DAY – 3 : Insta 75 Days Revision Plan-2026 : ECONOMY

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• Question 1 of 15 1. Question 1 points Consider the following statements regarding money market instruments: Treasury Bills in India are issued at a discount and redeemed at face value. Commercial Paper can be issued by both financial institutions and corporate firms. Certificates of Deposit can be issued only by scheduled commercial banks. Which of the statements given above are correct? (a) 1 and 2 only (b) 2 and 3 only (c) 1 only (d) 1, 2 and 3 Correct Answer: (a) Explanation The correct answer is (a) 1 and 2 only. Statement 1 is correct. Treasury Bills (T-Bills) are short-term government securities issued by the RBI on behalf of the Government of India. They are zero-coupon instruments, meaning they do not pay periodic interest. Instead, they are issued at a discount to the face value and redeemed at par upon maturity (commonly 91-day, 182-day and 364-day T-Bills). Statement 2 is correct. Commercial Paper (CP) is an unsecured short-term money market instrument issued by corporates, primary dealers and financial institutions to meet working capital requirements. They are typically issued at a discount and traded in the secondary market. Statement 3 is incorrect. Certificates of Deposit (CDs) can be issued not only by scheduled commercial banks but also by select financial institutions such as All-India Financial Institutions permitted by RBI. Therefore, restricting issuance only to banks is incorrect. Hence, only statements 1 and 2 are correct. Incorrect Answer: (a) Explanation The correct answer is (a) 1 and 2 only. Statement 1 is correct. Treasury Bills (T-Bills) are short-term government securities issued by the RBI on behalf of the Government of India. They are zero-coupon instruments, meaning they do not pay periodic interest. Instead, they are issued at a discount to the face value and redeemed at par upon maturity (commonly 91-day, 182-day and 364-day T-Bills). Statement 2 is correct. Commercial Paper (CP) is an unsecured short-term money market instrument issued by corporates, primary dealers and financial institutions to meet working capital requirements. They are typically issued at a discount and traded in the secondary market. Statement 3 is incorrect. Certificates of Deposit (CDs) can be issued not only by scheduled commercial banks but also by select financial institutions such as All-India Financial Institutions permitted by RBI. Therefore, restricting issuance only to banks is incorrect. Hence, only statements 1 and 2 are correct.

#### 1. Question

Consider the following statements regarding money market instruments:

• Treasury Bills in India are issued at a discount and redeemed at face value.

• Commercial Paper can be issued by both financial institutions and corporate firms.

• Certificates of Deposit can be issued only by scheduled commercial banks.

Which of the statements given above are correct?

• (a) 1 and 2 only

• (b) 2 and 3 only

• (c) 1 only

• (d) 1, 2 and 3

Answer: (a)

Explanation

The correct answer is (a) 1 and 2 only.

Statement 1 is correct. Treasury Bills (T-Bills) are short-term government securities issued by the RBI on behalf of the Government of India.

• They are zero-coupon instruments, meaning they do not pay periodic interest. Instead, they are issued at a discount to the face value and redeemed at par upon maturity (commonly 91-day, 182-day and 364-day T-Bills).

Statement 2 is correct. Commercial Paper (CP) is an unsecured short-term money market instrument issued by corporates, primary dealers and financial institutions to meet working capital requirements. They are typically issued at a discount and traded in the secondary market.

Statement 3 is incorrect. Certificates of Deposit (CDs) can be issued not only by scheduled commercial banks but also by select financial institutions such as All-India Financial Institutions permitted by RBI. Therefore, restricting issuance only to banks is incorrect.

Hence, only statements 1 and 2 are correct.

Answer: (a)

Explanation

The correct answer is (a) 1 and 2 only.

Statement 1 is correct. Treasury Bills (T-Bills) are short-term government securities issued by the RBI on behalf of the Government of India.

Hence, only statements 1 and 2 are correct.

• Question 2 of 15 2. Question 1 points Which one of the following best describes the primary objective of the money market? (a) Financing long-term infrastructure projects (b) Facilitating short-term liquidity and working capital needs (c) Providing equity financing to start-ups (d) Mobilising household savings for industrial investment Correct Answer: (b) Explanation The correct answer is (b) Facilitating short-term liquidity and working capital needs. The money market is a segment of the financial system where short-term funds are borrowed and lent, typically for periods less than one year. It serves as a mechanism through which governments, banks, financial institutions and corporations manage their short-term liquidity requirements. The instruments traded in the money market include Treasury Bills, Commercial Paper, Certificates of Deposit, repos and call money. These instruments are highly liquid and relatively low risk compared with long-term securities. The key objective of the money market is to ensure efficient liquidity management and smooth functioning of the financial system. It helps institutions meet temporary mismatches between inflows and outflows of funds. Options (a), (c), and (d) relate primarily to the capital market, which deals with long-term financing and investment rather than short-term liquidity management. Incorrect Answer: (b) Explanation The correct answer is (b) Facilitating short-term liquidity and working capital needs. The money market is a segment of the financial system where short-term funds are borrowed and lent, typically for periods less than one year. It serves as a mechanism through which governments, banks, financial institutions and corporations manage their short-term liquidity requirements. The instruments traded in the money market include Treasury Bills, Commercial Paper, Certificates of Deposit, repos and call money. These instruments are highly liquid and relatively low risk compared with long-term securities. The key objective of the money market is to ensure efficient liquidity management and smooth functioning of the financial system. It helps institutions meet temporary mismatches between inflows and outflows of funds. Options (a), (c), and (d) relate primarily to the capital market, which deals with long-term financing and investment rather than short-term liquidity management.

#### 2. Question

Which one of the following best describes the primary objective of the money market?

• (a) Financing long-term infrastructure projects

• (b) Facilitating short-term liquidity and working capital needs

• (c) Providing equity financing to start-ups

• (d) Mobilising household savings for industrial investment

Answer: (b)

Explanation

The correct answer is (b) Facilitating short-term liquidity and working capital needs.

• The money market is a segment of the financial system where short-term funds are borrowed and lent, typically for periods less than one year. It serves as a mechanism through which governments, banks, financial institutions and corporations manage their short-term liquidity requirements.

• The instruments traded in the money market include Treasury Bills, Commercial Paper, Certificates of Deposit, repos and call money. These instruments are highly liquid and relatively low risk compared with long-term securities.

