DAY – 2 Insta 75 Days Revision Plan 2.0 -2024: Subject – Economy

Solution: C

Real GDP is calculated in a way such that the goods and services are evaluated at some constant set of prices (or constant prices). Since these prices remain fixed, if the Real GDP changes, we can be sure that it is the volume of production which is undergoing changes. Nominal GDP, on the other hand, is simply the value of GDP at the current prevailing prices.

GDP Deflator is the ratio between Nominal and real GDP, or equal to Nominal GDP/Real GDP.

GDP deflator can increase only if either:

Real GDP has reduced with nominal GDP constant

Nominal GDP has increased with either a constant real GDP or decreased real GDP

or that the increase in nominal GDP is much greater than the increase in real GDP

In option A and B, it is not sure as to what has happened to the other GDP figure, so if in option A real GDP grows more than nominal GDP, then there won’t be an increase in GDP deflator. You can think likewise for option B. Hence, the correct answer is option C.

Solution C

The base effect refers to the impact of the rise in price level (i.e. last year’s inflation) in the previous year over the corresponding rise in price levels in the current year (i.e., current inflation).

If the price index had risen at a high rate in the corresponding period of the previous year leading to a high inflation rate, some of the potential rise is already factored in, therefore a similar absolute increase in the Price index in the current year will lead to a relatively lower inflation rates.

On the other hand, if the inflation rate was too low or negative in the corresponding period of the previous year, even a relatively smaller rise in the Price Index will arithmetically give a high rate of current inflation. So, option C is the most appropriate response.

Solution C

India is the second largest producer of silk in the world. Among the four varieties of silk produced, Mulberry accounts for 71.8% (20,434 MT), Tasar 9.9% (2,818 MT), Eri 17.8% (5,054 MT) and Muga 0.6% (166 MT) of the total raw silk production of 28,472 MT. Hence Statement 1 is incorrect.

Overall the NE region contributes 18% of India’s total silk production. Hence, statement 2 is incorrect.

India has the unique distinction of being the only country producing all the five known commercial silks, namely, mulberry, tropical tasar, oak tasar, eri and muga, of which muga with its golden yellow glitter is unique and prerogative of India. Hence, statement 3 is incorrect.

Solution: B

India is the third largest energy consumer in the world after the USA and China. Hence, statement 1 is incorrect.

India with a refining capacity of 249.4 MMTPA is the fourth largest in the world after the United States, China and Russia. Hence, statement 2 is correct.

Solution D

Capital Goods refer to products that are used in the production of other products but are not incorporated into the new product. These include machine tools, industrial machinery, process plant equipment, construction & mining equipment, electrical equipment, textile machinery, printing & packaging machinery etc.

They are deployed to help increase future production. Consumer goods are any goods that are not capital goods; they are goods used by consumers and have no future productive use. Hence all statements are correct.

Solution B

Trademark is a visual symbol which may be a word signature, name, device, label, numerals or combination of colours used by one undertaking on goods or services or other articles of commerce to distinguish it from other similar goods or services originating from a different undertaking.

Different types of trademarks that may be registered in India:

• Any name (including personal or surname of the applicant or predecessor in business or the signature of the person), which is not unusual for trade to adopt as a mark. Hence Statement 1 is correct.
• An invented word or any arbitrary dictionary word or words, not being directly descriptive of the character or quality of the goods/service.
• Letters or numerals or any combination thereof.
• The right to proprietorship of a trademark may be acquired by either registration under the Act or by use in relation to particular goods or service.
• Devices, including fancy devices or symbols
• Monograms
• Combination of colors or even a single color in combination with a word or device
• Shape of goods or their packaging. Hence Statement 2 is correct.
• Marks constituting a 3- dimensional sign. Hence Statement 3 is incorrect.
• Sound marks when represented in conventional notation or described in words by being graphically represented.

The Controller General of Patents, Designs and Trade Marks heads the TRADE MARKS Registry offices and functions as the Registrar of TRADE MARKS.

Solution C

The difference between a regular bond and a zero-coupon bond is the payment of interest, otherwise known as coupons. A regular bond pays interest to bondholders, while a zero-coupon bond does not issue such interest payments. Instead, zero-coupon bondholders merely receive the face value of the bond when it reaches maturity. Regular bonds, which are also called coupon bonds, pay interest over the life of the bond and also repay the principal at maturity.

