[Mission 2024] STATIC QUIZ, 16 October 2023 – Economy

Solution: b)

Exchange rate of a currency may be fixed by a central bank or left to the market forces of demand and supply. When the value is changed by the central bank it is called devaluation. If market forces bring down the value due to demand falling behind supply of the currency, it leads to depreciation.

In the Balance of Payments, the movements of money without exchange for goods or services called ‘remittances’ and charities are part of Current account.

Solution: c)

Option 3 is incorrect.

The BoP is essentially the overall ledger of how much rupee was demanded by the rest of the world and how much foreign currency (that is, currencies of all countries) was demanded by Indians.

The BoP is divided into two “accounts” — current and capital. Current account refers to all transactions that are related to current consumption; capital account refers to transactions for investment purposes.

All transactions involving export or import of goods (cars, gadgets etc) are logged under the “trade account” within the current account.

But people also trade in “invisibles”. Essentially, this refers to export and import of services (such as an Indian company selling software to an American firm, or a European bank providing financial services to some Indians, or simply Indians working abroad sending back money to their families in India).

The capital account, on the other hand involves investments (such as an Indian buying land in the US, or a Japanese firm investing in the Indian stock exchange) as well as exchange of loans between India and other countries.

Solution: a)

If external aid is a grant or coming without interest, no better way to finance the deficit, if we ignore their inflationary effects.

When the domestic market has limited amount of funds, and if the government desires to borrow a large share of it to finance the fiscal deficit, it tends to raise the demand for funds in the market. This shoots the market interest rate for the funds and causes problems to the domestic investors who now have to pay a higher interest rate to avail the same loan.

If the same money is borrowed from abroad, the crowing out effect doesn’t occur.

Solution: c)

Non-tariff measure (NTMs) are defined as policy measures, other than ordinary customs tariffs, that can potentially have an economic effect on international trade in goods, changing quantities traded, or prices or both.

As a result, NTMs cover a broad range of policies including traditional trade policy instruments, such as quotas or price controls.

However, they also comprise technical regulatory measures that pursue important non-trade objectives that relate to health and environmental protection, such as Sanitary and Phytosanitary (SPS) measures and Technical Barriers to Trade (TBT).

Solution: b)

Statement 1 is incorrect.

Indian Patents Act, 1970:

• It replaced the Indian Patents and Designs Act 1911.
• The Act was amended by the Patents (Amendment) Act, 2005, wherein product patent was extended to all fields of technology including food, drugs, chemicals and microorganisms.
• After the amendment, the provisions relating to Exclusive Marketing Rights (EMRs) have been repealed, and a provision for enabling grant of compulsory license has been introduced.
• The provisions relating to pre-grant and post-grant opposition have also been introduced.

Article 3(d) of the Indian Patent Act prevents the mere discovery of any new property or new use for a known substance from being patented as an invention unless it enhances the efficacy of the substance repetitively. This prevents what is known as “evergreening” of patents.

In respect of each of the main areas of intellectual property covered by the TRIPS Agreement, the Agreement sets out the minimum standards of protection to be provided by each Member.