• The key objective of the money market is to ensure efficient liquidity management and smooth functioning of the financial system. It helps institutions meet temporary mismatches between inflows and outflows of funds.

Options (a), (c), and (d) relate primarily to the capital market, which deals with long-term financing and investment rather than short-term liquidity management.

Answer: (b)

Explanation

The correct answer is (b) Facilitating short-term liquidity and working capital needs.

Options (a), (c), and (d) relate primarily to the capital market, which deals with long-term financing and investment rather than short-term liquidity management.

• Question 3 of 15 3. Question 1 points With reference to the money market in India, consider the following statements: Repurchase agreements (Repos) involve the sale of securities with a commitment to repurchase them later. The call money market allows borrowing and lending for periods up to one year. Treasury Bills are issued through auctions conducted by the Reserve Bank of India. How many of the statements given above are correct? (a) Only one (b) Only two (c) All the three (d) None Correct Answer: (b) Explanation The correct answer is (b) Only two. Statement 1 is correct. A repurchase agreement (repo) is a short-term borrowing mechanism where one party sells securities, usually government securities, with an agreement to repurchase them at a predetermined price on a specified future date. It is widely used by banks and financial institutions to manage short-term liquidity. Statement 2 is incorrect. The call money market refers to very short-term interbank borrowing and lending. Call money transactions are typically overnight. When the borrowing period is more than one day but up to 14 days, it is called notice money. Borrowing for periods up to one year does not fall under the call money segment. Statement 3 is correct. Treasury Bills (T-Bills) are short-term government securities issued by the Government of India through auctions conducted by the RBI (91-day, 182-day and 364-day maturities). Thus, two statements (1 and 3) are correct. Incorrect Answer: (b) Explanation The correct answer is (b) Only two. Statement 1 is correct. A repurchase agreement (repo) is a short-term borrowing mechanism where one party sells securities, usually government securities, with an agreement to repurchase them at a predetermined price on a specified future date. It is widely used by banks and financial institutions to manage short-term liquidity. Statement 2 is incorrect. The call money market refers to very short-term interbank borrowing and lending. Call money transactions are typically overnight. When the borrowing period is more than one day but up to 14 days, it is called notice money. Borrowing for periods up to one year does not fall under the call money segment. Statement 3 is correct. Treasury Bills (T-Bills) are short-term government securities issued by the Government of India through auctions conducted by the RBI (91-day, 182-day and 364-day maturities). Thus, two statements (1 and 3) are correct.

#### 3. Question

With reference to the money market in India, consider the following statements:

• Repurchase agreements (Repos) involve the sale of securities with a commitment to repurchase them later.

• The call money market allows borrowing and lending for periods up to one year.

• Treasury Bills are issued through auctions conducted by the Reserve Bank of India.

How many of the statements given above are correct?

• (a) Only one

• (b) Only two

• (c) All the three

Answer: (b)

Explanation

The correct answer is (b) Only two.

Statement 1 is correct. A repurchase agreement (repo) is a short-term borrowing mechanism where one party sells securities, usually government securities, with an agreement to repurchase them at a predetermined price on a specified future date. It is widely used by banks and financial institutions to manage short-term liquidity.

Statement 2 is incorrect. The call money market refers to very short-term interbank borrowing and lending. Call money transactions are typically overnight. When the borrowing period is more than one day but up to 14 days, it is called notice money. Borrowing for periods up to one year does not fall under the call money segment.

Statement 3 is correct. Treasury Bills (T-Bills) are short-term government securities issued by the Government of India through auctions conducted by the RBI (91-day, 182-day and 364-day maturities).

Thus, two statements (1 and 3) are correct.

Answer: (b)

Explanation

The correct answer is (b) Only two.

Thus, two statements (1 and 3) are correct.

• Question 4 of 15 4. Question 1 points Which one of the following best describes a Primary Market transaction in the capital market? (a) Trading of existing shares between investors on stock exchanges (b) Purchase of government bonds in the secondary market (c) Issue of new shares by a company to raise funds from investors (d) Short-term borrowing between banks Correct Answer: (c) Explanation The correct answer is (c) Issue of new shares by a company to raise funds from investors. The primary market refers to the segment of the capital market where new securities are issued for the first time. Companies raise fresh capital by issuing shares or bonds to investors through mechanisms such as Initial Public Offerings (IPOs), Follow-on Public Offers (FPOs), and private placements. Option (a) describes trading of existing shares between investors on stock exchanges, which occurs in the secondary market rather than the primary market. Option (b) refers to the purchase of government bonds in the secondary market, which again involves previously issued securities. Option (d) relates to short-term borrowing between banks, which is a function of the money market, not the capital market. Thus, the primary market is the platform where new securities are issued and capital is raised for the first time. Incorrect Answer: (c) Explanation The correct answer is (c) Issue of new shares by a company to raise funds from investors. The primary market refers to the segment of the capital market where new securities are issued for the first time. Companies raise fresh capital by issuing shares or bonds to investors through mechanisms such as Initial Public Offerings (IPOs), Follow-on Public Offers (FPOs), and private placements. Option (a) describes trading of existing shares between investors on stock exchanges, which occurs in the secondary market rather than the primary market. Option (b) refers to the purchase of government bonds in the secondary market, which again involves previously issued securities. Option (d) relates to short-term borrowing between banks, which is a function of the money market, not the capital market. Thus, the primary market is the platform where new securities are issued and capital is raised for the first time.

#### 4. Question

Which one of the following best describes a Primary Market transaction in the capital market?

• (a) Trading of existing shares between investors on stock exchanges

• (b) Purchase of government bonds in the secondary market

• (c) Issue of new shares by a company to raise funds from investors

• (d) Short-term borrowing between banks

Answer: (c)

Explanation

The correct answer is (c) Issue of new shares by a company to raise funds from investors.

The primary market refers to the segment of the capital market where new securities are issued for the first time. Companies raise fresh capital by issuing shares or bonds to investors through mechanisms such as Initial Public Offerings (IPOs), Follow-on Public Offers (FPOs), and private placements.

Option (a) describes trading of existing shares between investors on stock exchanges, which occurs in the secondary market rather than the primary market.

Option (b) refers to the purchase of government bonds in the secondary market, which again involves previously issued securities.

Option (d) relates to short-term borrowing between banks, which is a function of the money market, not the capital market.

Thus, the primary market is the platform where new securities are issued and capital is raised for the first time.

Answer: (c)

Explanation

The correct answer is (c) Issue of new shares by a company to raise funds from investors.

