DAY – 45 : Insta 75 Days Revision Plan-2025 : Economy

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• Question 1 of 30 1. Question 1 points Consider the following statements regarding the Goods and Services Tax (Compensation to States) Act, 2017: The Compensation Cess is levied only on notified demerit goods and luxury items. The cess collected is first credited to the Consolidated Fund of India before being transferred to the GST Compensation Fund. The period for levy of Compensation Cess was extended beyond the initial five years primarily to service the debt taken to meet the compensation shortfall during the COVID-19 pandemic. How many of the above statements are correct? (a) Only one (b) Only two (c) All three (d) None Correct Solution: B The GST (Compensation to States) Act, 2017 provided for compensation to states for loss of revenue arising on account of implementation of GST for a period of five years (July 2017 to June 2022), assuming a 14% annual growth rate over the base year FY 2015-16 revenues. Statement 1 is correct. The Compensation Cess under Section 8 of the Act is levied on the supply of specific goods and services, primarily notified demerit goods (like tobacco, pan masala, aerated water) and luxury items (like motor vehicles), as recommended by the GST Council. Statement 2 is incorrect. Article 270 of the Constitution was amended to state that the proceeds of the cess levied under the GST (Compensation to States) Act, 2017, shall not form part of the Consolidated Fund of India. It is directly credited to a non-lapsable fund known as the Goods and Services Tax Compensation Fund, established in the Public Account of India. Statement 3 is correct. The levy and collection of the Compensation Cess were originally intended for five years (up to June 30, 2022). However, due to the revenue shortfall during the pandemic, the central government borrowed funds (back-to-back loans) to meet the compensation gap. The GST Council recommended extending the levy of the cess beyond June 2022 (up to March 31, 2026) specifically to repay these borrowings and service the debt. Incorrect Solution: B The GST (Compensation to States) Act, 2017 provided for compensation to states for loss of revenue arising on account of implementation of GST for a period of five years (July 2017 to June 2022), assuming a 14% annual growth rate over the base year FY 2015-16 revenues. Statement 1 is correct. The Compensation Cess under Section 8 of the Act is levied on the supply of specific goods and services, primarily notified demerit goods (like tobacco, pan masala, aerated water) and luxury items (like motor vehicles), as recommended by the GST Council. Statement 2 is incorrect. Article 270 of the Constitution was amended to state that the proceeds of the cess levied under the GST (Compensation to States) Act, 2017, shall not form part of the Consolidated Fund of India. It is directly credited to a non-lapsable fund known as the Goods and Services Tax Compensation Fund, established in the Public Account of India. Statement 3 is correct. The levy and collection of the Compensation Cess were originally intended for five years (up to June 30, 2022). However, due to the revenue shortfall during the pandemic, the central government borrowed funds (back-to-back loans) to meet the compensation gap. The GST Council recommended extending the levy of the cess beyond June 2022 (up to March 31, 2026) specifically to repay these borrowings and service the debt.

#### 1. Question

Consider the following statements regarding the Goods and Services Tax (Compensation to States) Act, 2017:

• The Compensation Cess is levied only on notified demerit goods and luxury items.

• The cess collected is first credited to the Consolidated Fund of India before being transferred to the GST Compensation Fund.

• The period for levy of Compensation Cess was extended beyond the initial five years primarily to service the debt taken to meet the compensation shortfall during the COVID-19 pandemic.

How many of the above statements are correct?

• (a) Only one

• (b) Only two

• (c) All three

Solution: B

• The GST (Compensation to States) Act, 2017 provided for compensation to states for loss of revenue arising on account of implementation of GST for a period of five years (July 2017 to June 2022), assuming a 14% annual growth rate over the base year FY 2015-16 revenues.

• Statement 1 is correct. The Compensation Cess under Section 8 of the Act is levied on the supply of specific goods and services, primarily notified demerit goods (like tobacco, pan masala, aerated water) and luxury items (like motor vehicles), as recommended by the GST Council.

• Statement 2 is incorrect. Article 270 of the Constitution was amended to state that the proceeds of the cess levied under the GST (Compensation to States) Act, 2017, shall not form part of the Consolidated Fund of India. It is directly credited to a non-lapsable fund known as the Goods and Services Tax Compensation Fund, established in the Public Account of India.

• Statement 3 is correct. The levy and collection of the Compensation Cess were originally intended for five years (up to June 30, 2022). However, due to the revenue shortfall during the pandemic, the central government borrowed funds (back-to-back loans) to meet the compensation gap. The GST Council recommended extending the levy of the cess beyond June 2022 (up to March 31, 2026) specifically to repay these borrowings and service the debt.

Solution: B

• Question 2 of 30 2. Question 1 points Consider the following statements regarding Core Inflation in India: Core inflation typically excludes the impact of volatile food and fuel prices to better reflect underlying demand pressures. A situation where headline inflation is significantly lower than core inflation often indicates successful supply-side management but persistent demand-pull factors. The Reserve Bank of India’s Monetary Policy Committee (MPC) is mandated to target core inflation within the +/- 2% tolerance band around 4%. Which of the statements given above is/are correct? (a) 1 only (b) 1 and 2 only (c) 2 and 3 only (d) 1, 2 and 3 Correct Solution: B Statement 1 is correct. Core inflation is a measure of inflation that omits categories with volatile prices, most commonly food and energy (fuel). The rationale is to provide a clearer picture of underlying, persistent inflationary trends driven by demand factors, wage pressures, and structural elements, rather than temporary supply shocks. Statement 2 is correct. When headline inflation (which includes food and fuel) falls significantly while core inflation remains high or sticky, it suggests that factors driving down headline inflation (e.g., good monsoon easing food prices, government supply interventions, favorable base effects) are different from those sustaining core inflation. Persistent core inflation often points towards underlying demand strength, sticky service sector inflation, or rising input costs unrelated to food/fuel. This scenario presents a challenge for monetary policy. Statement 3 is incorrect. The Reserve Bank of India Act, 1934, as amended, mandates the MPC to target headline Consumer Price Index (CPI) inflation, keeping it within the band of 4% +/- 2%. While the MPC closely monitors core inflation trends for policy formulation, the official target is based on headline CPI inflation, not core inflation. Incorrect Solution: B Statement 1 is correct. Core inflation is a measure of inflation that omits categories with volatile prices, most commonly food and energy (fuel). The rationale is to provide a clearer picture of underlying, persistent inflationary trends driven by demand factors, wage pressures, and structural elements, rather than temporary supply shocks. Statement 2 is correct. When headline inflation (which includes food and fuel) falls significantly while core inflation remains high or sticky, it suggests that factors driving down headline inflation (e.g., good monsoon easing food prices, government supply interventions, favorable base effects) are different from those sustaining core inflation. Persistent core inflation often points towards underlying demand strength, sticky service sector inflation, or rising input costs unrelated to food/fuel. This scenario presents a challenge for monetary policy. Statement 3 is incorrect. The Reserve Bank of India Act, 1934, as amended, mandates the MPC to target headline Consumer Price Index (CPI) inflation, keeping it within the band of 4% +/- 2%. While the MPC closely monitors core inflation trends for policy formulation, the official target is based on headline CPI inflation, not core inflation.

#### 2. Question

Consider the following statements regarding Core Inflation in India:

• Core inflation typically excludes the impact of volatile food and fuel prices to better reflect underlying demand pressures.

• A situation where headline inflation is significantly lower than core inflation often indicates successful supply-side management but persistent demand-pull factors.

• The Reserve Bank of India’s Monetary Policy Committee (MPC) is mandated to target core inflation within the +/- 2% tolerance band around 4%.

Which of the statements given above is/are correct?

• (a) 1 only

• (b) 1 and 2 only

• (c) 2 and 3 only

• (d) 1, 2 and 3

Solution: B

• Statement 1 is correct. Core inflation is a measure of inflation that omits categories with volatile prices, most commonly food and energy (fuel). The rationale is to provide a clearer picture of underlying, persistent inflationary trends driven by demand factors, wage pressures, and structural elements, rather than temporary supply shocks.

• Statement 2 is correct. When headline inflation (which includes food and fuel) falls significantly while core inflation remains high or sticky, it suggests that factors driving down headline inflation (e.g., good monsoon easing food prices, government supply interventions, favorable base effects) are different from those sustaining core inflation. Persistent core inflation often points towards underlying demand strength, sticky service sector inflation, or rising input costs unrelated to food/fuel. This scenario presents a challenge for monetary policy.

• Statement 3 is incorrect. The Reserve Bank of India Act, 1934, as amended, mandates the MPC to target headline Consumer Price Index (CPI) inflation, keeping it within the band of 4% +/- 2%. While the MPC closely monitors core inflation trends for policy formulation, the official target is based on headline CPI inflation, not core inflation.

Solution: B

• Question 3 of 30 3. Question 1 points With reference to the Basel III capital framework as implemented by the Reserve Bank of India (RBI), consider the following statements: The Capital Conservation Buffer (CCB) must be maintained entirely in the form of Common Equity Tier 1 (CET1) capital. The Countercyclical Capital Buffer (CCyB), when activated, acts as an extension of the CCB, and breaching the combined requirement triggers restrictions on capital distributions. The RBI decided to activate a CCyB of 1% in April 2025 due to rising credit growth in certain sectors. How many of the above statements are correct? (a) Only one (b) Only two (c) All three (d) None of the above Correct Solution: B Statement 1 is correct. The Capital Conservation Buffer (CCB), set at 2.5% of Risk-Weighted Assets (RWAs) in India, is designed to absorb losses during stress. Basel III stipulations require it to be composed entirely of the highest quality capital, which is Common Equity Tier 1 (CET1). Statement 2 is correct. The Countercyclical Capital Buffer (CCyB), ranging from 0% to 2.5% of RWAs, is intended to be built up during periods of excessive credit growth. Functionally, it operates as an extension of the CCB. If a bank’s capital ratio falls into the combined buffer range (minimum requirement + CCB + CCyB), it faces graduated constraints on capital distributions (like dividends, share buybacks, discretionary bonuses). Statement 3 is incorrect. The RBI, after reviewing the relevant indicators (including the credit-to-GDP gap), explicitly decided not to activate the CCyB in April 2025. The applicable CCyB rate for Indian banks remains 0%. The framework has been in place since 2015 but has never been activated. Incorrect Solution: B Statement 1 is correct. The Capital Conservation Buffer (CCB), set at 2.5% of Risk-Weighted Assets (RWAs) in India, is designed to absorb losses during stress. Basel III stipulations require it to be composed entirely of the highest quality capital, which is Common Equity Tier 1 (CET1). Statement 2 is correct. The Countercyclical Capital Buffer (CCyB), ranging from 0% to 2.5% of RWAs, is intended to be built up during periods of excessive credit growth. Functionally, it operates as an extension of the CCB. If a bank’s capital ratio falls into the combined buffer range (minimum requirement + CCB + CCyB), it faces graduated constraints on capital distributions (like dividends, share buybacks, discretionary bonuses). Statement 3 is incorrect. The RBI, after reviewing the relevant indicators (including the credit-to-GDP gap), explicitly decided not to activate the CCyB in April 2025. The applicable CCyB rate for Indian banks remains 0%. The framework has been in place since 2015 but has never been activated.

