[Mission 2022] QUIZ – 2022: INSIGHTS STATIC QUIZ, 18 March 2022 – Economy

Solution: a)

Socialistic economy emphasises the collective ownership of the means of production (property and assets). It also ascribes a large role to the state in running the economy.

A socialist economy’s central goal is the welfare of its subjects by progressive and equitable distribution of income, widespread employment, economic growth etc.

Economic efficiency is generally the goal of capitalist economies.

Solution: b)

Cash Reserve Ratio refers to the fraction of the total Net Demand and Time Liabilities (NDTL) of a Scheduled Commercial Bank held in India, that it has to maintain as cash deposit with the Reserve Bank of India (RBI). The requirement applies uniformly to all banks in the country irrespective of an individual bank’s financial situation or size. In contrast, certain countries e.g. China stipulates separate reserve requirements for ‘large’ and ‘small’ banks.

As per the RBI Act 1934, all Scheduled Commercial Banks (that includes public and private sector banks, foreign banks, regional rural banks and co-operative banks) are required to maintain a cash balance on average with the RBI on a fortnightly basis to cater to the CRR requirement.

Presently, banks are not paid any interest on behalf of the RBI for parking the required cash. If a bank fails to meet its required reserve requirements, the RBI is empowered to impose a penalty by charging a penal interest rate.

Solution: d)

Despite all the disruptions caused by the global pandemic, India’s balance of payments remained in surplus throughout the last two years. This allowed the Reserve Bank of India to keep accumulating foreign exchange reserves, which stands at US$634 billion on 31st December 2021). This is equivalent to 13.2 months of imports and higher than the country’s external debt. As of end-November 2021, India was the fourth largest foreign exchange reserves holder in the world after China, Japan, and Switzerland.

Solution: c)

Solution: c)

An angel investor (also known as a private investor, seed investor or angel funder) is a high-net-worth individual who provides financial backing for small startups or entrepreneurs, typically in exchange for ownership equity in the company. Often, angel investors are found among an entrepreneur’s family and friends.

The funds that angel investors provide may be a one-time investment to help the business get off the ground or an ongoing injection to support and carry the company through its difficult early stages.

• Angel investing is often the primary source of funding for many startups who find it more appealing than other, more predatory, forms of funding.
• The support that angel investors provide startups fosters innovation which translates into economic growth.

A venture capitalist (VC) is a private equity investor that provides capital to companies exhibiting high growth potential in exchange for an equity stake.