Long-term zero-coupon bond investors gain the difference between the price they pay for the bond and the amount they receive at the bond’s maturity. This amount can be substantial because zero-coupon bonds are typically purchased at deep discounts to the bond’s face value. This discount frequently leads to higher returns in the long-run.

A zero-coupon bond will usually have higher returns than a regular bond with the same maturity because of the shape of the yield curve. With a normal yield curve, long-term bonds have higher yields than short-term bonds. The interest payments made by regular coupon bonds are due before the date of maturity, so those payments are like small zero-coupon bonds that mature earlier. Interest payments cut down the wait time and the risk, so they also reduce expected returns.

Hence both the statements are correct.

Solution A

Bond is an instrument of raising long-term debt on which the bond-issuer pays a periodic interest (known as ‘coupon’ ). In theory, bonds could be issued by governments as well as private companies. Hence Statement 2 is correct

Bonds generally have a maturity period, however, some bonds might not have any definite maturity period (which are known as ‘Perpetual Bonds’ ). Hence statement 3 is incorrect.

Debentures generally have a more specific purpose than other bonds. These debt securities are a common form of long-term financing taken out by corporations. Hence Statement 1 is incorrect.

Solution: A

Accommodative monetary policy, also known as loose credit or easy monetary policy, occurs when a central bank (such as the Federal Reserve) attempts to expand the overall money supply to boost the economy when growth is slowing (as measured by GDP). The policy is implemented to allow the money supply to rise in line with national income and the demand for money. Hence, statement 2 is incorrect.

Solution D

All Small Finance Banks (SFBs) eligible under the Liquidity Adjustment Facility (LAF) can participate in the Special Long term repo Scheme.

Hence all 3 statements are incorrect.

Answer: D

Explanation:

Option (a) is correct: “Certificate of Deposit” or “CD” is a negotiable, unsecured money market instrument issued by a bank as a Usance Promissory Note against funds deposited at the bank for a maturity period upto one year.

Option (b) is correct: CDs shall be traded either in Over-the-Counter (OTC) markets, including on Electronic Trading Platforms, or on recognised stock exchanges with the approval of the Reserve Bank.

The settlement cycle for OTC trades in CDs shall be T+0 or T+1.

Banks are not allowed to grant loans against CDs, unless specifically permitted by the Reserve Bank.

Option (c) is correct: CDs shall be issued only in dematerialised form and held with a depository registered with Securities and Exchange Board of India.

CDs shall be issued in minimum denomination of ₹5 lakh and in multiples of ₹5 lakh thereafter.

Option (d) is not correct: Certificate of Deposits (CDs) may be issued by:

• Scheduled Commercial Banks;
• Regional Rural Banks; and
• Small Finance Banks.

Answer: C

Explanation:

Statement 1 is correct: Infrastructure Investment Trusts (InvITs) are investment instruments that work like mutual funds and are regulated by SEBI. Typically, such a vehicle is designed to pool money (small sums) from several investors to be invested in income-generating assets.

Statement 2 is correct: An InvIT is established as a trust settled by the sponsor under the Indian Trusts Act, 1882 and the trust deed registered in India under the Registration Act, 1908. Also, a Certificate of Registration as REITs and InvITs needs to be obtained from SEBI.

There are various parties involved in REITs and InvITs, such as a sponsor, trustee, and investment manager. Distributions by REITs and InvITs are based on Net distributable cash flows (NDCF), unlike companies where dividends are based on profits.

Statement 3 is correct: While REITs and InvITs raise debt through a trustee and an investment manager, they are also actively involved in projects to maximize returns to shareholders.

Answer: B

Explanation:

A trade deficit or negative balance of trade (BOT) is the gap between exports and imports. When money spent on imports exceeds that spent on exports in a country, trade deficit occurs.

It can be calculated for different goods and services and also for international transactions. The opposite of trade deficit is trade surplus.

Statement 1 is correct: There are multiple factors that can be responsible. One of them is some goods not being produced domestically. In that case, they have to be imported. This leads to an imbalance in their trade. A weak currency can also be a cause as it makes trade expensive.