Option (a) describes trading of existing shares between investors on stock exchanges, which occurs in the secondary market rather than the primary market.

Option (b) refers to the purchase of government bonds in the secondary market, which again involves previously issued securities.

Option (d) relates to short-term borrowing between banks, which is a function of the money market, not the capital market.

Thus, the primary market is the platform where new securities are issued and capital is raised for the first time.

• Question 5 of 15 5. Question 1 points Consider the following pairs: Capital Market Instrument Description 1. Equity Shares Ownership stake in a company 2. Debentures Long-term borrowing instrument 3. Derivatives Instruments whose value depends on an underlying asset 4. Commercial Paper Long-term capital market instrument How many of the above pairs are correctly matched? (a) Only two (b) Only three (c) All four (d) Only one Correct Answer: (b) Explanation The correct answer is (b) Only three. Pair 1 is correct. Equity shares represent an ownership stake in a company and provide voting rights and potential dividends. Pair 2 is correct. Debentures are long-term debt instruments issued by companies to raise capital. They promise repayment of principal with interest after a specified period. Pair 3 is correct. Derivatives are financial instruments whose value depends on an underlying asset such as stocks, commodities, currencies or indices. Examples include futures and options. Pair 4 is incorrect. Commercial Paper is not a capital market instrument. It is a money market instrument used for short-term borrowing, usually with maturity periods up to one year. The capital market generally deals with long-term financing instruments, while commercial paper belongs to the short-term money market segment. Thus three pairs are correctly matched. Incorrect Answer: (b) Explanation The correct answer is (b) Only three. Pair 1 is correct. Equity shares represent an ownership stake in a company and provide voting rights and potential dividends. Pair 2 is correct. Debentures are long-term debt instruments issued by companies to raise capital. They promise repayment of principal with interest after a specified period. Pair 3 is correct. Derivatives are financial instruments whose value depends on an underlying asset such as stocks, commodities, currencies or indices. Examples include futures and options. Pair 4 is incorrect. Commercial Paper is not a capital market instrument. It is a money market instrument used for short-term borrowing, usually with maturity periods up to one year. The capital market generally deals with long-term financing instruments, while commercial paper belongs to the short-term money market segment. Thus three pairs are correctly matched.

#### 5. Question

Consider the following pairs:

Capital Market Instrument | Description

1.Equity Shares | Ownership stake in a company
2.Debentures | Long-term borrowing instrument
3.Derivatives | Instruments whose value depends on an underlying asset
4.Commercial Paper | Long-term capital market instrument

How many of the above pairs are correctly matched?

• (a) Only two

• (b) Only three

• (c) All four

• (d) Only one

Answer: (b)

Explanation

The correct answer is (b) Only three.

Pair 1 is correct. Equity shares represent an ownership stake in a company and provide voting rights and potential dividends.

Pair 2 is correct. Debentures are long-term debt instruments issued by companies to raise capital. They promise repayment of principal with interest after a specified period.

Pair 3 is correct. Derivatives are financial instruments whose value depends on an underlying asset such as stocks, commodities, currencies or indices. Examples include futures and options.

Pair 4 is incorrect. Commercial Paper is not a capital market instrument. It is a money market instrument used for short-term borrowing, usually with maturity periods up to one year.

The capital market generally deals with long-term financing instruments, while commercial paper belongs to the short-term money market segment.

Thus three pairs are correctly matched.

Answer: (b)

Explanation

The correct answer is (b) Only three.

Pair 1 is correct. Equity shares represent an ownership stake in a company and provide voting rights and potential dividends.

Pair 2 is correct. Debentures are long-term debt instruments issued by companies to raise capital. They promise repayment of principal with interest after a specified period.

Pair 3 is correct. Derivatives are financial instruments whose value depends on an underlying asset such as stocks, commodities, currencies or indices. Examples include futures and options.

Pair 4 is incorrect. Commercial Paper is not a capital market instrument. It is a money market instrument used for short-term borrowing, usually with maturity periods up to one year.

The capital market generally deals with long-term financing instruments, while commercial paper belongs to the short-term money market segment.

Thus three pairs are correctly matched.

• Question 6 of 15 6. Question 1 points With reference to the Real Effective Exchange Rate (REER), consider the following statements: REER measures the value of a country’s currency against a basket of foreign currencies adjusted for inflation differentials. REER can be used to assess a country’s export competitiveness. A decline in REER generally indicates improvement in export competitiveness. REER is calculated solely on the basis of nominal exchange rate movements. How many of the statements given above are correct? (a) Only one (b) Only two (c) Only three (d) All four Correct Answer: (c) Only three Explanation The Real Effective Exchange Rate (REER) is an important macroeconomic indicator used to measure the international competitiveness of a country’s currency. It adjusts the nominal exchange rate for inflation differences between the domestic economy and its trading partners. Statement 1 is correct- REER represents the value of a currency relative to a weighted basket of currencies, adjusted for relative price levels. Statement 2 is correct- REER is widely used by policymakers and central banks as an indicator of external competitiveness. When REER rises significantly, it may signal that exports are becoming relatively expensive. Statement 3 is correct- A decline in REER indicates real depreciation, meaning domestic goods become cheaper compared to foreign goods. This typically improves export competitiveness. Statement 4 is incorrect- REER is not calculated solely using nominal exchange rate movements. It also incorporates inflation differentials, which is the key distinction between REER and NEER. Thus statements 1, 2 and 3 are correct, while statement 4 is incorrect. Incorrect Answer: (c) Only three Explanation The Real Effective Exchange Rate (REER) is an important macroeconomic indicator used to measure the international competitiveness of a country’s currency. It adjusts the nominal exchange rate for inflation differences between the domestic economy and its trading partners. Statement 1 is correct- REER represents the value of a currency relative to a weighted basket of currencies, adjusted for relative price levels. Statement 2 is correct- REER is widely used by policymakers and central banks as an indicator of external competitiveness. When REER rises significantly, it may signal that exports are becoming relatively expensive. Statement 3 is correct- A decline in REER indicates real depreciation, meaning domestic goods become cheaper compared to foreign goods. This typically improves export competitiveness. Statement 4 is incorrect- REER is not calculated solely using nominal exchange rate movements. It also incorporates inflation differentials, which is the key distinction between REER and NEER. Thus statements 1, 2 and 3 are correct, while statement 4 is incorrect.