#### 3. Question

With reference to the Basel III capital framework as implemented by the Reserve Bank of India (RBI), consider the following statements:

• The Capital Conservation Buffer (CCB) must be maintained entirely in the form of Common Equity Tier 1 (CET1) capital.

• The Countercyclical Capital Buffer (CCyB), when activated, acts as an extension of the CCB, and breaching the combined requirement triggers restrictions on capital distributions.

• The RBI decided to activate a CCyB of 1% in April 2025 due to rising credit growth in certain sectors.

How many of the above statements are correct?

• (a) Only one

• (b) Only two

• (c) All three

• (d) None of the above

Solution: B

• Statement 1 is correct. The Capital Conservation Buffer (CCB), set at 2.5% of Risk-Weighted Assets (RWAs) in India, is designed to absorb losses during stress. Basel III stipulations require it to be composed entirely of the highest quality capital, which is Common Equity Tier 1 (CET1).

• Statement 2 is correct. The Countercyclical Capital Buffer (CCyB), ranging from 0% to 2.5% of RWAs, is intended to be built up during periods of excessive credit growth. Functionally, it operates as an extension of the CCB. If a bank’s capital ratio falls into the combined buffer range (minimum requirement + CCB + CCyB), it faces graduated constraints on capital distributions (like dividends, share buybacks, discretionary bonuses).

• Statement 3 is incorrect. The RBI, after reviewing the relevant indicators (including the credit-to-GDP gap), explicitly decided not to activate the CCyB in April 2025. The applicable CCyB rate for Indian banks remains 0%. The framework has been in place since 2015 but has never been activated.

Solution: B

• Question 4 of 30 4. Question 1 points Consider the following implications of the Reserve Bank of India (RBI) adopting an ‘accommodative’ monetary policy stance: It signals the MPC’s readiness to reduce the policy repo rate further if economic conditions warrant. It necessarily implies that the RBI will conduct Open Market Operations (OMOs) only for purchasing government securities. 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 Solution: A Statement 1 is correct. An ‘accommodative’ stance explicitly indicates that the central bank is leaning towards easing monetary policy to support economic activity. It signals a preparedness to cut the policy repo rate further if deemed necessary based on evolving macroeconomic conditions. This contrasts with a ‘neutral’ stance (where moves are possible in either direction) or a ‘withdrawal of accommodation’ stance (signaling a bias towards tightening). Statement 2 is incorrect. While an accommodative stance often aligns with ensuring ample liquidity, it does not restrict RBI’s OMOs solely to purchases. RBI uses various tools, including OMO sales (to absorb excess liquidity) or other operations like swaps , even under an accommodative stance, to manage liquidity conditions consistent with the overall policy objective. The stance primarily guides the direction of the policy rate, not the exclusive type of liquidity operation. The RBI MPC shifted to an accommodative stance and cut the repo rate in April 2025 despite core inflation remaining sticky above 4% and acknowledging global risks. This decision implies that the MPC, at that point, placed a higher weight on addressing growth concerns (GDP forecast trimmed, growth below potential ) than on the risks posed by the prevailing level of core inflation, likely banking on headline inflation remaining anchored around the 4% target. Incorrect Solution: A Statement 1 is correct. An ‘accommodative’ stance explicitly indicates that the central bank is leaning towards easing monetary policy to support economic activity. It signals a preparedness to cut the policy repo rate further if deemed necessary based on evolving macroeconomic conditions. This contrasts with a ‘neutral’ stance (where moves are possible in either direction) or a ‘withdrawal of accommodation’ stance (signaling a bias towards tightening). Statement 2 is incorrect. While an accommodative stance often aligns with ensuring ample liquidity, it does not restrict RBI’s OMOs solely to purchases. RBI uses various tools, including OMO sales (to absorb excess liquidity) or other operations like swaps , even under an accommodative stance, to manage liquidity conditions consistent with the overall policy objective. The stance primarily guides the direction of the policy rate, not the exclusive type of liquidity operation. The RBI MPC shifted to an accommodative stance and cut the repo rate in April 2025 despite core inflation remaining sticky above 4% and acknowledging global risks. This decision implies that the MPC, at that point, placed a higher weight on addressing growth concerns (GDP forecast trimmed, growth below potential ) than on the risks posed by the prevailing level of core inflation, likely banking on headline inflation remaining anchored around the 4% target.

#### 4. Question

Consider the following implications of the Reserve Bank of India (RBI) adopting an ‘accommodative’ monetary policy stance:

• It signals the MPC’s readiness to reduce the policy repo rate further if economic conditions warrant.

• It necessarily implies that the RBI will conduct Open Market Operations (OMOs) only for purchasing government securities.

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

Solution: A

• Statement 1 is correct. An ‘accommodative’ stance explicitly indicates that the central bank is leaning towards easing monetary policy to support economic activity. It signals a preparedness to cut the policy repo rate further if deemed necessary based on evolving macroeconomic conditions. This contrasts with a ‘neutral’ stance (where moves are possible in either direction) or a ‘withdrawal of accommodation’ stance (signaling a bias towards tightening).

• Statement 2 is incorrect. While an accommodative stance often aligns with ensuring ample liquidity, it does not restrict RBI’s OMOs solely to purchases. RBI uses various tools, including OMO sales (to absorb excess liquidity) or other operations like swaps , even under an accommodative stance, to manage liquidity conditions consistent with the overall policy objective. The stance primarily guides the direction of the policy rate, not the exclusive type of liquidity operation.

• The RBI MPC shifted to an accommodative stance and cut the repo rate in April 2025 despite core inflation remaining sticky above 4% and acknowledging global risks. This decision implies that the MPC, at that point, placed a higher weight on addressing growth concerns (GDP forecast trimmed, growth below potential ) than on the risks posed by the prevailing level of core inflation, likely banking on headline inflation remaining anchored around the 4% target.

Solution: A

• Question 5 of 30 5. Question 1 points Consider the following statements comparing the Consumer Price Index (CPI) and the Wholesale Price Index (WPI) in India: WPI gives higher weightage to manufactured goods, while CPI gives higher weightage to food items. Changes in WPI typically translate fully and immediately into changes in CPI. Services inflation is captured directly in CPI but not in WPI. Which of the statements given above are correct? (a) 1 and 2 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3 Correct Solution: C Statement 1 is correct. The composition of the baskets differs significantly. The WPI basket is dominated by manufactured products (around 64% weightage), followed by primary articles (including food articles, ~23%) and fuel & power (~13%). The CPI (Combined) basket gives the highest weightage to Food and Beverages (around 46%), followed by miscellaneous items (including services like health, education, transport, ~28%), housing, fuel & light, and clothing & footwear. Statement 2 is incorrect. While there is some pass-through from wholesale to retail prices, the translation is neither full nor immediate. The extent and speed of pass-through depend on various factors, including market structure, demand conditions, transportation costs, and retailer margins. Furthermore, the differing weights and inclusion of services in CPI mean the two indices can diverge significantly. Statement 3 is correct. WPI tracks prices at the wholesale/producer level, primarily for goods. It does not directly include the prices of services. CPI, reflecting the consumer’s perspective, includes the prices of services consumed by households, such as housing, transport, education, health, and recreation, which have a significant weight in the index. Incorrect Solution: C Statement 1 is correct. The composition of the baskets differs significantly. The WPI basket is dominated by manufactured products (around 64% weightage), followed by primary articles (including food articles, ~23%) and fuel & power (~13%). The CPI (Combined) basket gives the highest weightage to Food and Beverages (around 46%), followed by miscellaneous items (including services like health, education, transport, ~28%), housing, fuel & light, and clothing & footwear. Statement 2 is incorrect. While there is some pass-through from wholesale to retail prices, the translation is neither full nor immediate. The extent and speed of pass-through depend on various factors, including market structure, demand conditions, transportation costs, and retailer margins. Furthermore, the differing weights and inclusion of services in CPI mean the two indices can diverge significantly. Statement 3 is correct. WPI tracks prices at the wholesale/producer level, primarily for goods. It does not directly include the prices of services. CPI, reflecting the consumer’s perspective, includes the prices of services consumed by households, such as housing, transport, education, health, and recreation, which have a significant weight in the index.

#### 5. Question

Consider the following statements comparing the Consumer Price Index (CPI) and the Wholesale Price Index (WPI) in India:

• WPI gives higher weightage to manufactured goods, while CPI gives higher weightage to food items.

• Changes in WPI typically translate fully and immediately into changes in CPI.

• Services inflation is captured directly in CPI but not in WPI.

Which of the statements given above are correct?

• (a) 1 and 2 only

• (b) 2 and 3 only

• (c) 1 and 3 only

• (d) 1, 2 and 3

Solution: C

• Statement 1 is correct. The composition of the baskets differs significantly. The WPI basket is dominated by manufactured products (around 64% weightage), followed by primary articles (including food articles, ~23%) and fuel & power (~13%). The CPI (Combined) basket gives the highest weightage to Food and Beverages (around 46%), followed by miscellaneous items (including services like health, education, transport, ~28%), housing, fuel & light, and clothing & footwear.

• Statement 2 is incorrect. While there is some pass-through from wholesale to retail prices, the translation is neither full nor immediate. The extent and speed of pass-through depend on various factors, including market structure, demand conditions, transportation costs, and retailer margins. Furthermore, the differing weights and inclusion of services in CPI mean the two indices can diverge significantly.

Statement 3 is correct. WPI tracks prices at the wholesale/producer level, primarily for goods. It does not directly include the prices of services. CPI, reflecting the consumer’s perspective, includes the prices of services consumed by households, such as housing, transport, education, health, and recreation, which have a significant weight in the index.

Solution: C

• Question 6 of 30 6. Question 1 points With reference to the Tri-party Repo Market (TREPS) in India, consider the following statements: It is an anonymous, order-driven trading system for repo transactions facilitated by the Clearing Corporation of India Ltd (CCIL). Only Scheduled Commercial Banks and Primary Dealers are allowed to participate in TREPS. Transactions in TREPS are typically collateralized using only Central Government Securities. Which of the statements given above is/are correct? (a) 1 only (b) 1 and 3 only (c) 2 and 3 only (d) 1, 2 and 3 Correct Solution: A Statement 1 is correct. TREPS (Tri-Party Repo Dealing System) is operated by CCIL. It provides an anonymous, order-matching platform for executing repo transactions, where CCIL acts as a central counterparty (CCP) and also handles collateral management as the tri-party agent. Statement 2 is incorrect. Participation in TREPS is broader than just SCBs and PDs. Eligible participants include SCBs, PDs, Cooperative Banks, Mutual Funds, Insurance Companies, Pension Funds, Corporates, and other entities permitted by RBI to undertake repo transactions. This wide participation base contributes to its high trading volumes. Statement 3 is incorrect. While Central Government Securities (including Treasury Bills) are the most common collateral, State Development Loans (SDLs) are also eligible collateral for repo transactions in TREPS, subject to haircuts and concentration limits specified by CCIL/RBI. Incorrect Solution: A Statement 1 is correct. TREPS (Tri-Party Repo Dealing System) is operated by CCIL. It provides an anonymous, order-matching platform for executing repo transactions, where CCIL acts as a central counterparty (CCP) and also handles collateral management as the tri-party agent. Statement 2 is incorrect. Participation in TREPS is broader than just SCBs and PDs. Eligible participants include SCBs, PDs, Cooperative Banks, Mutual Funds, Insurance Companies, Pension Funds, Corporates, and other entities permitted by RBI to undertake repo transactions. This wide participation base contributes to its high trading volumes. Statement 3 is incorrect. While Central Government Securities (including Treasury Bills) are the most common collateral, State Development Loans (SDLs) are also eligible collateral for repo transactions in TREPS, subject to haircuts and concentration limits specified by CCIL/RBI.