Statement 2 is correct: A higher trade deficit can decrease the local currency’s value.

Statement 3 is not correct: If trade deficit increases, a country’s GDP decreases.

Answer: C

Explanation:

Pulses are annual leguminous crops yielding between one and 12 grains or seeds of variable size, shape and colour within a pod, used for both food and feed.

Statement 1 is correct: India is the largest producer (25% of global production), consumer (27% of world consumption) and importer (14%) of pulses in the world.

Pulses account for around 20 per cent of the area under foodgrains and contribute around 7-10 per cent of the total foodgrains production in the country.

Though pulses are grown in both Kharif and Rabi seasons, Rabi pulses contribute more than 60 per cent of the total production.

Statement 2 is correct: The term “pulses” is limited to crops harvested solely for dry grain, thereby excluding crops harvested green for food, which are classified as vegetable crops, as well as those crops used mainly for oil extraction and leguminous crops that are used exclusively for sowing purposes.

Answer: A

Explanation:

Option (a) is correct: Water for Shared Prosperity report of the World Bank Group explores the connection between water, economic growth, and shared prosperity.

It highlights the global inequalities in water access and recommends pro-poor and inclusive interventions to improve water security and strengthen climate resilience while reducing poverty and boosting shared prosperity.

The World Bank’s vision of a world free of poverty on a livable planet will depend on achieving water security for all.

Answer: c

Explanation:

• In economics, utility is a measure of the satisfaction or benefit that a consumer derives from consuming a good or service. This concept is fundamental in understanding consumer behavior as it explains why people choose to buy certain goods and not others. Hence, statement 1 is correct.
• Utility is inherently subjective. Different individuals derive different levels of satisfaction from the same good or service based on their personal preferences, experiences, and circumstances. For example, one person might derive great pleasure from eating chocolate, while another might not like it at all. Furthermore, the same person might value a commodity differently at different times or in different situations. This subjectivity and variability make utility unique to each individual. Hence, statement 2 is incorrect.
• Utility is not static and can change depending on the context in which a commodity is consumed. For example:
• Time: the utility of a sweater is higher in winter than in summer.
• Location: The utility of a heater is greater in a cold region like Alaska than in a warm region like Florida. Therefore, utility is influenced by both temporal and spatial factors, making this statement true.
• Hence, statement 3 is correct.
• Utility is linked to the degree of need or desire for a commodity. When a consumer’s need for a good is high, consuming that good provides a greater level of satisfaction. For instance, water has high utility for someone who is very thirsty compared to someone who is not. This relationship between need and utility helps explain why consumers might be willing to pay more for goods that they perceive as necessary or highly desirable. Hence, statement 4 is correct.
• Hence, option (c) is correct.

Answer: a

Explanation:

• Demand represents the desire of consumers for a particular good or service, combined with their ability to purchase it at various prices. It encompasses both willingness and ability to buy. Hence, statement 1 is correct.
• While desire is a component of demand, the ability to purchase the good is equally important. Demand requires not only a desire for the good but also the financial means to buy it. Without the ability to purchase, desire alone does not constitute demand. Hence, statement 2 is incorrect.
• Demand represents the perspective of consumers in the market, indicating the quantity of a good they are willing and able to buy at various prices. On the other hand, supply refers to the quantity of a good that producers are willing to sell at different prices. Hence, statement 3 is incorrect.
• Hence, option (a) is correct.

Answer: b

Explanation:

• Production Possibilities Curve in economics measures the maximum output of two goods that can be produced using fixed amount of inputs.
• The production possibilities curve (PPC) is a graphical representation of all the possible combinations of two goods that can be produced by the utilization of available resources and the given technology. It is also called the production possibilities frontier (PPF).
• For example, let’s say, a country has resources and technology to produce 20,000 oranges and 120,000 apples. If it wants to produce more oranges, it must produce fewer apples and vice versa.
• By describing this trade-off, the curve demonstrates the concept of opportunity cost. Making more of one good will cost society the opportunity of making more of the other good

• Hence, option (b) is correct.

