[Mission 2022] QUIZ – 2022: INSIGHTS STATIC QUIZ, 5 May 2022 – Economy

Solution: c)

Within the budgetary process, deficit spending is the amount by which spending exceeds revenue over a particular period of time, also called simply deficit, or budget deficit; the opposite of budget surplus. The term may be applied to the budget of a government, private company, or individual. Government deficit spending was first identified as a necessary economic tool by John Maynard Keynes in the wake of the Great Depression.

Solution: b)

• Commercial Paper (CP) is an unsecured money market instrument issued in the form of a promissory note.
• It was introduced in India in 1990 with a view to enabling highly rated corporate borrowers to diversify their sources of short-term borrowings and to provide an additional instrument to investors. Subsequently, primary dealers and all-India financial institutions were also permitted to issue CP to enable them to meet their short-term funding requirements for their operations. Corporates, primary dealers (PDs) and the All-India Financial Institutions (FIs) are eligible to issue CP.
• Individuals, banking companies, other corporate bodies (registered or incorporated in India) and unincorporated bodies, Non-Resident Indians (NRIs) and Foreign Institutional Investors (FIIs) can invest in CPs. However, investment by FIIs would be within the limits set for them by Securities and Exchange Board of India (SEBI) from time-to-time.

Solution: d)

Fixed capital includes the assets and capital investments, such as property, plant, and equipment (PP&E), that are needed to start up and conduct business, even at a minimal stage. These assets are considered fixed in that they are not consumed or destroyed during the actual production of a good or service but have a reusable value.

Solution: c)

Tax Information Exchange Agreement (TIEA) was developed by the OECD Global Forum Working Group on Effective Exchange of Information.

The agreement also provides for representatives of one country to undertake tax examinations in the other country and will help curb tax evasion and tax avoidance. TIEAs are not binding instruments.

India has notified a tax information exchange agreement (TIEA) with the Marshall Islands

Solution: d)

Priority Sector means those sectors which the Government of India and Reserve Bank of India consider as important for the development of the basic needs of the country and are to be given priority over other sectors. The banks are mandated to encourage the growth of such sectors with adequate and timely credit.

The categories of priority sector are as follows

• Agriculture
• Micro, Small and Medium Enterprises
• Export Credit
• Education
• Housing
• Social Infrastructure
• Renewable Energy
• Others