#### 6. Question

With reference to the Real Effective Exchange Rate (REER), consider the following statements:

• REER measures the value of a country’s currency against a basket of foreign currencies adjusted for inflation differentials.

• REER can be used to assess a country’s export competitiveness.

• A decline in REER generally indicates improvement in export competitiveness.

• REER is calculated solely on the basis of nominal exchange rate movements.

How many of the statements given above are correct?

• (a) Only one

• (b) Only two

• (c) Only three

• (d) All four

Answer: (c) Only three

Explanation

The Real Effective Exchange Rate (REER) is an important macroeconomic indicator used to measure the international competitiveness of a country’s currency. It adjusts the nominal exchange rate for inflation differences between the domestic economy and its trading partners.

Statement 1 is correct- REER represents the value of a currency relative to a weighted basket of currencies, adjusted for relative price levels.

Statement 2 is correct- REER is widely used by policymakers and central banks as an indicator of external competitiveness. When REER rises significantly, it may signal that exports are becoming relatively expensive.

Statement 3 is correct- A decline in REER indicates real depreciation, meaning domestic goods become cheaper compared to foreign goods. This typically improves export competitiveness.

Statement 4 is incorrect- REER is not calculated solely using nominal exchange rate movements. It also incorporates inflation differentials, which is the key distinction between REER and NEER.

Thus statements 1, 2 and 3 are correct, while statement 4 is incorrect.

Answer: (c) Only three

Explanation

Statement 1 is correct- REER represents the value of a currency relative to a weighted basket of currencies, adjusted for relative price levels.

Statement 3 is correct- A decline in REER indicates real depreciation, meaning domestic goods become cheaper compared to foreign goods. This typically improves export competitiveness.

Thus statements 1, 2 and 3 are correct, while statement 4 is incorrect.

• Question 7 of 15 7. Question 1 points Consider the following pairs: BOP Component Example 1. Current Account Software exports 2. Capital/Financial Account Foreign portfolio investment 3. Reserve Assets RBI intervention in forex market 4. Current Account External commercial borrowing How many of the above pairs are correctly matched? (a) Only one (b) Only two (c) Only three (d) All four Correct Answer: (c) Explanation Pair 1 is correct. Software exports fall under services trade, which is part of the current account. Pair 2 is correct. Foreign portfolio investment (FPI) is recorded in the financial account, as it represents cross-border investment flows. Pair 3 is correct. Reserve assets refer to changes in a country’s foreign exchange reserves managed by the central bank, often resulting from interventions in forex markets. Pair 4 is incorrect. External Commercial Borrowings (ECBs) represent foreign loans taken by domestic firms and are recorded in the capital/financial account, not the current account. Thus, three pairs are correct. Incorrect Answer: (c) Explanation Pair 1 is correct. Software exports fall under services trade, which is part of the current account. Pair 2 is correct. Foreign portfolio investment (FPI) is recorded in the financial account, as it represents cross-border investment flows. Pair 3 is correct. Reserve assets refer to changes in a country’s foreign exchange reserves managed by the central bank, often resulting from interventions in forex markets. Pair 4 is incorrect. External Commercial Borrowings (ECBs) represent foreign loans taken by domestic firms and are recorded in the capital/financial account, not the current account. Thus, three pairs are correct.

#### 7. Question

Consider the following pairs:

BOP Component | Example

1.Current Account | Software exports
2.Capital/Financial Account | Foreign portfolio investment
3.Reserve Assets | RBI intervention in forex market
4.Current Account | External commercial borrowing

How many of the above pairs are correctly matched?

• (a) Only one

• (b) Only two

• (c) Only three

• (d) All four

Answer: (c)

Explanation

Pair 1 is correct. Software exports fall under services trade, which is part of the current account.

Pair 2 is correct. Foreign portfolio investment (FPI) is recorded in the financial account, as it represents cross-border investment flows.

Pair 3 is correct. Reserve assets refer to changes in a country’s foreign exchange reserves managed by the central bank, often resulting from interventions in forex markets.

Pair 4 is incorrect. External Commercial Borrowings (ECBs) represent foreign loans taken by domestic firms and are recorded in the capital/financial account, not the current account.

Thus, three pairs are correct.

Answer: (c)

Explanation

Pair 1 is correct. Software exports fall under services trade, which is part of the current account.

Pair 2 is correct. Foreign portfolio investment (FPI) is recorded in the financial account, as it represents cross-border investment flows.

Pair 3 is correct. Reserve assets refer to changes in a country’s foreign exchange reserves managed by the central bank, often resulting from interventions in forex markets.

Pair 4 is incorrect. External Commercial Borrowings (ECBs) represent foreign loans taken by domestic firms and are recorded in the capital/financial account, not the current account.

Thus, three pairs are correct.

• Question 8 of 15 8. Question 1 points Consider the following statements: Statement 1: NEER provides a more comprehensive measure of exchange rate movements than bilateral exchange rates. Statement 2: NEER incorporates exchange rate changes against multiple currencies. Which one of the following is correct in respect of the above statements? (a) Both Statement 1 and Statement 2 are correct and Statement 2 explains Statement 1 (b) Both Statement 1 and Statement 2 are correct but Statement 2 does not explain Statement 1 (c) Statement 1 is correct but Statement 2 is incorrect (d) Statement 1 is incorrect but Statement 2 is correct Correct Answer: (a) Explanation Statement 1 is correct- The Nominal Effective Exchange Rate (NEER) provides a broader measure of exchange rate movements compared to a bilateral exchange rate, which only reflects the value of a currency relative to one foreign currency. Statement 2 is correct- NEER is calculated using a weighted average of the domestic currency against a basket of currencies of major trading partners. The weights are usually based on trade shares. Why Statement 2 explains Statement 1- Since NEER incorporates exchange rate movements against multiple currencies rather than a single currency, it gives a more comprehensive and representative measure of overall exchange rate movements. Therefore, Statement 2 correctly explains Statement 1. The reason correctly explains the assertion. Incorrect Answer: (a) Explanation Statement 1 is correct- The Nominal Effective Exchange Rate (NEER) provides a broader measure of exchange rate movements compared to a bilateral exchange rate, which only reflects the value of a currency relative to one foreign currency. Statement 2 is correct- NEER is calculated using a weighted average of the domestic currency against a basket of currencies of major trading partners. The weights are usually based on trade shares. Why Statement 2 explains Statement 1- Since NEER incorporates exchange rate movements against multiple currencies rather than a single currency, it gives a more comprehensive and representative measure of overall exchange rate movements. Therefore, Statement 2 correctly explains Statement 1. The reason correctly explains the assertion.