Answer: a

Explanation:

• Shrinkflation is the practice of reducing the size of a product while maintaining its price. It is a form of hidden inflation. Companies, instead of raising prices, just give less of the product so as to maintain their profit margins. Hence, statement 1 is correct.
• Greedflation refers to the situation where corporate greed drives inflation.Rather than a wage-price spiral, it is a Profit-Price Spiral where companies exploit inflation by raising prices excessively, going beyond covering their increased costs, and aiming to maximize their profit margins. These further fuels inflation. Hence, statement 2 is incorrect.
• Stagflation refers to an economy that is experiencing a simultaneous increase in inflation and stagnation of economic output. It is a perfect storm of economic ills – slow economic growth, high unemployment, and high prices. Hence, statement 3 is incorrect.
• Hence, option (a) is correct.

Answer: d

Explanation:

• Economists have identified four types of competition—perfect competition, monopolistic competition, oligopoly, and monopoly.
• Oligopoly: An oligopoly has two main characteristics:
• A small number of firms produce most of the supply.
• Large capital requirements limit other firms from entering the market.
• In this type of market structure, since there are so few firms producing output, one firm’s actions will greatly impact the entire industry.
• The price in an oligopoly is usually set by one of the more dominant players. Once the leading firm sets the price, everyone else has to compete at that price.
• Example: Apple and Google. Any change in one firm will have an immediate response from the other firms. For example, if Apple decreases the price it charges apps to operate on their phone, then Google will have to decrease prices as well, or it may risk losing its smartphone market share.
• Another example of an oligopoly is commercial airlines. Most economists will characterize the airline industry as an oligopoly market structure. Because of the very high cost of entering the market, only a few airlines supply the market with air travel.
• Hence, option (d) is correct.

Answer: c

Explanation:

• Recently, India cut its windfall tax on petroleum crude to 1,700 rupees ($20.53) a tonne from 2,300 rupees a tonne.
• Windfall Tax is a tax levied by governments against certain industries when economic conditions allow those industries to experience significantly above-average profits.
• The term “windfall” refers to an unexpected rise in profits, and the tax on windfall gains is known as the windfall tax.
• The primary rationale behind implementing windfall taxes is to capture a portion of these unexpected profits and redistribute them in a manner deemed beneficial to the broader economy or society. Governments may use the revenue generated from windfall taxes to address various economic challenges, such as reducing budget deficits, funding social welfare programs, or stabilizing currency values.
• In July 2022 the government of India imposed windfall taxes on the oil industry amid record-high trade deficits and a depreciating currency. The surge in profits among domestic crude producers, attributed to the global impact of the Russia-Ukraine war, prompted the government to enact measures aimed at curbing excessive gains and addressing economic imbalances.
• Regular business profits are typically generated as a result of the company’s strategic decisions, sustainable business practices, and long-term investments. These profits are often earned through the company’s ongoing operations, sales efforts, and efficient management of resources. In contrast, the revenue targeted for windfall taxation is distinct because it is unrelated to the company’s efforts or expansion.
• Windfall profits arise from external events or conditions that are beyond the control of the company, such as sudden spikes in demand, geopolitical disruptions, natural disasters, or significant market fluctuations. These events lead to a sharp increase in revenue for certain industries, creating unexpected windfall gains. Since these gains are not the result of the company’s business strategy or operational excellence, they are considered separate from regular business profits.
• Hence, option (c) is correct.

Answer: b

Explanation:

• The Consumer Price Index (CPI) and the GDP Deflator are both important measures used to track changes in prices over time, but they serve different purposes and use different methodologies.
• The CPI is specifically designed to measure changes in the cost of living for consumers. It does this by comparing the prices of a fixed basket of goods and services commonly purchased by households to the prices of the same basket in a base year. By tracking changes in the prices of this fixed basket, the CPI provides insight into how the overall cost of living for consumers is changing over time.
• On the other hand, the GDP Deflator is a broader measure that reflects changes in the overall price level of all goods and services produced within an economy. It accomplishes this by comparing the current prices of all goods and services produced to the prices of those same goods and services in a base year. This comparison allows the GDP Deflator to capture changes in the prices received by producers for their output across the entire economy.
• Therefore, while both indices track changes in prices, the CPI focuses on consumer goods and services and compares them to a fixed basket over time, while the GDP Deflator considers all goods and services produced within an economy and compares them to a base year to assess changes in the overall price level.
• Hence, option (b) is correct.