#### 6. Question

With reference to the Tri-party Repo Market (TREPS) in India, consider the following statements:

• It is an anonymous, order-driven trading system for repo transactions facilitated by the Clearing Corporation of India Ltd (CCIL).

• Only Scheduled Commercial Banks and Primary Dealers are allowed to participate in TREPS.

• Transactions in TREPS are typically collateralized using only Central Government Securities.

Which of the statements given above is/are correct?

• (a) 1 only

• (b) 1 and 3 only

• (c) 2 and 3 only

• (d) 1, 2 and 3

Solution: A

• Statement 1 is correct. TREPS (Tri-Party Repo Dealing System) is operated by CCIL. It provides an anonymous, order-matching platform for executing repo transactions, where CCIL acts as a central counterparty (CCP) and also handles collateral management as the tri-party agent.

• Statement 2 is incorrect. Participation in TREPS is broader than just SCBs and PDs. Eligible participants include SCBs, PDs, Cooperative Banks, Mutual Funds, Insurance Companies, Pension Funds, Corporates, and other entities permitted by RBI to undertake repo transactions. This wide participation base contributes to its high trading volumes.

Statement 3 is incorrect. While Central Government Securities (including Treasury Bills) are the most common collateral, State Development Loans (SDLs) are also eligible collateral for repo transactions in TREPS, subject to haircuts and concentration limits specified by CCIL/RBI.

Solution: A

• Question 7 of 30 7. Question 1 points Consider the following statements regarding the T+0 settlement cycle being implemented in the Indian equity market: It completely replaces the existing T+1 settlement cycle for all listed securities. Participation in the T+0 settlement cycle is mandatory for all investors and brokers for the eligible scrips. One of the primary objectives is to reduce counterparty risk and enhance market liquidity. SEBI has permitted stock brokers to charge a different brokerage fee for T+0 trades compared to T+1 trades. How many of the above statements are correct? (a) Only one (b) Only two (c) Only three (d) All four Correct Solution: B Statement 1 is incorrect. The T+0 settlement cycle is being introduced as an optional facility in addition to the existing T+1 settlement cycle. The T+1 cycle remains the default settlement cycle. Statement 2 is incorrect. Participation in the T+0 settlement cycle is optional for both investors and brokers. Investors can choose whether to trade in the T+0 segment or the T+1 segment for eligible scrips. Statement 3 is correct. A key driver for shortening the settlement cycle (first to T+1, now optionally to T+0, and eventually instant settlement) is to reduce the time lag between trade execution and settlement, thereby minimizing counterparty risk (the risk that one party defaults before settlement) and pre-settlement risk. Faster settlement also means funds and securities are available sooner, potentially enhancing market liquidity and capital efficiency. Statement 4 is correct. SEBI, in its circulars regarding the expansion of the T+0 settlement, has explicitly permitted stock brokers to charge differential brokerage fees for trades settled under the T+0 cycle compared to those settled under the T+1 cycle, within the overall regulatory limits. This acknowledges potential differences in operational costs or services associated with the faster settlement cycle. Incorrect Solution: B Statement 1 is incorrect. The T+0 settlement cycle is being introduced as an optional facility in addition to the existing T+1 settlement cycle. The T+1 cycle remains the default settlement cycle. Statement 2 is incorrect. Participation in the T+0 settlement cycle is optional for both investors and brokers. Investors can choose whether to trade in the T+0 segment or the T+1 segment for eligible scrips. Statement 3 is correct. A key driver for shortening the settlement cycle (first to T+1, now optionally to T+0, and eventually instant settlement) is to reduce the time lag between trade execution and settlement, thereby minimizing counterparty risk (the risk that one party defaults before settlement) and pre-settlement risk. Faster settlement also means funds and securities are available sooner, potentially enhancing market liquidity and capital efficiency. Statement 4 is correct. SEBI, in its circulars regarding the expansion of the T+0 settlement, has explicitly permitted stock brokers to charge differential brokerage fees for trades settled under the T+0 cycle compared to those settled under the T+1 cycle, within the overall regulatory limits. This acknowledges potential differences in operational costs or services associated with the faster settlement cycle.

#### 7. Question

Consider the following statements regarding the T+0 settlement cycle being implemented in the Indian equity market:

• It completely replaces the existing T+1 settlement cycle for all listed securities.

• Participation in the T+0 settlement cycle is mandatory for all investors and brokers for the eligible scrips.

• One of the primary objectives is to reduce counterparty risk and enhance market liquidity.

• SEBI has permitted stock brokers to charge a different brokerage fee for T+0 trades compared to T+1 trades.

How many of the above statements are correct?

• (a) Only one

• (b) Only two

• (c) Only three

• (d) All four

Solution: B

• Statement 1 is incorrect. The T+0 settlement cycle is being introduced as an optional facility in addition to the existing T+1 settlement cycle. The T+1 cycle remains the default settlement cycle.

• Statement 2 is incorrect. Participation in the T+0 settlement cycle is optional for both investors and brokers. Investors can choose whether to trade in the T+0 segment or the T+1 segment for eligible scrips.

• Statement 3 is correct. A key driver for shortening the settlement cycle (first to T+1, now optionally to T+0, and eventually instant settlement) is to reduce the time lag between trade execution and settlement, thereby minimizing counterparty risk (the risk that one party defaults before settlement) and pre-settlement risk. Faster settlement also means funds and securities are available sooner, potentially enhancing market liquidity and capital efficiency.

• Statement 4 is correct. SEBI, in its circulars regarding the expansion of the T+0 settlement, has explicitly permitted stock brokers to charge differential brokerage fees for trades settled under the T+0 cycle compared to those settled under the T+1 cycle, within the overall regulatory limits. This acknowledges potential differences in operational costs or services associated with the faster settlement cycle.

Solution: B

• Question 8 of 30 8. Question 1 points Consider the following methods of financing the government’s fiscal deficit: Issuance of Treasury Bills (T-Bills) External Commercial Borrowings (ECBs) Issuance of dated Government Securities (G-Secs) Disinvestment of shares in Public Sector Undertakings (PSUs) Which of the above are generally considered sources of financing the fiscal deficit? (a) 1 and 3 only (b) 1, 2 and 3 only (c) 1, 3 and 4 only (d) 1, 2, 3 and 4 Correct Solution: A Statement 1 is correct. Treasury Bills are short-term debt instruments (maturities less than one year) issued by the central government to meet its immediate financing needs. They are a key component of market borrowings used to finance the fiscal deficit. Statement 2 is incorrect. While India receives external assistance (loans and grants), direct External Commercial Borrowings (ECBs) are typically undertaken by corporations and financial institutions, not directly by the central government itself to finance its fiscal deficit. Government’s external debt usually comprises multilateral/bilateral loans or NRI deposits, not ECBs in the conventional sense. Statement 3 is correct. Dated Government Securities (G-Secs) are long-term debt instruments (maturities of one year or more) issued by the central government. These market borrowings form the largest component of financing the fiscal deficit. Statement 4 is incorrect. Disinvestment proceeds are classified as non-debt capital receipts. While they reduce the government’s need for borrowing (and thus help manage the fiscal situation), they are not technically considered a source of financing the fiscal deficit itself. Fiscal deficit is defined as the excess of total expenditure over total receipts excluding borrowings. Disinvestment receipts reduce the borrowing requirement but are not borrowings themselves. Incorrect Solution: A Statement 1 is correct. Treasury Bills are short-term debt instruments (maturities less than one year) issued by the central government to meet its immediate financing needs. They are a key component of market borrowings used to finance the fiscal deficit. Statement 2 is incorrect. While India receives external assistance (loans and grants), direct External Commercial Borrowings (ECBs) are typically undertaken by corporations and financial institutions, not directly by the central government itself to finance its fiscal deficit. Government’s external debt usually comprises multilateral/bilateral loans or NRI deposits, not ECBs in the conventional sense. Statement 3 is correct. Dated Government Securities (G-Secs) are long-term debt instruments (maturities of one year or more) issued by the central government. These market borrowings form the largest component of financing the fiscal deficit. Statement 4 is incorrect. Disinvestment proceeds are classified as non-debt capital receipts. While they reduce the government’s need for borrowing (and thus help manage the fiscal situation), they are not technically considered a source of financing the fiscal deficit itself. Fiscal deficit is defined as the excess of total expenditure over total receipts excluding borrowings. Disinvestment receipts reduce the borrowing requirement but are not borrowings themselves.

#### 8. Question

Consider the following methods of financing the government’s fiscal deficit:

• Issuance of Treasury Bills (T-Bills)

• External Commercial Borrowings (ECBs)

• Issuance of dated Government Securities (G-Secs)

• Disinvestment of shares in Public Sector Undertakings (PSUs)

Which of the above are generally considered sources of financing the fiscal deficit?

• (a) 1 and 3 only

• (b) 1, 2 and 3 only

• (c) 1, 3 and 4 only

• (d) 1, 2, 3 and 4

Solution: A

• Statement 1 is correct. Treasury Bills are short-term debt instruments (maturities less than one year) issued by the central government to meet its immediate financing needs. They are a key component of market borrowings used to finance the fiscal deficit.

• Statement 2 is incorrect. While India receives external assistance (loans and grants), direct External Commercial Borrowings (ECBs) are typically undertaken by corporations and financial institutions, not directly by the central government itself to finance its fiscal deficit. Government’s external debt usually comprises multilateral/bilateral loans or NRI deposits, not ECBs in the conventional sense.

• Statement 3 is correct. Dated Government Securities (G-Secs) are long-term debt instruments (maturities of one year or more) issued by the central government. These market borrowings form the largest component of financing the fiscal deficit.

Statement 4 is incorrect. Disinvestment proceeds are classified as non-debt capital receipts. While they reduce the government’s need for borrowing (and thus help manage the fiscal situation), they are not technically considered a source of financing the fiscal deficit itself. Fiscal deficit is defined as the excess of total expenditure over total receipts excluding borrowings. Disinvestment receipts reduce the borrowing requirement but are not borrowings themselves.