#### 8. Question

Consider the following statements:

Statement 1: NEER provides a more comprehensive measure of exchange rate movements than bilateral exchange rates. Statement 2: NEER incorporates exchange rate changes against multiple currencies.

Which one of the following is correct in respect of the above statements?

• (a) Both Statement 1 and Statement 2 are correct and Statement 2 explains Statement 1

• (b) Both Statement 1 and Statement 2 are correct but Statement 2 does not explain Statement 1

• (c) Statement 1 is correct but Statement 2 is incorrect

• (d) Statement 1 is incorrect but Statement 2 is correct

Answer: (a)

Explanation

Statement 1 is correct- The Nominal Effective Exchange Rate (NEER) provides a broader measure of exchange rate movements compared to a bilateral exchange rate, which only reflects the value of a currency relative to one foreign currency.

Statement 2 is correct- NEER is calculated using a weighted average of the domestic currency against a basket of currencies of major trading partners. The weights are usually based on trade shares.

Why Statement 2 explains Statement 1- Since NEER incorporates exchange rate movements against multiple currencies rather than a single currency, it gives a more comprehensive and representative measure of overall exchange rate movements. Therefore, Statement 2 correctly explains Statement 1.

The reason correctly explains the assertion.

Answer: (a)

Explanation

The reason correctly explains the assertion.

• Question 9 of 15 9. Question 1 points With reference to the Economic Capital Framework (ECF) of the Reserve Bank of India, consider the following statements: The ECF determines the proportion of the RBI’s annual income that must be transferred to the Government of India as surplus. Under the ECF, the Contingent Risk Buffer is maintained as a percentage of the RBI’s balance sheet to absorb potential financial risks. The ECF mandates that the RBI must maintain a fixed minimum capital adequacy ratio similar to commercial banks. Under the ECF, surplus transfer is decided based solely on the size of foreign exchange reserves held by the RBI. How many of the statements given above are correct? (a) Only one (b) Only two (c) Only three (d) All four Correct Answer: (a) Only one Explanation The Economic Capital Framework (ECF) provides a structured approach for determining how much financial buffer the Reserve Bank of India (RBI) should maintain before transferring surplus profits to the Government of India. The present framework was adopted in 2019 following the recommendations of the Bimal Jalan Committee. Statement 1 is incorrect- The ECF does not directly determine a fixed proportion of annual income to be transferred to the government. Instead, it determines the level of capital and risk buffers that the RBI must maintain. The surplus available for transfer is calculated after maintaining these buffers. Statement 2 is correct- The Contingent Risk Buffer (CRB) is maintained as a percentage of the RBI’s balance sheet, recommended within the range of 5.5%–6.5%. This buffer protects the RBI against risks such as exchange rate volatility, financial market instability, and monetary operations. Statement 3 is incorrect- Capital adequacy ratios apply to commercial banks under Basel norms, not to the RBI. The ECF concerns the central bank’s balance sheet, not regulatory capital for banks. Statement 4 is incorrect- Surplus transfer is not determined solely by foreign exchange reserves. It depends on multiple factors including income, expenditure, valuation changes and risk provisioning. Thus, only statement 2 is correct. Incorrect Answer: (a) Only one Explanation The Economic Capital Framework (ECF) provides a structured approach for determining how much financial buffer the Reserve Bank of India (RBI) should maintain before transferring surplus profits to the Government of India. The present framework was adopted in 2019 following the recommendations of the Bimal Jalan Committee. Statement 1 is incorrect- The ECF does not directly determine a fixed proportion of annual income to be transferred to the government. Instead, it determines the level of capital and risk buffers that the RBI must maintain. The surplus available for transfer is calculated after maintaining these buffers. Statement 2 is correct- The Contingent Risk Buffer (CRB) is maintained as a percentage of the RBI’s balance sheet, recommended within the range of 5.5%–6.5%. This buffer protects the RBI against risks such as exchange rate volatility, financial market instability, and monetary operations. Statement 3 is incorrect- Capital adequacy ratios apply to commercial banks under Basel norms, not to the RBI. The ECF concerns the central bank’s balance sheet, not regulatory capital for banks. Statement 4 is incorrect- Surplus transfer is not determined solely by foreign exchange reserves. It depends on multiple factors including income, expenditure, valuation changes and risk provisioning. Thus, only statement 2 is correct.

#### 9. Question

With reference to the Economic Capital Framework (ECF) of the Reserve Bank of India, consider the following statements:

• The ECF determines the proportion of the RBI’s annual income that must be transferred to the Government of India as surplus.

• Under the ECF, the Contingent Risk Buffer is maintained as a percentage of the RBI’s balance sheet to absorb potential financial risks.

• The ECF mandates that the RBI must maintain a fixed minimum capital adequacy ratio similar to commercial banks.

• Under the ECF, surplus transfer is decided based solely on the size of foreign exchange reserves held by the RBI.

How many of the statements given above are correct?

• (a) Only one

• (b) Only two

• (c) Only three

• (d) All four

Answer: (a) Only one

Explanation

The Economic Capital Framework (ECF) provides a structured approach for determining how much financial buffer the Reserve Bank of India (RBI) should maintain before transferring surplus profits to the Government of India. The present framework was adopted in 2019 following the recommendations of the Bimal Jalan Committee.

Statement 1 is incorrect- The ECF does not directly determine a fixed proportion of annual income to be transferred to the government. Instead, it determines the level of capital and risk buffers that the RBI must maintain. The surplus available for transfer is calculated after maintaining these buffers.

Statement 2 is correct- The Contingent Risk Buffer (CRB) is maintained as a percentage of the RBI’s balance sheet, recommended within the range of 5.5%–6.5%. This buffer protects the RBI against risks such as exchange rate volatility, financial market instability, and monetary operations.

Statement 3 is incorrect- Capital adequacy ratios apply to commercial banks under Basel norms, not to the RBI. The ECF concerns the central bank’s balance sheet, not regulatory capital for banks.

Statement 4 is incorrect- Surplus transfer is not determined solely by foreign exchange reserves. It depends on multiple factors including income, expenditure, valuation changes and risk provisioning.

Thus, only statement 2 is correct.

