capital and the investors are called venture capitalists. Thus, it is being promoted by SEBI.

Initial public offering (IPO) is the process by which a private company can go public by sale of its stocks to general public. It could be a new, young company or an old company which decides to be listed on an exchange and hence goes public. Companies can raise equity capital with the help of an IPO by issuing new shares to the public or the existing shareholders can sell their shares to the public without raising any fresh capital. Thus, it is being promoted by SEBI.

Solution: D

What are the different categories under priority sector?

Priority Sector includes the following categories:

(i) Agriculture
(ii) Micro, Small and Medium Enterprises
(iii) Export Credit
(iv) Education
(v) Housing
(vi) Social Infrastructure
(vii) Renewable Energy
(viii) Others

https://www.rbi.org.in/scripts/FAQView.aspx?Id=87

Solution: B

Ad valorem tax, any tax imposed on the basis of the monetary value of the taxed item. Literally the term means “according to value.”

Ad valorem rates, which have come into increased use, have the important advantage of adjusting the tax burden according to the amount the consumer spends on the taxed items. They thus avoid the serious discrimination of specific rates against the low-priced varieties of the commodities. Thus, they are progressive form of taxation.

Solution: B

A tax base is the total amount of assets or revenue that a government can tax.

To increase the tax base India should bring more sectors into the purview of tax regime. Thus, bringing agriculture sector into the purview of income tax likely to increase the tax base.

Encouraging entrepreneurial activity will increase the profit of existing companies as well as encourage the mushrooming of new companies. Thus, it is likely to increase the tax base.

Promoting cash transaction will increase the unaccounted money in the economy. Thus, lead to increase in the black money. Therefore, it is unlikely to increase the tax base.

Solution: B

A thermoplastic is a material, usually a plastic polymer, which becomes soft when heated and hard when cooled. They have very low melting point. Hence, statement 1 is incorrect.

Thermoplastic materials can be cooled and heated several times without any change in their chemistry or mechanical properties. When thermoplastics are heated, they melt to a liquid. They freeze to a glassy state when cooled enough.

Thermoplastic materials have many features. Some products made from thermoplastic materials are used for electronic applications. They protect against electrostatic discharge and radio frequency interference. Thermoplastics are one of the main two types of plastics.

Thermoplastic can be moulded into any shape. Thermoplastics differ from thermosetting polymers. Thermosets form irreversible chemical bonds during the curing process.

The most produced plastics are:

Polyethylene (PE)

Polypropylene

Polyvinyl chloride (PVC). Hence, statement 3 is correct.

Solution: A

Central Zoo Authority was established as a statutory body under the Ministry of Environment & Forests by the Government of India in the year 1992.

The Authority consists of a Chairman, ten members and a Member Secretary. Section 38 A to 38 J was added to the Wildlife (Protection) Act, 1972 for establishment of the Central Zoo Authority in India.

The main objective of this Authority is to complement and strengthen the national effort in conservation of the rich biodiversity of the country, particularly the fauna as per the National Zoo Policy, 1998.

Other objectives of this Authority include- enforcing minimum standards and norms for upkeep and healthcare of animals in Indian zoos and to control mushrooming of unplanned and ill-conceived zoos.

Every zoo in the country is required to obtain recognition from the Authority for its operation. The Authority evaluates the zoos with reference to the parameters prescribed under the Rules and grants recognition, accordingly.

The Authority’s role is more of a facilitator than a regulator. It therefore, provides technical and financial assistance to such zoos which have the potential to attain the desired standard in animal management.

Apart from the primary function of grant of recognition. the Central Zoo Authority also regulates the exchange of animals of endangered category listed under Schedule- I and II of the Wildlife (Protection) Act, 1972 among zoos.

http://cza.nic.in/page/en/introduction

Solution: C

As per 10th Plan document of Planning Commission relating to the Forests and Environment sector , the National Afforestation Programme (NAP) Scheme was initiated by scaling-up the SGVSY project experience and converging all afforestation schemes of the 9th Plan period to avoid duplicity or redundancy, and at the same time keeping in focus the decentralization agenda of the government. NAP is being operated as a 100% Central Sector Scheme.

The overall objective of the scheme is to develop the forest resources with people’s participation, with focus on improvement in livelihoods of the forest-fringe communities, especially the poor.

NAP Scheme aims to support and accelerate the ongoing process of devolving forest protection, management and development functions to decentralized institutions of Joint Forest Management Committee (JFMC) at the village level, and Forest Development Agency (FDA) at the forest division level.

The NAP Scheme is being implemented through two-tier decentralized mechanism of Forest Development Agency (FDA) at Forest Division Level and Joint Forest Management Committees (JFMCs) at the village level.

India has witnessed a minor increase in the percentage of the land area under forest cover from 1950 to 2006.  38% of forest is categorized as subtropical dry deciduous and 30% as tropical moist deciduous plus other smaller groups. It is taken care that only local species are planted in an area. Trees bearing fruits are preferred wherever possible due to their function as a food source.

Solution: B

Red Panda is closely associated with montane forests with dense bamboo-thicket. It is found Sikkim, West Bengal and Arunachal Pradesh. It is poached for its meat, and for use in medicines, and as a pet.

The IUCN has categorized Red Panda as ‘Endangered’.