Solution: A

• Question 9 of 30 9. Question 1 points With reference to the revised Prompt Corrective Action (PCA) Framework implemented by the RBI, consider the following statements: The framework applies uniformly to all Scheduled Commercial Banks, Regional Rural Banks, and Urban Cooperative Banks. Return on Assets (RoA) is no longer a parameter used to trigger PCA for Scheduled Commercial Banks. Tier 1 Leverage Ratio has been introduced as a key monitoring parameter under the revised framework for Scheduled Commercial Banks. Exit from the PCA framework requires a bank to remain below all risk thresholds for only one audited annual financial statement. How many of the above statements are correct? (a) Only one (b) Only two (c) Only three (d) All four Correct Solution: B Statement 1 is incorrect. The applicability of the PCA framework is differentiated. The revised framework effective Jan 2022 applies to Scheduled Commercial Banks (SCBs) excluding Regional Rural Banks (RRBs), Small Finance Banks, and Payment Banks. A separate, distinct PCA framework was introduced for Urban Cooperative Banks (UCBs) (Tiers 2, 3, 4), effective April 2025. RRBs might have separate guidelines from NABARD/RBI. Statement 2 is correct. The revised PCA framework for SCBs (effective Jan 2022) removed Return on Assets (RoA) as one of the trigger parameters. The focus shifted to Capital, Asset Quality, and Leverage. (Note: However, the PCA framework for UCBs does include profitability – losses for two consecutive years – as a trigger). Statement 3 is correct. The revised PCA framework for SCBs explicitly introduced the Tier 1 Leverage Ratio as the third key monitoring area, alongside Capital (CRAR/CET1) and Asset Quality (Net NPA ratio). Specific thresholds for leverage were defined. Statement 4 is incorrect. Exit from the PCA framework (for SCBs) requires a bank to show sustained improvement. The condition is that there should be no breaches in risk thresholds in any of the parameters (Capital, Asset Quality, and Leverage) for four continuous quarterly financial statements, one of which must be an Audited Annual Financial Statement. A similar four-quarter requirement applies for UCBs. RBI also assesses the sustainability of the improvement. Incorrect Solution: B Statement 1 is incorrect. The applicability of the PCA framework is differentiated. The revised framework effective Jan 2022 applies to Scheduled Commercial Banks (SCBs) excluding Regional Rural Banks (RRBs), Small Finance Banks, and Payment Banks. A separate, distinct PCA framework was introduced for Urban Cooperative Banks (UCBs) (Tiers 2, 3, 4), effective April 2025. RRBs might have separate guidelines from NABARD/RBI. Statement 2 is correct. The revised PCA framework for SCBs (effective Jan 2022) removed Return on Assets (RoA) as one of the trigger parameters. The focus shifted to Capital, Asset Quality, and Leverage. (Note: However, the PCA framework for UCBs does include profitability – losses for two consecutive years – as a trigger). Statement 3 is correct. The revised PCA framework for SCBs explicitly introduced the Tier 1 Leverage Ratio as the third key monitoring area, alongside Capital (CRAR/CET1) and Asset Quality (Net NPA ratio). Specific thresholds for leverage were defined. Statement 4 is incorrect. Exit from the PCA framework (for SCBs) requires a bank to show sustained improvement. The condition is that there should be no breaches in risk thresholds in any of the parameters (Capital, Asset Quality, and Leverage) for four continuous quarterly financial statements, one of which must be an Audited Annual Financial Statement. A similar four-quarter requirement applies for UCBs. RBI also assesses the sustainability of the improvement.

#### 9. Question

With reference to the revised Prompt Corrective Action (PCA) Framework implemented by the RBI, consider the following statements:

• The framework applies uniformly to all Scheduled Commercial Banks, Regional Rural Banks, and Urban Cooperative Banks.

• Return on Assets (RoA) is no longer a parameter used to trigger PCA for Scheduled Commercial Banks.

• Tier 1 Leverage Ratio has been introduced as a key monitoring parameter under the revised framework for Scheduled Commercial Banks.

• Exit from the PCA framework requires a bank to remain below all risk thresholds for only one audited annual financial statement.

How many of the above statements are correct?

• (a) Only one

• (b) Only two

• (c) Only three

• (d) All four

Solution: B

• Statement 1 is incorrect. The applicability of the PCA framework is differentiated. The revised framework effective Jan 2022 applies to Scheduled Commercial Banks (SCBs) excluding Regional Rural Banks (RRBs), Small Finance Banks, and Payment Banks. A separate, distinct PCA framework was introduced for Urban Cooperative Banks (UCBs) (Tiers 2, 3, 4), effective April 2025. RRBs might have separate guidelines from NABARD/RBI.

• Statement 2 is correct. The revised PCA framework for SCBs (effective Jan 2022) removed Return on Assets (RoA) as one of the trigger parameters. The focus shifted to Capital, Asset Quality, and Leverage. (Note: However, the PCA framework for UCBs does include profitability – losses for two consecutive years – as a trigger).

• Statement 3 is correct. The revised PCA framework for SCBs explicitly introduced the Tier 1 Leverage Ratio as the third key monitoring area, alongside Capital (CRAR/CET1) and Asset Quality (Net NPA ratio). Specific thresholds for leverage were defined.

Statement 4 is incorrect. Exit from the PCA framework (for SCBs) requires a bank to show sustained improvement. The condition is that there should be no breaches in risk thresholds in any of the parameters (Capital, Asset Quality, and Leverage) for four continuous quarterly financial statements, one of which must be an Audited Annual Financial Statement. A similar four-quarter requirement applies for UCBs. RBI also assesses the sustainability of the improvement.

Solution: B

• Question 10 of 30 10. Question 1 points Consider the following statements regarding the Standing Deposit Facility (SDF) and Marginal Standing Facility (MSF) operated by the Reserve Bank of India (RBI): Both SDF and MSF are tools used by the RBI primarily to manage overnight liquidity in the banking system. Banks can borrow funds from the RBI under the SDF against government securities as collateral. The MSF rate typically acts as the ceiling and the SDF rate as the floor for the overnight inter-bank call money rate. The spread between the MSF rate and the SDF rate has been fixed permanently at 50 basis points by the RBI Act. Which of the statements given above are correct? (a) 1 and 3 only (b) 2 and 4 only (c) 1, 3 and 4 only (d) 1, 2 and 3 only Correct Solution: A Statement 1 is correct. The SDF allows eligible banks to park surplus overnight liquidity with the RBI, while the MSF allows eligible banks to borrow overnight funds from the RBI. Together, they form the corridor for the operating target of monetary policy (the weighted average call rate) and help manage day-to-day liquidity fluctuations. Statement 2 is incorrect. The key feature of the Standing Deposit Facility (SDF) is that it allows banks to deposit funds with the RBI without requiring collateral (like government securities) from the RBI. This distinguishes it from the earlier fixed-rate reverse repo. Banks borrow under the MSF, typically against G-Secs. Statement 3 is correct. The MSF rate, being the rate at which banks can borrow overnight from the RBI in urgent need, acts as the upper bound (ceiling) for the overnight call money rate. The SDF rate, being the rate banks receive for parking surplus funds overnight with the RBI without collateral, acts as the lower bound (floor). The policy repo rate lies within this corridor. Statement 4 is incorrect. While the current spread between the MSF rate (Repo + 0.25%) and the SDF rate (Repo – 0.25%) is indeed 50 basis points (e.g., 6.25% MSF and 5.75% SDF when Repo is 6.00%), this spread is determined by the MPC/RBI as part of its operational framework and is not permanently fixed by the RBI Act. The width of the corridor can be adjusted based on monetary policy objectives and liquidity conditions. Incorrect Solution: A Statement 1 is correct. The SDF allows eligible banks to park surplus overnight liquidity with the RBI, while the MSF allows eligible banks to borrow overnight funds from the RBI. Together, they form the corridor for the operating target of monetary policy (the weighted average call rate) and help manage day-to-day liquidity fluctuations. Statement 2 is incorrect. The key feature of the Standing Deposit Facility (SDF) is that it allows banks to deposit funds with the RBI without requiring collateral (like government securities) from the RBI. This distinguishes it from the earlier fixed-rate reverse repo. Banks borrow under the MSF, typically against G-Secs. Statement 3 is correct. The MSF rate, being the rate at which banks can borrow overnight from the RBI in urgent need, acts as the upper bound (ceiling) for the overnight call money rate. The SDF rate, being the rate banks receive for parking surplus funds overnight with the RBI without collateral, acts as the lower bound (floor). The policy repo rate lies within this corridor. Statement 4 is incorrect. While the current spread between the MSF rate (Repo + 0.25%) and the SDF rate (Repo – 0.25%) is indeed 50 basis points (e.g., 6.25% MSF and 5.75% SDF when Repo is 6.00%), this spread is determined by the MPC/RBI as part of its operational framework and is not permanently fixed by the RBI Act. The width of the corridor can be adjusted based on monetary policy objectives and liquidity conditions.

#### 10. Question

Consider the following statements regarding the Standing Deposit Facility (SDF) and Marginal Standing Facility (MSF) operated by the Reserve Bank of India (RBI):

• Both SDF and MSF are tools used by the RBI primarily to manage overnight liquidity in the banking system.

• Banks can borrow funds from the RBI under the SDF against government securities as collateral.

• The MSF rate typically acts as the ceiling and the SDF rate as the floor for the overnight inter-bank call money rate.

• The spread between the MSF rate and the SDF rate has been fixed permanently at 50 basis points by the RBI Act.

Which of the statements given above are correct?

• (a) 1 and 3 only

• (b) 2 and 4 only

• (c) 1, 3 and 4 only

• (d) 1, 2 and 3 only

Solution: A

• Statement 1 is correct. The SDF allows eligible banks to park surplus overnight liquidity with the RBI, while the MSF allows eligible banks to borrow overnight funds from the RBI. Together, they form the corridor for the operating target of monetary policy (the weighted average call rate) and help manage day-to-day liquidity fluctuations.

• Statement 2 is incorrect. The key feature of the Standing Deposit Facility (SDF) is that it allows banks to deposit funds with the RBI without requiring collateral (like government securities) from the RBI. This distinguishes it from the earlier fixed-rate reverse repo. Banks borrow under the MSF, typically against G-Secs.

• Statement 3 is correct. The MSF rate, being the rate at which banks can borrow overnight from the RBI in urgent need, acts as the upper bound (ceiling) for the overnight call money rate. The SDF rate, being the rate banks receive for parking surplus funds overnight with the RBI without collateral, acts as the lower bound (floor). The policy repo rate lies within this corridor.

Statement 4 is incorrect. While the current spread between the MSF rate (Repo + 0.25%) and the SDF rate (Repo – 0.25%) is indeed 50 basis points (e.g., 6.25% MSF and 5.75% SDF when Repo is 6.00%), this spread is determined by the MPC/RBI as part of its operational framework and is not permanently fixed by the RBI Act. The width of the corridor can be adjusted based on monetary policy objectives and liquidity conditions.