Answer: (a) Only one

Explanation

Thus, only statement 2 is correct.

• Question 10 of 15 10. Question 1 points With reference to the Fair and Remunerative Price (FRP) for sugarcane, consider the following statements: FRP represents the minimum price that sugar mills are legally required to pay to sugarcane farmers. The FRP system replaced the Statutory Minimum Price (SMP) mechanism in 2009. The final decision regarding FRP is taken by the Commission for Agricultural Costs and Prices (CACP). FRP is notified under the provisions of the Essential Commodities Act, 1955. Which of the statements given above are correct? (a) 1 and 2 only (b) 1, 2 and 4 only (c) 2 and 3 only (d) 1, 2, 3 and 4 Correct Answer: (b) 1 ,2 and 4 Explanation The Fair and Remunerative Price (FRP) is the minimum price that sugar mills must pay to sugarcane farmers for their produce. It is intended to ensure that farmers receive a remunerative return for their crop regardless of fluctuations in the sugar market. Statement 1 is correct FRP acts as a statutory minimum payment that mills must pay to sugarcane farmers. It ensures farmers receive a guaranteed price for their crop. Statement 2 is correct The FRP mechanism was introduced in 2009, replacing the earlier Statutory Minimum Price (SMP) system. The shift aimed to make pricing more transparent and linked to sugar recovery. Statement 3 is incorrect The CACP only recommends the FRP, while the final decision is taken by the Cabinet Committee on Economic Affairs (CCEA). Statement 4 is correct the pricing framework operates under provisions of the Essential Commodities Act, 1955, which allows the central government to regulate sugarcane pricing. Thus, three statements are correct– 1,2 and 4 Incorrect Answer: (b) 1 ,2 and 4 Explanation The Fair and Remunerative Price (FRP) is the minimum price that sugar mills must pay to sugarcane farmers for their produce. It is intended to ensure that farmers receive a remunerative return for their crop regardless of fluctuations in the sugar market. Statement 1 is correct FRP acts as a statutory minimum payment that mills must pay to sugarcane farmers. It ensures farmers receive a guaranteed price for their crop. Statement 2 is correct The FRP mechanism was introduced in 2009, replacing the earlier Statutory Minimum Price (SMP) system. The shift aimed to make pricing more transparent and linked to sugar recovery. Statement 3 is incorrect The CACP only recommends the FRP, while the final decision is taken by the Cabinet Committee on Economic Affairs (CCEA). Statement 4 is correct the pricing framework operates under provisions of the Essential Commodities Act, 1955, which allows the central government to regulate sugarcane pricing. Thus, three statements are correct– 1,2 and 4

#### 10. Question

With reference to the Fair and Remunerative Price (FRP) for sugarcane, consider the following statements:

• FRP represents the minimum price that sugar mills are legally required to pay to sugarcane farmers.

• The FRP system replaced the Statutory Minimum Price (SMP) mechanism in 2009.

• The final decision regarding FRP is taken by the Commission for Agricultural Costs and Prices (CACP).

• FRP is notified under the provisions of the Essential Commodities Act, 1955.

Which of the statements given above are correct?

• (a) 1 and 2 only

• (b) 1, 2 and 4 only

• (c) 2 and 3 only

• (d) 1, 2, 3 and 4

Answer: (b) 1 ,2 and 4

Explanation

The Fair and Remunerative Price (FRP) is the minimum price that sugar mills must pay to sugarcane farmers for their produce. It is intended to ensure that farmers receive a remunerative return for their crop regardless of fluctuations in the sugar market.

Statement 1 is correct FRP acts as a statutory minimum payment that mills must pay to sugarcane farmers. It ensures farmers receive a guaranteed price for their crop.

Statement 2 is correct The FRP mechanism was introduced in 2009, replacing the earlier Statutory Minimum Price (SMP) system. The shift aimed to make pricing more transparent and linked to sugar recovery.

Statement 3 is incorrect The CACP only recommends the FRP, while the final decision is taken by the Cabinet Committee on Economic Affairs (CCEA).

Statement 4 is correct the pricing framework operates under provisions of the Essential Commodities Act, 1955, which allows the central government to regulate sugarcane pricing.

Thus, three statements are correct– 1,2 and 4

Answer: (b) 1 ,2 and 4

Explanation

Statement 1 is correct FRP acts as a statutory minimum payment that mills must pay to sugarcane farmers. It ensures farmers receive a guaranteed price for their crop.

Statement 3 is incorrect The CACP only recommends the FRP, while the final decision is taken by the Cabinet Committee on Economic Affairs (CCEA).

Statement 4 is correct the pricing framework operates under provisions of the Essential Commodities Act, 1955, which allows the central government to regulate sugarcane pricing.

Thus, three statements are correct– 1,2 and 4

• Question 11 of 15 11. Question 1 points Digital platforms have transformed the way people access information, conduct business, and engage in social interaction. Online marketplaces, social media networks, and remote working tools have expanded opportunities for entrepreneurship and collaboration. At the same time, these platforms concentrate vast amounts of data and influence in the hands of a few large corporations. Such concentration raises concerns regarding privacy, market competition, and the autonomy of users. Algorithmic control over content visibility and commercial transactions can shape public opinion and consumer behaviour in subtle ways. In societies with limited digital literacy, these effects may become more pronounced, increasing vulnerability to misinformation and economic exploitation. Which one of the following statements best reflects the critical message conveyed by the author of the passage? (a) Digital platforms mainly promote economic growth and innovation. (b) Regulation of digital platforms should restrict technological development. (c) Digital platforms create opportunities but also generate structural risks. (d) Online communication has replaced traditional social interaction. Correct Answer: (c) Explanation: The passage presents both positive and negative aspects of digital platforms. It acknowledges expanded opportunities while highlighting concerns related to data concentration, influence, and vulnerability. Option (c) captures this balanced and critical perspective by recognising both benefits and risks. The other options focus only on one aspect or introduce claims not supported by the passage. Incorrect Answer: (c) Explanation: The passage presents both positive and negative aspects of digital platforms. It acknowledges expanded opportunities while highlighting concerns related to data concentration, influence, and vulnerability. Option (c) captures this balanced and critical perspective by recognising both benefits and risks. The other options focus only on one aspect or introduce claims not supported by the passage.

#### 11. Question

Digital platforms have transformed the way people access information, conduct business, and engage in social interaction. Online marketplaces, social media networks, and remote working tools have expanded opportunities for entrepreneurship and collaboration. At the same time, these platforms concentrate vast amounts of data and influence in the hands of a few large corporations.