Solution: C

• The Archaeological Survey of India (ASI), under the Ministry of Culture, is the premier organization for the archaeological researches and protection of the cultural heritage of the nation.
• The prime objection of ASI is to maintain the archaeological sites, ancient monuments and remains of national importance. It also regulates Antiquities and Art Treasure Act, 1972.

Solution: A

Aflatoxins are a family of toxins produced by certain fungi that are found on agricultural crops such as maize (corn), peanuts, cottonseed, and tree nuts.

The main fungi that produce aflatoxins are Aspergillus flavus and Aspergillus parasiticus, which are abundant in warm and humid regions of the world.  Aflatoxin-producing fungi can contaminate crops in the field, at harvest, and during storage.

Exposure to aflatoxins is associated with an increased risk of liver cancer.

Solution: C

The five Indian states that share a land border with Nepal are Uttarakhand, Uttar Pradesh, Bihar, West Bengal, and Sikkim.

The Sharda River demarcates Nepal’s western border with India. It descends from 3,600 m at Kalapani to 200 m as it enters the Terai plains in Uttar Pradesh, flowing southeast across the plains to join the Ghaghra river, a tributary of the Ganges.

Exercise SURYA KIRAN is a biannual event which is conducted alternatively in Nepal and India.  Notably in the series of military training exercises undertaken by India with various countries, Exercise SURYA KIRAN with Nepal is the largest in terms of troop participation.

Solution: C

The Qualified Foreign Investor (QFI) is sub-category of Foreign Portfolio Investor and refers to any foreign individuals, groups or associations, or resident, however, restricted to those from a country that is a member of Financial Action Task Force (FATF) or a country that is a member of a group which is a member of FATF and a country that is a signatory to International Organization of Securities Commission’s (IOSCO) Multilateral Memorandum of Understanding (MMOU).

QFI scheme was introduced by Government of India in consultation with RBI and SEBI in the year 2011, through a Union Budget announcement.

The objective of enabling QFIs is to deepen and infuse more foreign funds in the Indian capital market and to reduce market volatility as individuals are considered to be long term investors, as compared to institutional investors.

QFIs are allowed to make investments in the following instruments by opening a demat account in any of the SEBI approved Qualified Depository Participant (QDP):

• Equity and Debt schemes of Indian mutual funds,
• Equity shares listed on recognized stock exchanges,
• Equity shares offered through public offers
• Corporate bonds listed/to be listed on recognized stock exchanges
• G-Securities, T-Bills and Commercial Papers

http://www.arthapedia.in/index.php?title=Qualified_Foreign_Investors_(QFIs)

Solution: C

The International Monetary Fund (IMF), also known as the Fund, is an international organization headquartered in Washington, D.C., consisting of 189 countries working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world while periodically depending on World Bank for its resources.

International Monetary Fund can lend loan to member countries only.

In 2011 the world’s largest developing countries, the BRIC nations, issued a statement declaring that the tradition of appointing a European as managing director undermined the legitimacy of the IMF and called for the appointment to be merit-based.

Solution: D

The Ashok Dalwai committee is related “doubling farmers” income is achieved by 2022

Solution: C

Let each side of the square = 10 units

So, Area of square = 10 × 10 = 100 sq units

Now, Length of the rectangle= 10 + 30% of 10 = 13 units

And Breadth of the rectangle= 10 – 30% of 10= 7 units

So, Area of rectangle = 13 x 7= 91 sq units.

We know that actual area of square = 110 sq m

So, actual area of rectangle = (91/100) x 110 = 100.1 sq m

Solution: A

There are 3 married couples in the family. It means there will be 3 men and 3 women. It’s clear that B, C and D are women, hence A, E and F must be men.

As each team won different number of matches, the number of matches won by different teams must be 2, 1 and 0.

A and D have lost all their matches and hence must be a couple. As B is the mother-in-law of C and won against her and E has defeated his son too.

Hence, E and B must be a pair, the other being F and C. F is the son of E and B. Moreover, it’s clear that E-B won all their matches.

Solution: A

There are 3 married couples in the family. It means there will be 3 men and 3 women. It’s clear that B, C and D are women, hence A, E and F must be men.

As each team won different number of matches, the number of matches won by different teams must be 2, 1 and 0.

A and D have lost all their matches and hence must be a couple. As B is the mother-in-law of C and won against her and E has defeated his son too.

Hence, E and B must be a pair, the other being F and C. F is the son of E and B. Moreover, it’s clear that E-B won all their matches.

Solution: C

There are 3 married couples in the family. It means there will be 3 men and 3 women. It’s clear that B, C and D are women, hence A, E and F must be men.

As each team won different number of matches, the number of matches won by different teams must be 2, 1 and 0.

A and D have lost all their matches and hence must be a couple.

Solution: D

The passage tells that, running behind happiness is not the right way to measure progress because, it may not consider most inevitable economic indicators like jobs.

1. Statement A is wrong completely against essence of the passage
2. Statement B is wrong; Happiness measurement complementing economic measurement is not the main thrust of this passage
3. Statement C is wrong; it is outside the context to consider political justice which has no specific relevance to the passage
4. Statement D is correct. It clarifies us in following happiness measurements we may lose out economic indicators.