Solution: A

• Question 11 of 30 11. Question 1 points Consider the following statements: Statement – I: Principal Purpose Test is a component of BEPS Framework intended to prevent companies from shifting profit to low tax jurisdictions. Statement – II: Base Erosion and Profit Shifting (BEPS) strategies are aimed at minimizing overall corporate tax liability. Which of the following is correct in respect of the above statements? (a) Both Statement -I and Statement -II are correct and Statement -II explains Statement -I (b) Both Statement -I and Statement -II are correct but Statement -II does not explain Statement -I (c) Statement- I is correct but Statement -II is incorrect (d) Statement- I is incorrect but Statement -II is correct Correct Solution: A Principal Purpose Test is an anti-abuse provision in tax treaties including those between India and other countries designed to prevent the misuse of tax benefits. It checks if the primary reason for a transaction is to gain tax benefits under a treaty and if it is so, those benefits can be denied. It is a key component of BEPS Framework which aims to prevent companies from shifting profits to low tax jurisdictions. Hence statement 1 is correct BEPS refers to tax avoidance strategies used by Multinational Corporations to reduce the tax burden by artificially shifting profits to lower tax of no tax locations BEPS strategies are aimed at minimising corporate tax liability; the strategies involve exploiting loopholes in Tax rules to artificially shift profits to low tax or no tax jurisdictions to reduce the overall tax burden. Hence statement 2 is correct The purpose of the Principal Purpose Test is to tackle the exact tax-minimizing behaviour described in Statement II. Hence, Statement II provides the broader rationale behind implementing Statement I. Incorrect Solution: A Principal Purpose Test is an anti-abuse provision in tax treaties including those between India and other countries designed to prevent the misuse of tax benefits. It checks if the primary reason for a transaction is to gain tax benefits under a treaty and if it is so, those benefits can be denied. It is a key component of BEPS Framework which aims to prevent companies from shifting profits to low tax jurisdictions. Hence statement 1 is correct BEPS refers to tax avoidance strategies used by Multinational Corporations to reduce the tax burden by artificially shifting profits to lower tax of no tax locations BEPS strategies are aimed at minimising corporate tax liability; the strategies involve exploiting loopholes in Tax rules to artificially shift profits to low tax or no tax jurisdictions to reduce the overall tax burden. Hence statement 2 is correct The purpose of the Principal Purpose Test is to tackle the exact tax-minimizing behaviour described in Statement II. Hence, Statement II provides the broader rationale behind implementing Statement I.

#### 11. Question

Consider the following statements:

Statement – I: Principal Purpose Test is a component of BEPS Framework intended to prevent companies from shifting profit to low tax jurisdictions.

Statement – II: Base Erosion and Profit Shifting (BEPS) strategies are aimed at minimizing overall corporate tax liability.

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

• (a) Both Statement -I and Statement -II are correct and Statement -II explains Statement -I

• (b) Both Statement -I and Statement -II are correct but Statement -II does not explain Statement -I

• (c) Statement- I is correct but Statement -II is incorrect

• (d) Statement- I is incorrect but Statement -II is correct

Solution: A

• Principal Purpose Test is an anti-abuse provision in tax treaties including those between India and other countries designed to prevent the misuse of tax benefits.

• It checks if the primary reason for a transaction is to gain tax benefits under a treaty and if it is so, those benefits can be denied.

• It is a key component of BEPS Framework which aims to prevent companies from shifting profits to low tax jurisdictions.

Hence statement 1 is correct

• BEPS refers to tax avoidance strategies used by Multinational Corporations to reduce the tax burden by artificially shifting profits to lower tax of no tax locations

• BEPS strategies are aimed at minimising corporate tax liability; the strategies involve exploiting loopholes in Tax rules to artificially shift profits to low tax or no tax jurisdictions to reduce the overall tax burden.

Hence statement 2 is correct

The purpose of the Principal Purpose Test is to tackle the exact tax-minimizing behaviour described in Statement II. Hence, Statement II provides the broader rationale behind implementing Statement I.

Solution: A

• Principal Purpose Test is an anti-abuse provision in tax treaties including those between India and other countries designed to prevent the misuse of tax benefits.

• It checks if the primary reason for a transaction is to gain tax benefits under a treaty and if it is so, those benefits can be denied.

• It is a key component of BEPS Framework which aims to prevent companies from shifting profits to low tax jurisdictions.

Hence statement 1 is correct

• BEPS refers to tax avoidance strategies used by Multinational Corporations to reduce the tax burden by artificially shifting profits to lower tax of no tax locations

Hence statement 2 is correct

• Question 12 of 30 12. Question 1 points Which of the following best describe the term Windfall tax? (a) A cess levied by the government for promotion of renewable energy (b) A tax levied on NRI NGOs in developing countries (c) A tax levied on unexpected increase in profits of an industry due to events they are not responsible for (d) A situation when taxation burden on an industry is reduced due to continuous loss over last few years Correct Solution: C A windfall tax is a higher tax that is levied by a government on specific Industries that experience an unexpected and above average profit due to various Global and Geopolitical events which are outside the control of the industry. It refers to an unanticipated increase in profits and the tax is imposed on this sudden income growth. The government imposes this tax when it notices a sudden rise in an Industry’s revenue. These profits cannot be attributed to something the company was actively involved in, like its business expansion or strategies Thus, when an industry experiences huge growth in their income due to external incidents, that they are not responsible for, a windfall tax is levied on their earnings. Hence option C is correct Incorrect Solution: C A windfall tax is a higher tax that is levied by a government on specific Industries that experience an unexpected and above average profit due to various Global and Geopolitical events which are outside the control of the industry. It refers to an unanticipated increase in profits and the tax is imposed on this sudden income growth. The government imposes this tax when it notices a sudden rise in an Industry’s revenue. These profits cannot be attributed to something the company was actively involved in, like its business expansion or strategies Thus, when an industry experiences huge growth in their income due to external incidents, that they are not responsible for, a windfall tax is levied on their earnings. Hence option C is correct

#### 12. Question

Which of the following best describe the term Windfall tax?

• (a) A cess levied by the government for promotion of renewable energy

• (b) A tax levied on NRI NGOs in developing countries

• (c) A tax levied on unexpected increase in profits of an industry due to events they are not responsible for

• (d) A situation when taxation burden on an industry is reduced due to continuous loss over last few years

Solution: C

• A windfall tax is a higher tax that is levied by a government on specific Industries that experience an unexpected and above average profit due to various Global and Geopolitical events which are outside the control of the industry.

• It refers to an unanticipated increase in profits and the tax is imposed on this sudden income growth.

• The government imposes this tax when it notices a sudden rise in an Industry’s revenue.

• These profits cannot be attributed to something the company was actively involved in, like its business expansion or strategies

• Thus, when an industry experiences huge growth in their income due to external incidents, that they are not responsible for, a windfall tax is levied on their earnings.

Hence option C is correct

Solution: C

• It refers to an unanticipated increase in profits and the tax is imposed on this sudden income growth.

• The government imposes this tax when it notices a sudden rise in an Industry’s revenue.

• These profits cannot be attributed to something the company was actively involved in, like its business expansion or strategies

• Thus, when an industry experiences huge growth in their income due to external incidents, that they are not responsible for, a windfall tax is levied on their earnings.

Hence option C is correct

• Question 13 of 30 13. Question 1 points Consider the following statements: Statement – I: Higher Gross Fixed Capital Formation leads to increased Gross Domestic Product in an economy. Statement – II: GFCF is defined as the acquisition of produced assets including the production of such assets by producers for their own use, minus disposals. Which of the following is correct in respect of the above statements? (a) Both Statement -I and Statement -II are correct and Statement -II explains Statement -I (b) Both Statement -I and Statement -II are correct but Statement -II does not explain Statement -I (c) Statement- I is correct but Statement -II is incorrect (d) Statement- I is incorrect but Statement -II is correct Correct Solution: B Gross fixed capital formation is a key economic indicator that represents the total value of new fixed assets produced and used in an economy during a specific period after deducting the value of fixed assets disposed off during that period. Basically, it measures how much an economy’s output is being invested in capital goods rather than consumed. GFCF includes land improvements, plant, machinery and equipment purchases and the construction of roads, railways, schools, office, hospitals, private residential buildings, commercial and industrial buildings. It is typically measured in monetary terms and can be expressed as a percentage of GDP. It is calculated by adding the value of new fixed assets produced and purchased and subtracting the value of fixed assets disposed off. It is a significant component of a country’s GDP representing the amount of investment in fixed assets like machinery and buildings Higher GFCF generally leads to increased GDP due to productivity and output enhancement that capital investments provide, ultimately enhancing growth and improving living standards. Hence statement 2 is correct Statement II does not explain Statement I, as it provides a definition without addressing the causal link to GDP growth. Incorrect Solution: B Gross fixed capital formation is a key economic indicator that represents the total value of new fixed assets produced and used in an economy during a specific period after deducting the value of fixed assets disposed off during that period. Basically, it measures how much an economy’s output is being invested in capital goods rather than consumed. GFCF includes land improvements, plant, machinery and equipment purchases and the construction of roads, railways, schools, office, hospitals, private residential buildings, commercial and industrial buildings. It is typically measured in monetary terms and can be expressed as a percentage of GDP. It is calculated by adding the value of new fixed assets produced and purchased and subtracting the value of fixed assets disposed off. It is a significant component of a country’s GDP representing the amount of investment in fixed assets like machinery and buildings Higher GFCF generally leads to increased GDP due to productivity and output enhancement that capital investments provide, ultimately enhancing growth and improving living standards. Hence statement 2 is correct Statement II does not explain Statement I, as it provides a definition without addressing the causal link to GDP growth.

#### 13. Question

Consider the following statements:

Statement – I: Higher Gross Fixed Capital Formation leads to increased Gross Domestic Product in an economy.

Statement – II: GFCF is defined as the acquisition of produced assets including the production of such assets by producers for their own use, minus disposals.

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

• (a) Both Statement -I and Statement -II are correct and Statement -II explains Statement -I

• (b) Both Statement -I and Statement -II are correct but Statement -II does not explain Statement -I

• (c) Statement- I is correct but Statement -II is incorrect

• (d) Statement- I is incorrect but Statement -II is correct

Solution: B

• Gross fixed capital formation is a key economic indicator that represents the total value of new fixed assets produced and used in an economy during a specific period after deducting the value of fixed assets disposed off during that period.

• Basically, it measures how much an economy’s output is being invested in capital goods rather than consumed.

• GFCF includes land improvements, plant, machinery and equipment purchases and the construction of roads, railways, schools, office, hospitals, private residential buildings, commercial and industrial buildings.

• It is typically measured in monetary terms and can be expressed as a percentage of GDP.

• It is calculated by adding the value of new fixed assets produced and purchased and subtracting the value of fixed assets disposed off.

• It is a significant component of a country’s GDP representing the amount of investment in fixed assets like machinery and buildings

• Higher GFCF generally leads to increased GDP due to productivity and output enhancement that capital investments provide, ultimately enhancing growth and improving living standards.

Hence statement 2 is correct

• Statement II does not explain Statement I, as it provides a definition without addressing the causal link to GDP growth.