Such concentration raises concerns regarding privacy, market competition, and the autonomy of users. Algorithmic control over content visibility and commercial transactions can shape public opinion and consumer behaviour in subtle ways. In societies with limited digital literacy, these effects may become more pronounced, increasing vulnerability to misinformation and economic exploitation.

Which one of the following statements best reflects the critical message conveyed by the author of the passage?

• (a) Digital platforms mainly promote economic growth and innovation.

• (b) Regulation of digital platforms should restrict technological development.

• (c) Digital platforms create opportunities but also generate structural risks.

• (d) Online communication has replaced traditional social interaction.

Answer: (c)

Explanation:

The passage presents both positive and negative aspects of digital platforms. It acknowledges expanded opportunities while highlighting concerns related to data concentration, influence, and vulnerability. Option (c) captures this balanced and critical perspective by recognising both benefits and risks. The other options focus only on one aspect or introduce claims not supported by the passage.

Answer: (c)

Explanation:

• Question 12 of 15 12. Question 1 points A and B can complete a task in 3 days and 4 days respectively. Work starts on Monday. A works on Day 1, B works on Day 2, and both work together on Day 3. This 3-day pattern then repeats (A alone, B alone, both together, …). Consider the following statements: The work will be finished on Wednesday. B works for fewer days than A. Which of the statements given above is/are correct? (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2 Correct Answer: (a) Explanation: A’s 1-day work = 1/3, B’s 1-day work = 1/4. In first 3 days: Day 1 (Mon): A → 1/3 Day 2 (Tue): B → +1/4 → total = 1/3 + 1/4 = 7/12 Day 3 (Wed): A + B → 1/3 + 1/4 = 7/12 Total after 3 days = 7/12 + 7/12 = 14/12 > 1. So the work finishes during Wednesday (Day 3). Statement 1 is correct. Up to completion, days worked: A: Day 1 and part of Day 3 → 2 days (effectively) B: Day 2 and part of Day 3 → 2 days (effectively) They both work the same number of days; so Statement 2 (“B works fewer days than A”) is false. Hence, only Statement 1 is correct → option (a). Incorrect Answer: (a) Explanation: A’s 1-day work = 1/3, B’s 1-day work = 1/4. In first 3 days: Day 1 (Mon): A → 1/3 Day 2 (Tue): B → +1/4 → total = 1/3 + 1/4 = 7/12 Day 3 (Wed): A + B → 1/3 + 1/4 = 7/12 Total after 3 days = 7/12 + 7/12 = 14/12 > 1. So the work finishes during Wednesday (Day 3). Statement 1 is correct. Up to completion, days worked: A: Day 1 and part of Day 3 → 2 days (effectively) B: Day 2 and part of Day 3 → 2 days (effectively) They both work the same number of days; so Statement 2 (“B works fewer days than A”) is false. Hence, only Statement 1 is correct → option (a).

#### 12. Question

A and B can complete a task in 3 days and 4 days respectively. Work starts on Monday. A works on Day 1, B works on Day 2, and both work together on Day 3. This 3-day pattern then repeats (A alone, B alone, both together, …).

Consider the following statements:

• The work will be finished on Wednesday.

• B works for fewer days than A.

Which of the statements given above is/are correct?

• (a) 1 only

• (b) 2 only

• (c) Both 1 and 2

• (d) Neither 1 nor 2

Answer: (a)

Explanation: A’s 1-day work = 1/3, B’s 1-day work = 1/4.

In first 3 days:

• Day 1 (Mon): A → 1/3

• Day 2 (Tue): B → +1/4 → total = 1/3 + 1/4 = 7/12

• Day 3 (Wed): A + B → 1/3 + 1/4 = 7/12

Total after 3 days = 7/12 + 7/12 = 14/12 > 1.

So the work finishes during Wednesday (Day 3). Statement 1 is correct.

Up to completion, days worked:

• A: Day 1 and part of Day 3 → 2 days (effectively)

• B: Day 2 and part of Day 3 → 2 days (effectively)

They both work the same number of days; so Statement 2 (“B works fewer days than A”) is false.

Hence, only Statement 1 is correct → option (a).

Answer: (a)

Explanation: A’s 1-day work = 1/3, B’s 1-day work = 1/4.

In first 3 days:

• Day 1 (Mon): A → 1/3

• Day 2 (Tue): B → +1/4 → total = 1/3 + 1/4 = 7/12

• Day 3 (Wed): A + B → 1/3 + 1/4 = 7/12

Total after 3 days = 7/12 + 7/12 = 14/12 > 1.

So the work finishes during Wednesday (Day 3). Statement 1 is correct.

Up to completion, days worked:

• A: Day 1 and part of Day 3 → 2 days (effectively)

• B: Day 2 and part of Day 3 → 2 days (effectively)

They both work the same number of days; so Statement 2 (“B works fewer days than A”) is false.

Hence, only Statement 1 is correct → option (a).

• Question 13 of 15 13. Question 1 points Two inlet pipes can fill a cistern in 12 hours and 18 hours respectively, while a third outlet pipe can empty it in 36 hours. If all three pipes are opened at the same time, how long will it take to fill the cistern? (a) 9 hours (b) 10 hours (c) 12 hours (d) 15 hours Correct Answer: (a) Explanation: Work done per hour: Pipe 1 = 1/12 Pipe 2 = 1/18 Pipe 3 (emptying) = –1/36 Net work/hour = 1/12 + 1/18 – 1/36 LCM of 12, 18, 36 = 36 → (3 + 2 – 1) / 36 = 4/36 = 1/9 So they fill 1/9 of the tank per hour. Therefore, total time = 9 hours. Hence, option (a) is correct. Incorrect Answer: (a) Explanation: Work done per hour: Pipe 1 = 1/12 Pipe 2 = 1/18 Pipe 3 (emptying) = –1/36 Net work/hour = 1/12 + 1/18 – 1/36 LCM of 12, 18, 36 = 36 → (3 + 2 – 1) / 36 = 4/36 = 1/9 So they fill 1/9 of the tank per hour. Therefore, total time = 9 hours. Hence, option (a) is correct.

#### 13. Question

Two inlet pipes can fill a cistern in 12 hours and 18 hours respectively, while a third outlet pipe can empty it in 36 hours. If all three pipes are opened at the same time, how long will it take to fill the cistern?