Answer: a

Explanation:

• Vostro and Nostro accounts are both used in international banking to facilitate transactions between domestic and foreign banks.
• The key distinction is in who opens the account and where.
• Vostro accounts are established by domestic banks to hold funds on behalf of a foreign bank in the domestic bank’s currency.
• In contrast, Nostro accounts are established by foreign banks to hold funds on behalf of a domestic bank in the domestic bank’s currency. This difference is fundamental for understanding how funds are managed and transferred between banks across different countries.
• Hence, option (a) is correct.

Answer: a

Explanation:

• Tax Collected at Source (TCS) applies to specific goods and services, and e-commerce transactions are among them.
• When customers make purchases through e-commerce platforms, the sellers collect tax from the buyers and remit it to the government on the buyers’ behalf. This mechanism ensures that taxes are collected at the point of sale and helps streamline tax collection in the digital economy. Therefore, e-commerce transactions are subject to Tax Collected at Source (TCS).
• Section 206C of the Indian Income Tax Act has specified a list of goods and services that fall under the provision of TCS. Collection or payment of TCS will only be applicable if the seller or buyer belongs to the classification categories mentioned in the tax law.
• The following table of goods and services are considered for Tax Collected at Source:

• TDS is deducted from wages, interest, dividends, leases, professional fees, brokerage and commission, and other payments.
• Hence, option (a) is correct.

Answer: d

Explanation:

• In a monetisation transaction, government transfers its revenue rights to private parties for a specified transaction period in return for upfront money, a revenue share, and commitment of investments in the assets. The revenue rights will be transferred to private entities but not ownership of assets. Example-Leasing of airports. Hence, statement 1 is incorrect.
• The government of India launched the National Monetisation Pipeline (NMP) in August 202.The National Monetisation Pipeline (NMP) estimates an aggregate monetization potential of Rs. 6 lakh crores, over a period of four years from FY 2022 to FY 2025.
• As of now, only assets of central government ministries and Central Public sector enterprises (CPSEs) in infrastructure sectors have been included.
• Roads, railways, and power sector assets will comprise over 66% of the total estimated value of the assets to be monetized.
• The sectors including telecom, mining, aviation, ports, natural gas, and petroleum product pipelines, warehouses, and stadiums will cover the remaining 44% estimated value. Hence, statement 2 is correct.
• Hence, option (d) is correct.

Answer: a

Explanation:

• As per the 2^ndadvance estimates for 2022-23, the total horticulture production is estimated to be 351.92 Million Tonne, surpassing the total food grain production of 329.69 Million Tonne during the year.  Hence, statement 1 is correct.
• At present, India is the second largest producer of vegetables and fruits in the world. Hence, statement 2 is correct.
• Atmanirbhar Clean Plant Programme was introduced in the budget of 2023 to boost the availability of disease-free, quality planting material for high-value horticultural crops at an outlay of Rs 2,200 crore. Hence, statement 3 is incorrect.

Hence, option (a) is correct.

Answer: d

Explanation:

• Angel tax is a tax imposed on capital raised through the issuance of shares by unlisted companies if the share price exceeds the fair market value of the company. The additional funds raised above the fair value are treated as income and taxed accordingly. This tax originates from section 56(2)(viib) of the Income Tax Act, 1961, introduced by the Finance Act of 2012. It taxes investments received by unlisted Indian companies valued above the fair market value as income, at a rate of 30.9%. Hence, statement 1 is incorrect.
• Angel Tax is imposed when the share price is higher than the fair market value, not lower. Hence, statement 2 is incorrect.
• The objective of angel tax is to discourage the generation and utilization of unaccounted money through the subscription of shares of closely held companies at inflated values.
• However, in 2019, the government announced an exemption from angel tax for startups meeting certain conditions. These conditions include recognition by the Department for Promotion of Industry and Internal Trade (DPIIT) as an eligible startup, and the aggregate amount of paid-up share capital and share premium not exceeding ₹25 crores, excluding investments from NRIs, venture capital firms, and specified companies.
• Angel Tax provisions were initially applicable only to investments from resident investors. However, the Finance Bill of 2023 extended its applicability to non-resident investors as well. Hence, statement 3 is incorrect.
• Hence, option (d) is correct.