Solution: B

• Basically, it measures how much an economy’s output is being invested in capital goods rather than consumed.

• It is typically measured in monetary terms and can be expressed as a percentage of GDP.

• It is calculated by adding the value of new fixed assets produced and purchased and subtracting the value of fixed assets disposed off.

• It is a significant component of a country’s GDP representing the amount of investment in fixed assets like machinery and buildings

• Higher GFCF generally leads to increased GDP due to productivity and output enhancement that capital investments provide, ultimately enhancing growth and improving living standards.

Hence statement 2 is correct

• Statement II does not explain Statement I, as it provides a definition without addressing the causal link to GDP growth.

• Question 14 of 30 14. Question 1 points Recently, Dr. Pushpak Bhattacharya Committee was in news; it has been constituted to recommend on: (a) Strengthening monetary policy framework (b) Financial inclusion for small business and low-income households (c) Creation of a Framework for responsible and ethical use of artificial intelligence in financial sector (d) Assessing the functioning of clearing houses in India Correct Solution: C Pushpak Bhattacharya Committee has been established by the Reserve Bank of India; it is an eight-member committee chaired by Dr Bhattacharya a professor of IIT Bombay. The committee aims to create a Framework for responsible and ethical enablement of AI in the financial sector to guide AI adoption ethically and securely. The reviewing of AI adoption trends in financial services both in India and globally is necessary; also identifying risks associated with AI in finance and mitigation and monetary strategies are required. Hence option C is correct Incorrect Solution: C Pushpak Bhattacharya Committee has been established by the Reserve Bank of India; it is an eight-member committee chaired by Dr Bhattacharya a professor of IIT Bombay. The committee aims to create a Framework for responsible and ethical enablement of AI in the financial sector to guide AI adoption ethically and securely. The reviewing of AI adoption trends in financial services both in India and globally is necessary; also identifying risks associated with AI in finance and mitigation and monetary strategies are required. Hence option C is correct

#### 14. Question

Recently, Dr. Pushpak Bhattacharya Committee was in news; it has been constituted to recommend on:

• (a) Strengthening monetary policy framework

• (b) Financial inclusion for small business and low-income households

• (c) Creation of a Framework for responsible and ethical use of artificial intelligence in financial sector

• (d) Assessing the functioning of clearing houses in India

Solution: C

• Pushpak Bhattacharya Committee has been established by the Reserve Bank of India; it is an eight-member committee chaired by Dr Bhattacharya a professor of IIT Bombay.

• The committee aims to create a Framework for responsible and ethical enablement of AI in the financial sector to guide AI adoption ethically and securely.

• The reviewing of AI adoption trends in financial services both in India and globally is necessary; also identifying risks associated with AI in finance and mitigation and monetary strategies are required.

Hence option C is correct

Solution: C

• Pushpak Bhattacharya Committee has been established by the Reserve Bank of India; it is an eight-member committee chaired by Dr Bhattacharya a professor of IIT Bombay.

• The committee aims to create a Framework for responsible and ethical enablement of AI in the financial sector to guide AI adoption ethically and securely.

Hence option C is correct

• Question 15 of 30 15. Question 1 points Consider the following statements: Neobanks are online only Financial Institutions with the focus on ‘digital first’ solutions. Neobanks are regulated by RBI guidelines under the Banking Regulation Act 1949. 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 Solution: A Neobanks are online only Financial Institutions that offer banking services with a focus on digital first solutions and personalized customer experiences. They are different from traditional banks as they operate primarily through mobile apps and online platforms without physical branches. Due to lower overhead costs, these banks can offer lower fees, higher interest rates on savings account and more competitive lending rates. Hence statement 1 is correct Neobanks are not regulated by the Reserve Bank directly , but operate under indirect control due to their partnerships with regulated banks. Neobanks do not have their own Bank licence and rely on their partner banks to provide bank licenced services. The Banking Regulation Act 1949 regulate all banking companies in India. Hence statement 2 is incorrect Incorrect Solution: A Neobanks are online only Financial Institutions that offer banking services with a focus on digital first solutions and personalized customer experiences. They are different from traditional banks as they operate primarily through mobile apps and online platforms without physical branches. Due to lower overhead costs, these banks can offer lower fees, higher interest rates on savings account and more competitive lending rates. Hence statement 1 is correct Neobanks are not regulated by the Reserve Bank directly , but operate under indirect control due to their partnerships with regulated banks. Neobanks do not have their own Bank licence and rely on their partner banks to provide bank licenced services. The Banking Regulation Act 1949 regulate all banking companies in India. Hence statement 2 is incorrect

#### 15. Question

Consider the following statements:

• Neobanks are online only Financial Institutions with the focus on ‘digital first’ solutions.

• Neobanks are regulated by RBI guidelines under the Banking Regulation Act 1949.

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

Solution: A

• Neobanks are online only Financial Institutions that offer banking services with a focus on digital first solutions and personalized customer experiences.

• They are different from traditional banks as they operate primarily through mobile apps and online platforms without physical branches.

• Due to lower overhead costs, these banks can offer lower fees, higher interest rates on savings account and more competitive lending rates.

Hence statement 1 is correct

• Neobanks are not regulated by the Reserve Bank directly , but operate under indirect control due to their partnerships with regulated banks.

• Neobanks do not have their own Bank licence and rely on their partner banks to provide bank licenced services.

• The Banking Regulation Act 1949 regulate all banking companies in India.

Hence statement 2 is incorrect

Solution: A

• Neobanks are online only Financial Institutions that offer banking services with a focus on digital first solutions and personalized customer experiences.

• They are different from traditional banks as they operate primarily through mobile apps and online platforms without physical branches.

• Due to lower overhead costs, these banks can offer lower fees, higher interest rates on savings account and more competitive lending rates.

Hence statement 1 is correct

• Neobanks are not regulated by the Reserve Bank directly , but operate under indirect control due to their partnerships with regulated banks.

• Neobanks do not have their own Bank licence and rely on their partner banks to provide bank licenced services.

• The Banking Regulation Act 1949 regulate all banking companies in India.

Hence statement 2 is incorrect

• Question 16 of 30 16. Question 1 points Consider the following statements: Greenium represents a premium that investors are willing to pay for green bonds. A higher supply of green bonds leads to higher premium. 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 Solution: A Greenium essentially represents a premium that investors are willing to pay for green bonds or other sustainable bonds. This premium is reflected in the lower yield offered by these bonds compared to comparable conventional bonds. Hence statement 1 is correct Certain factors influence Greenium, including: The strength of investor demand that plays a crucial role The supply of green bonds, as a limited supply leads to higher premium Overall market condition such as interest rate and economic Outlook The level of trust that investors have in the green credentials of the bond. Hence statement 2 is incorrect Incorrect Solution: A Greenium essentially represents a premium that investors are willing to pay for green bonds or other sustainable bonds. This premium is reflected in the lower yield offered by these bonds compared to comparable conventional bonds. Hence statement 1 is correct Certain factors influence Greenium, including: The strength of investor demand that plays a crucial role The supply of green bonds, as a limited supply leads to higher premium Overall market condition such as interest rate and economic Outlook The level of trust that investors have in the green credentials of the bond. Hence statement 2 is incorrect

#### 16. Question

Consider the following statements:

• Greenium represents a premium that investors are willing to pay for green bonds.

• A higher supply of green bonds leads to higher premium.

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

Solution: A

• Greenium essentially represents a premium that investors are willing to pay for green bonds or other sustainable bonds.

• This premium is reflected in the lower yield offered by these bonds compared to comparable conventional bonds.

Hence statement 1 is correct

Certain factors influence Greenium, including:

• The strength of investor demand that plays a crucial role

• The supply of green bonds, as a limited supply leads to higher premium

• Overall market condition such as interest rate and economic Outlook

• The level of trust that investors have in the green credentials of the bond.

Hence statement 2 is incorrect

Solution: A

• Greenium essentially represents a premium that investors are willing to pay for green bonds or other sustainable bonds.

• This premium is reflected in the lower yield offered by these bonds compared to comparable conventional bonds.

Hence statement 1 is correct

Certain factors influence Greenium, including:

• The strength of investor demand that plays a crucial role

• The supply of green bonds, as a limited supply leads to higher premium

• Overall market condition such as interest rate and economic Outlook

• The level of trust that investors have in the green credentials of the bond.

Hence statement 2 is incorrect

• Question 17 of 30 17. Question 1 points Consider the following statements: Statement – I: Interest rates for WMA are linked to repo rate announced by the RBI. Statement – II: Ways and Means Advances (WMA) are provided by RBI to tackle temporary cash flow mismatches of receipt and payment in States. Which of the following is correct in respect of the above statements? (a) Both Statement -I and Statement -II are correct and Statement -II explains Statement -I (b) Both Statement -I and Statement -II are correct but Statement -II does not explain Statement -I (c) Statement- I is correct but Statement -II is incorrect (d) Statement- I is incorrect but Statement -II is correct Correct Solution: B WMA and Repo rate are directly linked. WMA is a short-term borrowing facility provided by the RBI to Central and state governments to meet temporary cash flow mismatches of receipts and payments. The interest rate on WMA withdrawal is fixed at the current repo rate. If the WMA is not repaid within 90 days, the interest rate increases by 2 percentage points above the repo rate. While both statements are true, the reason behind interest rates being linked to the repo rate (monetary policy mechanism) is not directly explained by the purpose of WMA (cash flow support). Thus, there is no explanatory link between the two. Incorrect Solution: B WMA and Repo rate are directly linked. WMA is a short-term borrowing facility provided by the RBI to Central and state governments to meet temporary cash flow mismatches of receipts and payments. The interest rate on WMA withdrawal is fixed at the current repo rate. If the WMA is not repaid within 90 days, the interest rate increases by 2 percentage points above the repo rate. While both statements are true, the reason behind interest rates being linked to the repo rate (monetary policy mechanism) is not directly explained by the purpose of WMA (cash flow support). Thus, there is no explanatory link between the two.

#### 17. Question

Consider the following statements:

Statement – I: Interest rates for WMA are linked to repo rate announced by the RBI.

Statement – II: Ways and Means Advances (WMA) are provided by RBI to tackle temporary cash flow mismatches of receipt and payment in States.

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

• (a) Both Statement -I and Statement -II are correct and Statement -II explains Statement -I

• (b) Both Statement -I and Statement -II are correct but Statement -II does not explain Statement -I

• (c) Statement- I is correct but Statement -II is incorrect

• (d) Statement- I is incorrect but Statement -II is correct

Solution: B

• WMA and Repo rate are directly linked.

• WMA is a short-term borrowing facility provided by the RBI to Central and state governments to meet temporary cash flow mismatches of receipts and payments.

• The interest rate on WMA withdrawal is fixed at the current repo rate.

• If the WMA is not repaid within 90 days, the interest rate increases by 2 percentage points above the repo rate.

• While both statements are true, the reason behind interest rates being linked to the repo rate (monetary policy mechanism) is not directly explained by the purpose of WMA (cash flow support). Thus, there is no explanatory link between the two.

Solution: B

• WMA and Repo rate are directly linked.