• (a) 9 hours

• (b) 10 hours

• (c) 12 hours

• (d) 15 hours

Answer: (a)

Explanation:

Work done per hour:

• Pipe 1 = 1/12

• Pipe 2 = 1/18

• Pipe 3 (emptying) = –1/36

Net work/hour = 1/12 + 1/18 – 1/36

LCM of 12, 18, 36 = 36 → (3 + 2 – 1) / 36 = 4/36 = 1/9

So they fill 1/9 of the tank per hour. Therefore, total time = 9 hours.

Hence, option (a) is correct.

Answer: (a)

Explanation:

Work done per hour:

• Pipe 1 = 1/12

• Pipe 2 = 1/18

• Pipe 3 (emptying) = –1/36

Net work/hour = 1/12 + 1/18 – 1/36

LCM of 12, 18, 36 = 36 → (3 + 2 – 1) / 36 = 4/36 = 1/9

So they fill 1/9 of the tank per hour. Therefore, total time = 9 hours.

Hence, option (a) is correct.

• Question 14 of 15 14. Question 1 points A tank is fitted with two inlet pipes, D and E, having radii 3 cm and 6 cm, respectively. The rate of water flow through each pipe is directly proportional to the cube of its radius. If the pipe with the smaller radius takes 90 minutes to fill the empty tank, how much time will pipe E take to fill a tank that is already 20% full? (a) 9 minutes (b) 8 minutes (c) 12 minutes (d) 6 minutes Correct Answer: (a) Solution Water flow is directly proportional to the cube of the radius. Let k be the proportionality constant. Then, Pipe D (radius 3 cm) = k × 3³ = 27k units/minute Pipe E (radius 6 cm) = k × 6³ = 216k units/minute Pipe D has the smaller radius and it takes 90 minutes to fill the tank. Capacity of tank = flow rate × time = 27k × 90 = 2430k units The tank is already 20% full, so 80% remains to be filled: Remaining volume = 80% of 2430k = 0.8 × 2430k = 1944k units Time taken by pipe E to fill the remaining 80% of the tank = remaining volume / flow rate of E = 1944k / 216k = 9 minutes Hence, option (a) is correct. Incorrect Answer: (a) Solution Water flow is directly proportional to the cube of the radius. Let k be the proportionality constant. Then, Pipe D (radius 3 cm) = k × 3³ = 27k units/minute Pipe E (radius 6 cm) = k × 6³ = 216k units/minute Pipe D has the smaller radius and it takes 90 minutes to fill the tank. Capacity of tank = flow rate × time = 27k × 90 = 2430k units The tank is already 20% full, so 80% remains to be filled: Remaining volume = 80% of 2430k = 0.8 × 2430k = 1944k units Time taken by pipe E to fill the remaining 80% of the tank = remaining volume / flow rate of E = 1944k / 216k = 9 minutes Hence, option (a) is correct.

#### 14. Question

A tank is fitted with two inlet pipes, D and E, having radii 3 cm and 6 cm, respectively. The rate of water flow through each pipe is directly proportional to the cube of its radius. If the pipe with the smaller radius takes 90 minutes to fill the empty tank, how much time will pipe E take to fill a tank that is already 20% full?

• (a) 9 minutes

• (b) 8 minutes

• (c) 12 minutes

• (d) 6 minutes

Answer: (a)

Solution Water flow is directly proportional to the cube of the radius. Let k be the proportionality constant.

Then, Pipe D (radius 3 cm) = k × 3³ = 27k units/minute Pipe E (radius 6 cm) = k × 6³ = 216k units/minute

Pipe D has the smaller radius and it takes 90 minutes to fill the tank.

Capacity of tank = flow rate × time = 27k × 90 = 2430k units

The tank is already 20% full, so 80% remains to be filled: Remaining volume = 80% of 2430k = 0.8 × 2430k = 1944k units

Time taken by pipe E to fill the remaining 80% of the tank = remaining volume / flow rate of E = 1944k / 216k = 9 minutes

Hence, option (a) is correct.

Answer: (a)

Solution Water flow is directly proportional to the cube of the radius. Let k be the proportionality constant.

Then, Pipe D (radius 3 cm) = k × 3³ = 27k units/minute Pipe E (radius 6 cm) = k × 6³ = 216k units/minute

Pipe D has the smaller radius and it takes 90 minutes to fill the tank.

Capacity of tank = flow rate × time = 27k × 90 = 2430k units

The tank is already 20% full, so 80% remains to be filled: Remaining volume = 80% of 2430k = 0.8 × 2430k = 1944k units

Time taken by pipe E to fill the remaining 80% of the tank = remaining volume / flow rate of E = 1944k / 216k = 9 minutes

Hence, option (a) is correct.

• Question 15 of 15 15. Question 1 points Priya and Neha deliver parcels. Priya alone delivers 43 parcels in p hours. Together, Priya and Neha deliver 43 parcels in t hours. How many hours will Neha take alone to deliver 43 parcels? (a) p/(p + t) (b) t/(p + t) (c) pt/(p + t) (d) pt/(p − t) Correct Answer: (d) Explanation Let 43 be a unit. Priya’s rate = 1/p, combined rate = 1/t. Neha’s rate = 1/t − 1/p = (p − t)/(pt). Time for Neha alone = 1 ÷ [(p − t)/(pt)] = pt/(p − t) hours. Hence, option (d) is correct. Incorrect Answer: (d) Explanation Let 43 be a unit. Priya’s rate = 1/p, combined rate = 1/t. Neha’s rate = 1/t − 1/p = (p − t)/(pt). Time for Neha alone = 1 ÷ [(p − t)/(pt)] = pt/(p − t) hours. Hence, option (d) is correct.

#### 15. Question

Priya and Neha deliver parcels. Priya alone delivers 43 parcels in p hours. Together, Priya and Neha deliver 43 parcels in t hours. How many hours will Neha take alone to deliver 43 parcels?

• (a) p/(p + t)

• (b) t/(p + t)

• (c) pt/(p + t)

• (d) pt/(p − t)

Answer: (d) Explanation Let 43 be a unit. Priya’s rate = 1/p, combined rate = 1/t. Neha’s rate = 1/t − 1/p = (p − t)/(pt). Time for Neha alone = 1 ÷ [(p − t)/(pt)] = pt/(p − t) hours. Hence, option (d) is correct.

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