Answer: a

Explanation:

• Reverse Flipping is a term used to describe the trend of overseas start-ups shifting their domicile to India and listing on Indian stock exchanges.
• This trend has been gaining traction in recent years, as start-ups look to capitalise on India’s large and growing economy, access to deeper pools of venture capital, favourable tax regimes,better intellectual property protection, a young and educated population, and favourable government policies.
• The Economic Survey 2022-23 recognised the concept of reverse flipping and proposed ways to accelerate the process, such as simplifying the processes for tax vacations, taxation of ESOPs, capital movements, decreasing tax layers, and the like.
• Startups such as Pine Labs, Zepto, Meesho are the latest new-age companies looking to move headquarters to India.
• Hence, option (a) is correct.

Answer: a

Explanation:

• A progressive tax is a tax in which the tax rate increases as the taxable amount increases. (Income tax in India)
• Progressive expenditure is that expenditure in which higher income bracket people get less benefit out of government expenditure. (e.g., food subsidy).Both these will help in redistribution of wealth.
• Hence, option (a) is correct.

Answer: a

Explanation:

• In India, the disinvestment process is conducted by the Department of Investment and Public Asset Management (DIPAM), which comes under the Ministry of Finance. The primary objective of DIPAM is to manage the government’s investments in public sector enterprises and to oversee the disinvestment of government equity in these enterprises. Hence, statement 1 is incorrect.
• Government constituted the National Investment Fund (NIF) in 2005 into which the proceeds from disinvestment of Central Public Sector Enterprises is channelized. The corpus of NIF was to be of a permanent nature and NIF was to be professionally managed to provide sustainable returns to the Government, without depleting the corpus. Hence, statement 2 is incorrect.
• 75% of the annual income of the NIF is used for financing selected social sector schemes which promote education, health and employment. The residual 25% of the annual income of NIF is used to meet the capital investment requirements of profitable and revivable PSUs. Hence, statement 3 is correct.
• Hence, option (a) is correct.

Solution: b)

Justification: A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 engaged in the business of loans and advances, acquisition of shares/stocks/bonds/debentures/securities issued by Government or local authority or other marketable securities.

A company is registered as a NBFC by RBI if its principal business is conducting financial activity.

Financial activity as principal business is when a company’s financial assets constitute more than 50 per cent of the total assets and income from financial assets constitute more than 50 per cent of the gross income.

However, this excludes institutions whose principal business is that of agriculture activity, industrial activity, purchase or sale of any goods (other than securities) or providing any services and sale/purchase/construction of immovable property.

• A company which fulfils both these criteria will be registered as NBFC by RBI. The term ‘principal business’ is not defined by the Reserve Bank of India Act.
• The Reserve Bank has defined it to ensure that only companies predominantly engaged in financial activity get registered with it and are regulated and supervised by it.
• Hence if there are companies engaged in agricultural operations, industrial activity, purchase and sale of goods, providing services or purchase, sale or construction of immovable property as their principal business and are doing some financial business in a small way, they will not be regulated by the Reserve Bank.

Interestingly, this test is popularly known as 50-50 test and is applied to determine whether a company is into financial business.

Q Source: Chapter on Banking: Indian Economy: Ramesh Singh

Solution: b)

Justification: Carbon tax is a form of pollution tax. It levies a fee on the production, distribution or use of fossil fuels based on how much carbon their combustion emits. The government sets a price per ton on carbon, then translates it into a tax on electricity, natural gas or oil.

From an economic perspective, carbon taxes are a type of Pigovian tax. A Pigovian tax is a tax on any market activity that generates negative externalities (which are costs not included in the market price). Pollution from manufacturing is an externality, for example, which imposes a cost on the community that the consumer price fails to reflect (since the consumer is paying a much higher effective price due to the degradation of the environment imposing a long-term cost).

Carbon taxes help to address the problem of emitters of greenhouse gases not facing the full social cost of their actions, since these taxes can be used to mitigate adverse ecological changes.

Carbon taxes can be a regressive tax, in that they may directly or indirectly affect low-income groups disproportionately.

The regressive impact of carbon taxes could be addressed by using tax revenues to favour low-income groups.

Q Source: Basics: Environmental economics

Solution: c)

Justification: Overheating of an economy occurs when its productive capacity is unable to keep pace with growing aggregate demand leading to inflation.

