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Question 1 of 5
1. Question
India has come a long way in liberating the capital account transactions in the last three decades and currently has partial capital account convertibility. Which of the following moves indicate the above statement?
- Easing of external commercial borrowing
- Introducing the Fully Accessible Route (FAR) — through which non-residents can invest in specified government securities without any restrictions
- Increasing the foreign portfolio investment limits in the Indian debt markets
- Allowing outbound FDI by Indian incorporated entities
Select the correct answer code:
Correct
Solution: d)
India has come a long way in liberating the capital account transactions in the last three decades and currently has partial capital account convertibility.
Some of the recent moves include increasing the foreign portfolio investment limits in the Indian debt markets, introducing the Fully Accessible Route (FAR) — through which non-residents can invest in specified government securities without any restrictions and the easing of the external commercial borrowing framework by relaxing end-user restrictions. Inward FDI is allowed in most sectors, and outbound FDI by Indian incorporated entities is allowed as a multiple of their net worth.
Incorrect
Solution: d)
India has come a long way in liberating the capital account transactions in the last three decades and currently has partial capital account convertibility.
Some of the recent moves include increasing the foreign portfolio investment limits in the Indian debt markets, introducing the Fully Accessible Route (FAR) — through which non-residents can invest in specified government securities without any restrictions and the easing of the external commercial borrowing framework by relaxing end-user restrictions. Inward FDI is allowed in most sectors, and outbound FDI by Indian incorporated entities is allowed as a multiple of their net worth.
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Question 2 of 5
2. Question
Consider the following statements.
- Disinvestment involves Selling minority shares of Public Enterprises, to public or private entity.
- When the government sells minority shares in a public sector entity, that is strategic disinvestment.
Which of the above statements is/are correct?
Correct
Solution: a)
What is strategic disinvestment or strategic sale?
When the government decides to transfer the ownership and control of a public sector entity to some other entity, either private or public, the process is called strategic disinvestment.What is the difference between strategic disinvestment/sale and disinvestment
Selling minority shares of Public Enterprises, to another entity be it public or private is disinvestment. In this the government retains ownership of the enterprise. On the other hand, when the government sells majority shares in an enterprise, that is strategic disinvestment/sale. Here, the government gives up the ownership of the entity as well.Incorrect
Solution: a)
What is strategic disinvestment or strategic sale?
When the government decides to transfer the ownership and control of a public sector entity to some other entity, either private or public, the process is called strategic disinvestment.What is the difference between strategic disinvestment/sale and disinvestment
Selling minority shares of Public Enterprises, to another entity be it public or private is disinvestment. In this the government retains ownership of the enterprise. On the other hand, when the government sells majority shares in an enterprise, that is strategic disinvestment/sale. Here, the government gives up the ownership of the entity as well. -
Question 3 of 5
3. Question
Consider the following statements regarding zero-coupon bond.
- Zero Coupon Bonds are issued at a discount and redeemed at par.
- No interest payment is made on such bonds at periodic intervals.
- These are special types of bonds issued only by the Central government specifically to a particular institution.
Which of the above statements is/are correct?
Correct
Solution: b)
A zero-coupon bond is a debt security that does not pay interest but instead trades at a deep discount, rendering a profit at maturity, when the bond is redeemed for its full-face value.
It does not make periodic interest payments or have so-called coupons, hence the term zero coupon bond. When the bond reaches maturity, its investor receives its par (or face) value.
Zero coupon bonds by private companies are normally issued at discount.
Incorrect
Solution: b)
A zero-coupon bond is a debt security that does not pay interest but instead trades at a deep discount, rendering a profit at maturity, when the bond is redeemed for its full-face value.
It does not make periodic interest payments or have so-called coupons, hence the term zero coupon bond. When the bond reaches maturity, its investor receives its par (or face) value.
Zero coupon bonds by private companies are normally issued at discount.
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Question 4 of 5
4. Question
Consider the following statements.
- In India, the National Income estimates is released by the Ministry of Finance.
- GDP is the total value of a country’s annual output of goods and services and It gives the economic output from the consumers’ side.
- Gross Value Added (GVA) is a measure of the contribution to GDP made by an individual producer, industry or sector.
Which of the above statements is/are correct?
Correct
Solution: c)
The National Income estimates is released by National Statistical Office (NSO), Ministry of Statistics and Programme Implementation.
About Gross Domestic product and Gross Value Added:
- GDP is a measure of economic activity in a country. It is the total value of a country’s annual output of goods and services. It gives the economic output from the consumers’ side.
- GVA is the sum of a country’s GDP and net of subsidies and taxes in the economy.
- GVA is defined as the value of output minus the value of intermediate consumption and is a measure of the contribution to growth made by an individual producer, industry or sector.
- It provides the rupee value for the number of goods and services produced in an economy after deducting the cost of inputs and raw materials that have gone into the production of those goods and services.
Gross Value Added = GDP + subsidies on products – taxes on products.
Incorrect
Solution: c)
The National Income estimates is released by National Statistical Office (NSO), Ministry of Statistics and Programme Implementation.
About Gross Domestic product and Gross Value Added:
- GDP is a measure of economic activity in a country. It is the total value of a country’s annual output of goods and services. It gives the economic output from the consumers’ side.
- GVA is the sum of a country’s GDP and net of subsidies and taxes in the economy.
- GVA is defined as the value of output minus the value of intermediate consumption and is a measure of the contribution to growth made by an individual producer, industry or sector.
- It provides the rupee value for the number of goods and services produced in an economy after deducting the cost of inputs and raw materials that have gone into the production of those goods and services.
Gross Value Added = GDP + subsidies on products – taxes on products.
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Question 5 of 5
5. Question
Consider the following statements.
- GDP measures the monetary value of both intermediate and final goods and services.
- GDP also measures the inequality in the economy.
Which of the above statements is/are incorrect?
Correct
Solution: c)
The International Monetary Fund states “GDP measures the monetary value of final goods and services—that is, those that are bought by the final user—produced in a country in a given period of time (say a quarter or a year)”.
It is important to note that GDP maps the “final” goods and services, not the intermediate ones.
For a while now, GDP’s dominance has been questioned.
For instance, is GDP a faulty measure?
It all depends on what you use it for. GDP measures the total market value of goods and services in an economy in a year. Does it claim to measure welfare or wellbeing? No. Does it claim to measure happiness? No. Does it claim to measure inequality? No. Is it a measure of corruption or the lack of it? No. Does it measure the robustness of a democracy? No. Does it measure pollution or climate change? No. Such questions can go on with the same reply.
Incorrect
Solution: c)
The International Monetary Fund states “GDP measures the monetary value of final goods and services—that is, those that are bought by the final user—produced in a country in a given period of time (say a quarter or a year)”.
It is important to note that GDP maps the “final” goods and services, not the intermediate ones.
For a while now, GDP’s dominance has been questioned.
For instance, is GDP a faulty measure?
It all depends on what you use it for. GDP measures the total market value of goods and services in an economy in a year. Does it claim to measure welfare or wellbeing? No. Does it claim to measure happiness? No. Does it claim to measure inequality? No. Is it a measure of corruption or the lack of it? No. Does it measure the robustness of a democracy? No. Does it measure pollution or climate change? No. Such questions can go on with the same reply.