• WMA is a short-term borrowing facility provided by the RBI to Central and state governments to meet temporary cash flow mismatches of receipts and payments.

• The interest rate on WMA withdrawal is fixed at the current repo rate.

• If the WMA is not repaid within 90 days, the interest rate increases by 2 percentage points above the repo rate.

• Question 18 of 30 18. Question 1 points Consider the following statements: The Financial Inclusion Index (FII) measures financial inclusion within range from 0 to 100. FII is calculator by the RBI on the three parameters of Access, Usage and Quality. 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 Solution: C The Financial Inclusion Index is a comprehensive measure of financial inclusion announced by the Reserve Bank of India. It was developed in consultation with the government and sectoral regulators to measure ease of access, availability, usage and quality of financial services in the country. It measures financial inclusion ranging from 0 to 100 with 0 representing complete financial exclusion and 100 indicating full financial inclusion. It is published annually in July every year. It consists of three main parameters – Access (35%), usage (45%) and quality (20%); the index is based on 97 indicators covering banking, investment, insurance, postal service and pension. Hence statements 1 and 2 are correct Incorrect Solution: C The Financial Inclusion Index is a comprehensive measure of financial inclusion announced by the Reserve Bank of India. It was developed in consultation with the government and sectoral regulators to measure ease of access, availability, usage and quality of financial services in the country. It measures financial inclusion ranging from 0 to 100 with 0 representing complete financial exclusion and 100 indicating full financial inclusion. It is published annually in July every year. It consists of three main parameters – Access (35%), usage (45%) and quality (20%); the index is based on 97 indicators covering banking, investment, insurance, postal service and pension. Hence statements 1 and 2 are correct

#### 18. Question

Consider the following statements:

• The Financial Inclusion Index (FII) measures financial inclusion within range from 0 to 100.

• FII is calculator by the RBI on the three parameters of Access, Usage and Quality.

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

Solution: C

• The Financial Inclusion Index is a comprehensive measure of financial inclusion announced by the Reserve Bank of India.

• It was developed in consultation with the government and sectoral regulators to measure ease of access, availability, usage and quality of financial services in the country.

• It measures financial inclusion ranging from 0 to 100 with 0 representing complete financial exclusion and 100 indicating full financial inclusion.

• It is published annually in July every year.

• It consists of three main parameters – Access (35%), usage (45%) and quality (20%); the index is based on 97 indicators covering banking, investment, insurance, postal service and pension.

Hence statements 1 and 2 are correct

Solution: C

• The Financial Inclusion Index is a comprehensive measure of financial inclusion announced by the Reserve Bank of India.

• It was developed in consultation with the government and sectoral regulators to measure ease of access, availability, usage and quality of financial services in the country.

• It measures financial inclusion ranging from 0 to 100 with 0 representing complete financial exclusion and 100 indicating full financial inclusion.

• It is published annually in July every year.

• It consists of three main parameters – Access (35%), usage (45%) and quality (20%); the index is based on 97 indicators covering banking, investment, insurance, postal service and pension.

Hence statements 1 and 2 are correct

• Question 19 of 30 19. Question 1 points Consider the following statements: Statement – I: Increasing interest rate helps in dealing with inflationary gap in the economy. Statement – II: Inflationary gap is a situation in which potential GDP is higher than real GDP. Which of the following is correct in respect of the above statements? (a) Both Statement -I and Statement -II are correct and Statement -II explains Statement -I (b) Both Statement -I and Statement -II are correct but Statement -II does not explain Statement -I (c) Statement- I is correct but Statement -II is incorrect (d) Statement- I is incorrect but Statement -II is correct Correct Solution: C When the government spends over and above the national income, it creates inflationary gap in the economy. This is often deliberately done by the government in the process of boosting growth. In macroeconomics, an inflationary gap is defined as the situation where real GDP exceeds potential GDP, indicating that the economy is producing beyond its sustainable capacity. This causes upward pressure on prices due to excessive demand. Conversely, when potential GDP is higher than real GDP, it indicates a recessionary gap, where the economy is underperforming (Hence statement 2 is incorrect) Increasing interest rates is a monetary policy tool used by central banks (e.g., the Reserve Bank of India) to address an inflationary gap. Higher interest rates: (Hence 1 is correct) Increase borrowing costs, reducing consumer spending and business investment. Decrease aggregate demand, cooling the overheated economy. Help bring real GDP closer to potential GDP, mitigating inflationary pressures. Incorrect Solution: C When the government spends over and above the national income, it creates inflationary gap in the economy. This is often deliberately done by the government in the process of boosting growth. In macroeconomics, an inflationary gap is defined as the situation where real GDP exceeds potential GDP, indicating that the economy is producing beyond its sustainable capacity. This causes upward pressure on prices due to excessive demand. Conversely, when potential GDP is higher than real GDP, it indicates a recessionary gap, where the economy is underperforming (Hence statement 2 is incorrect) Increasing interest rates is a monetary policy tool used by central banks (e.g., the Reserve Bank of India) to address an inflationary gap. Higher interest rates: (Hence 1 is correct) Increase borrowing costs, reducing consumer spending and business investment. Decrease aggregate demand, cooling the overheated economy. Help bring real GDP closer to potential GDP, mitigating inflationary pressures.

#### 19. Question

Consider the following statements:

Statement – I: Increasing interest rate helps in dealing with inflationary gap in the economy.

Statement – II: Inflationary gap is a situation in which potential GDP is higher than real GDP.

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

• (a) Both Statement -I and Statement -II are correct and Statement -II explains Statement -I

• (b) Both Statement -I and Statement -II are correct but Statement -II does not explain Statement -I

• (c) Statement- I is correct but Statement -II is incorrect

• (d) Statement- I is incorrect but Statement -II is correct

Solution: C

• When the government spends over and above the national income, it creates inflationary gap in the economy.

• This is often deliberately done by the government in the process of boosting growth.

• In macroeconomics, an inflationary gap is defined as the situation where real GDP exceeds potential GDP, indicating that the economy is producing beyond its sustainable capacity.

• This causes upward pressure on prices due to excessive demand. Conversely, when potential GDP is higher than real GDP, it indicates a recessionary gap, where the economy is underperforming (Hence statement 2 is incorrect)

• Increasing interest rates is a monetary policy tool used by central banks (e.g., the Reserve Bank of India) to address an inflationary gap. Higher interest rates: (Hence 1 is correct)

• Increase borrowing costs, reducing consumer spending and business investment. Decrease aggregate demand, cooling the overheated economy. Help bring real GDP closer to potential GDP, mitigating inflationary pressures.

• Increase borrowing costs, reducing consumer spending and business investment.

• Decrease aggregate demand, cooling the overheated economy.

• Help bring real GDP closer to potential GDP, mitigating inflationary pressures.

Solution: C

• When the government spends over and above the national income, it creates inflationary gap in the economy.

• This is often deliberately done by the government in the process of boosting growth.

• In macroeconomics, an inflationary gap is defined as the situation where real GDP exceeds potential GDP, indicating that the economy is producing beyond its sustainable capacity.

• Increasing interest rates is a monetary policy tool used by central banks (e.g., the Reserve Bank of India) to address an inflationary gap. Higher interest rates: (Hence 1 is correct)

• Increase borrowing costs, reducing consumer spending and business investment.

• Decrease aggregate demand, cooling the overheated economy.

• Help bring real GDP closer to potential GDP, mitigating inflationary pressures.

• Question 20 of 30 20. Question 1 points Consider the following statements: The Cost Inflation Index (CII) is used to calculate short term profits arising from the sale of securities. CII has been defined under Income Tax Act 1961. CII is notified annually by the Central Board of Direct Taxes. Which of the statements given above is/are incorrect? (a) 1 only (b) 2 and 3 only (c) 3 only (d) 1 and 2 only Correct Solution: A The Cost Inflation Index is notified by the government to calculate long term capital gains arising from the sale of immovable property, securities and jewellery. It is used to compute the indexed cost of acquisition of a capital asset that has been held for more than 36 months. It is used by a tax payer to calculate gains arising out of the sale of capital assets after adjusting for inflation. Hence statement 1 is incorrect CII is defined under section 48 of Income Tax Act 1961. It is revised annually to keep up with inflation with the base year being periodically reset; the current base year is 2001-02 in India. It is annually notified by the Central Board of Direct Taxes, usually before the start of financial year. Hence statements 2 and 3 are correct Incorrect Solution: A The Cost Inflation Index is notified by the government to calculate long term capital gains arising from the sale of immovable property, securities and jewellery. It is used to compute the indexed cost of acquisition of a capital asset that has been held for more than 36 months. It is used by a tax payer to calculate gains arising out of the sale of capital assets after adjusting for inflation. Hence statement 1 is incorrect CII is defined under section 48 of Income Tax Act 1961. It is revised annually to keep up with inflation with the base year being periodically reset; the current base year is 2001-02 in India. It is annually notified by the Central Board of Direct Taxes, usually before the start of financial year. Hence statements 2 and 3 are correct

#### 20. Question

Consider the following statements:

• The Cost Inflation Index (CII) is used to calculate short term profits arising from the sale of securities.

• CII has been defined under Income Tax Act 1961.

• CII is notified annually by the Central Board of Direct Taxes.

Which of the statements given above is/are incorrect?

• (a) 1 only

• (b) 2 and 3 only

• (c) 3 only

• (d) 1 and 2 only

Solution: A

• The Cost Inflation Index is notified by the government to calculate long term capital gains arising from the sale of immovable property, securities and jewellery.

• It is used to compute the indexed cost of acquisition of a capital asset that has been held for more than 36 months.

• It is used by a tax payer to calculate gains arising out of the sale of capital assets after adjusting for inflation.

Hence statement 1 is incorrect

• CII is defined under section 48 of Income Tax Act 1961.

• It is revised annually to keep up with inflation with the base year being periodically reset; the current base year is 2001-02 in India.

• It is annually notified by the Central Board of Direct Taxes, usually before the start of financial year.

Hence statements 2 and 3 are correct

Solution: A

• The Cost Inflation Index is notified by the government to calculate long term capital gains arising from the sale of immovable property, securities and jewellery.

• It is used to compute the indexed cost of acquisition of a capital asset that has been held for more than 36 months.

• It is used by a tax payer to calculate gains arising out of the sale of capital assets after adjusting for inflation.

Hence statement 1 is incorrect

• CII is defined under section 48 of Income Tax Act 1961.

• It is revised annually to keep up with inflation with the base year being periodically reset; the current base year is 2001-02 in India.

• It is annually notified by the Central Board of Direct Taxes, usually before the start of financial year.