When there is excess demand and low supply, high consumption and low savings can lead to a situation where there is a shortage of investible capital. The economy is unable to supply demanded goods and prices start increases.

This can be caused due to additional liquidity pumped in the system by the central bank or government. When people have more money in the short-term, they can demand more goods and services causing the economy to heat up in the short-term, until the demand is satisfied.

Q Source: Basics: Economy

Solution: c)

Justification: The expenditure of the governments from which they cannot deny (as they have already committed them to pay) are known as committed expenditure.

The liabilities such as ‘interest’ (of the internal as well as external loans) and ‘pension’ (of the retired personnel of the governments) are examples of such expenditure.

Q Source: Basics: Public Finance

Solution: d)

Justification: GNH is distinguishable from Gross Domestic Product by valuing collective happiness as the goal of governance, by emphasizing harmony with nature and traditional values as expressed in the 9 domains of happiness and 4 pillars of GNH. According to the Bhutanese government, the four pillars of GNH are:

• sustainable and equitable socio-economic development;
• environmental conservation;
• preservation and promotion of culture; and
• good governance.

The nine domains of GNH are psychological well-being, health, time use, education, cultural diversity and resilience, good governance, community vitality, ecological diversity and resilience, and living standards.

Each domain is composed of subjective (survey-based) and objective indicators. The domains weigh equally but the indicators within each domain differ by weight.

The domains work differently depending on the person’s GDP. For instance, if there are two people, one whose life is consumed with working, leaving barely any time for friends and family, while the other, though not as good in working conditions, has still enough time to spend quality time with their friends and family: according to Carol Graham, the person who spends time with family and friends ends up having a larger GNH, than the person who is just in it for work. In other words, a person is happier, or can be happier, in life when focusing on the little things

Q Source: Ch4: 12^th NCERT: Human Geography

Solution: a) 5

Explanation:

Let the number 2, 3, 4-wheelers be ‘x’, ‘y’ and ‘z’ respectively.

Therefore, number of vehicles = x + y + z = 95.     ……….. (1)

Also, number of wheels = 2x + 3y + 4z = 300.                 ……….. (2)

Since the number of 3-wheelers is 10 less than number of 4-wheelers,

z – y = 10                                                       ……….. (3)

From (2) – 2 × (1)

2x + 3y + 4z – 2x – 2y – 2z = 300 – 2 × 95

y + 2z = 110                                                  ………… (4)

Adding (3) and (4),

z – y + y + 2z = 10 + 110

3z = 120

z = 40.

Substituting for z in (3),

y = 30.

x+ y+ z= 95 à x= 25

x-y = 5

Solution: b)

Explanation:

The number of mangoes in the third basket are unchanged.

The number of mangoes is multiple of both 3 and 5. So, we have to take LCM of 3 and 5 i.e. 15.

If we assume the number of mangoes in the third basket as 15, the old ratio will be

9:12:15.

New ratio will be 25:20:15.

Thus, the mangoes to be increased in first and second basket respectively will be 16 and 8.

So, the required ratio is 16:8 i.e. 2:1.

Option d)

Height of cone/height of the cylinder = 2/1

So, Statement II alone is not sufficient to answer the question

From statement II,

Area of the square = 9

Side of the square = 3

Perimeter of the square = 3 * 4 = 12 cm

Height of the cylinder = 12 cm

So, Statement II alone is not sufficient to answer the question

From statement III,

Radius of the cone = length of the rectangle

Perimeter of the rectangle = 2 * (l + b) = 20

So, Statement III alone is not sufficient to answer the question

Option B)

Explanation:

To make G south-west of C, length of CD should be smaller than FE, which is possible when CD = 4 m, and FE = 6 m. Also FG should be smaller than DE, which is possible with FG = 4 or 6 and DE = 10 m

Assume point P – north of G and west of C. So PC = 2 m (FE-CD). Since B is north of H, so BP = HG = 3 m

So BC = BP+PC = 3+2 = 5 m

Correct Answer : B
Answer Justification :
Explanation:
Statement A is wrong as it is unrelated to what is being spoken of in the passage. The fact mentioned in statement c is wrong as the passage states that Atlantic shore based concerns have diminished in importance but have not become irrelevant.