Hence statements 2 and 3 are correct

• Question 21 of 30 21. Question 1 points Consider the following statements regarding the Habitat Rights of PVTGs under the Forest Rights Act, 2006: Habitat rights are automatically conferred upon all Scheduled Tribes living in forested regions. Only the Ministry of Tribal Affairs has the authority to notify habitat rights. Habitat includes customary habitat and areas within reserved and protected forests. Which of the statements given above is/are correct? (a) 1 and 3 only (b) 2 and 3 only (c) 3 only (d) None of the above Correct Answer: C Explanation: Statement 3 is correct: As per Section 3(1)(e) of FRA, “habitat” includes customary territory of PVTGs including those in reserved/protected forests. Statement 1 is incorrect: Habitat rights are not automatic; they are accorded through a process involving Gram Sabha resolutions, verification, and approval by District Level Committees. Statement 2 is incorrect: While the Ministry of Tribal Affairs plays a policy role, the actual recognition process involves state-level authorities, notably District Level Committees under the FRA framework. The recent recognition of rights for Juangs and Mankidia tribes in Odisha illustrates this decentralized process. Incorrect Answer: C Explanation: Statement 3 is correct: As per Section 3(1)(e) of FRA, “habitat” includes customary territory of PVTGs including those in reserved/protected forests. Statement 1 is incorrect: Habitat rights are not automatic; they are accorded through a process involving Gram Sabha resolutions, verification, and approval by District Level Committees. Statement 2 is incorrect: While the Ministry of Tribal Affairs plays a policy role, the actual recognition process involves state-level authorities, notably District Level Committees under the FRA framework. The recent recognition of rights for Juangs and Mankidia tribes in Odisha illustrates this decentralized process.

#### 21. Question

Consider the following statements regarding the Habitat Rights of PVTGs under the Forest Rights Act, 2006:

• Habitat rights are automatically conferred upon all Scheduled Tribes living in forested regions.

• Only the Ministry of Tribal Affairs has the authority to notify habitat rights.

• Habitat includes customary habitat and areas within reserved and protected forests.

Which of the statements given above is/are correct?

• (a) 1 and 3 only

• (b) 2 and 3 only

• (c) 3 only

• (d) None of the above

Explanation: Statement 3 is correct: As per Section 3(1)(e) of FRA, “habitat” includes customary territory of PVTGs including those in reserved/protected forests.

Statement 1 is incorrect: Habitat rights are not automatic; they are accorded through a process involving Gram Sabha resolutions, verification, and approval by District Level Committees.

Statement 2 is incorrect: While the Ministry of Tribal Affairs plays a policy role, the actual recognition process involves state-level authorities, notably District Level Committees under the FRA framework. The recent recognition of rights for Juangs and Mankidia tribes in Odisha illustrates this decentralized process.

Explanation: Statement 3 is correct: As per Section 3(1)(e) of FRA, “habitat” includes customary territory of PVTGs including those in reserved/protected forests.

Statement 1 is incorrect: Habitat rights are not automatic; they are accorded through a process involving Gram Sabha resolutions, verification, and approval by District Level Committees.

• Question 22 of 30 22. Question 1 points The Aadharshila Curriculum for Early Childhood Care and Education (ECCE), 2024, recently launched by the Ministry of Women and Child Development, is primarily based on which of the following traditional Indian philosophical frameworks? (a) Panchakosha concept of human development (b) Trivarga concept from Manusmriti (c) Pancha Mahabhutas of Ayurveda (d) Sapta Rishi model from ancient Indian texts Correct Answer: A Explanation: The Aadharshila Curriculum, launched in 2024 for 3–6-year-olds in Anganwadis, is grounded in the Panchakosha framework, an ancient Indian model of holistic human development. It encompasses five developmental domains: Sharirik Vikas (physical), Pranik Vikas (life energy), Manasik Vikas (mental/emotional), Bauddhik Vikas (intellectual), and Chaitsik Vikas (spiritual). This aligns with India’s knowledge systems and NEP 2020’s emphasis on blending traditional philosophy with contemporary pedagogy. The curriculum emphasizes play-based learning, executive functioning, gender equality, and inclusion of children with disabilities, providing a culturally grounded yet child-centric approach to ECCE. Incorrect Answer: A Explanation: The Aadharshila Curriculum, launched in 2024 for 3–6-year-olds in Anganwadis, is grounded in the Panchakosha framework, an ancient Indian model of holistic human development. It encompasses five developmental domains: Sharirik Vikas (physical), Pranik Vikas (life energy), Manasik Vikas (mental/emotional), Bauddhik Vikas (intellectual), and Chaitsik Vikas (spiritual). This aligns with India’s knowledge systems and NEP 2020’s emphasis on blending traditional philosophy with contemporary pedagogy. The curriculum emphasizes play-based learning, executive functioning, gender equality, and inclusion of children with disabilities, providing a culturally grounded yet child-centric approach to ECCE.

#### 22. Question

The Aadharshila Curriculum for Early Childhood Care and Education (ECCE), 2024, recently launched by the Ministry of Women and Child Development, is primarily based on which of the following traditional Indian philosophical frameworks?

• (a) Panchakosha concept of human development

• (b) Trivarga concept from Manusmriti

• (c) Pancha Mahabhutas of Ayurveda

• (d) Sapta Rishi model from ancient Indian texts

Explanation: The Aadharshila Curriculum, launched in 2024 for 3–6-year-olds in Anganwadis, is grounded in the Panchakosha framework, an ancient Indian model of holistic human development. It encompasses five developmental domains: Sharirik Vikas (physical), Pranik Vikas (life energy), Manasik Vikas (mental/emotional), Bauddhik Vikas (intellectual), and Chaitsik Vikas (spiritual).

• This aligns with India’s knowledge systems and NEP 2020’s emphasis on blending traditional philosophy with contemporary pedagogy. The curriculum emphasizes play-based learning, executive functioning, gender equality, and inclusion of children with disabilities, providing a culturally grounded yet child-centric approach to ECCE.

• Question 23 of 30 23. Question 1 points Consider the following statements: Statement-I: The RPwD Act, 2016 allows full guardianship for persons with mental disabilities, authorizing the guardian to take all legal decisions. Statement-II: The Act provides for “limited guardianship” which is a joint decision-making arrangement based on mutual understanding and guided by the will of the person with disability. Which one of the following is correct in respect of the above statements? a) Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I b) Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I c) Statement-I is correct but Statement-II is incorrect d) Statement-I is incorrect but Statement-II is correct Correct Answer: D Explanation: Statement-I is incorrect: The RPwD Act, 2016 does not endorse full guardianship unless in exceptional cases. It emphasizes “limited guardianship”, aligning with the UN Convention on Rights of Persons with Disabilities (UNCRPD). Statement-II is correct: Limited guardianship under the Act is a shared decision-making process, involving both the guardian and the PwD, and is applicable only in specific contexts (e.g., legal or financial decisions). It is designed to respect the autonomy and will of the individual, and it is time-bound and subject-specific. Incorrect Answer: D Explanation: Statement-I is incorrect: The RPwD Act, 2016 does not endorse full guardianship unless in exceptional cases. It emphasizes “limited guardianship”, aligning with the UN Convention on Rights of Persons with Disabilities (UNCRPD). Statement-II is correct: Limited guardianship under the Act is a shared decision-making process, involving both the guardian and the PwD, and is applicable only in specific contexts (e.g., legal or financial decisions). It is designed to respect the autonomy and will of the individual, and it is time-bound and subject-specific.

#### 23. Question

Consider the following statements:

Statement-I: The RPwD Act, 2016 allows full guardianship for persons with mental disabilities, authorizing the guardian to take all legal decisions.

Statement-II: The Act provides for “limited guardianship” which is a joint decision-making arrangement based on mutual understanding and guided by the will of the person with disability.

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

• a) Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I

• b) Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I

• c) Statement-I is correct but Statement-II is incorrect

• d) Statement-I is incorrect but Statement-II is correct

Explanation: Statement-I is incorrect: The RPwD Act, 2016 does not endorse full guardianship unless in exceptional cases. It emphasizes “limited guardianship”, aligning with the UN Convention on Rights of Persons with Disabilities (UNCRPD).

Statement-II is correct: Limited guardianship under the Act is a shared decision-making process, involving both the guardian and the PwD, and is applicable only in specific contexts (e.g., legal or financial decisions). It is designed to respect the autonomy and will of the individual, and it is time-bound and subject-specific.

• Question 24 of 30 24. Question 1 points With reference to the Southern Sea Otter (Enhydra lutris), consider the following statements: It is an amphibious mammal belonging to the mustelid family, primarily found in freshwater river systems. It is considered a keystone species due to its role in controlling sea urchin populations, thereby protecting kelp forests. The IUCN currently classifies the species as Critically Endangered due to significant habitat loss and poaching. Which of the statements given above is/are correct? (a) 1 and 2 only (b) 2 only (c) 2 and 3 only (d) 1, 2 and 3 Correct Answer: B Explanation: Statement 1 is incorrect: The sea otter is not amphibious in the traditional sense (like frogs). It is an aquatic mammal of the weasel family (Mustelidae) and is primarily found in marine ecosystems like coastal kelp forests and estuaries, not freshwater rivers. Statement 2 is correct: Sea otters are indeed keystone species. Their consumption of sea urchins prevents urchin overgrazing, which protects the kelp forests—essential marine carbon sinks and biodiversity hotspots. Statement 3 is incorrect: While sea otters are Endangered on the IUCN Red List, they are not classified as Critically Endangered. Incorrect Answer: B Explanation: Statement 1 is incorrect: The sea otter is not amphibious in the traditional sense (like frogs). It is an aquatic mammal of the weasel family (Mustelidae) and is primarily found in marine ecosystems like coastal kelp forests and estuaries, not freshwater rivers. Statement 2 is correct: Sea otters are indeed keystone species. Their consumption of sea urchins prevents urchin overgrazing, which protects the kelp forests—essential marine carbon sinks and biodiversity hotspots. Statement 3 is incorrect: While sea otters are Endangered on the IUCN Red List, they are not classified as Critically Endangered.

#### 24. Question

With reference to the Southern Sea Otter (Enhydra lutris), consider the following statements:

• It is an amphibious mammal belonging to the mustelid family, primarily found in freshwater river systems.

• It is considered a keystone species due to its role in controlling sea urchin populations, thereby protecting kelp forests.

• The IUCN currently classifies the species as Critically Endangered due to significant habitat loss and poaching.

Which of the statements given above is/are correct?

• (a) 1 and 2 only

• (b) 2 only

• (c) 2 and 3 only

• (d) 1, 2 and 3

Explanation:

• Statement 1 is incorrect: The sea otter is not amphibious in the traditional sense (like frogs). It is an aquatic mammal of the weasel family (Mustelidae) and is primarily found in marine ecosystems like coastal kelp forests and estuaries, not freshwater rivers.

• Statement 2 is correct: Sea otters are indeed keystone species. Their consumption of sea urchins prevents urchin overgrazing, which protects the kelp forests—essential marine carbon sinks and biodiversity hotspots.

• Statement 3 is incorrect: While sea otters are Endangered on the IUCN Red List, they are not classified as Critically Endangered.

Explanation:

• Statement 3 is incorrect: While sea otters are Endangered on the IUCN Red List, they are not classified as Critically Endangered.

• Question 25 of 30 25. Question 1 points Which of the following are the benefits of declaring a disease as notifiable in India? Helps in early warning and control of disease outbreaks. Facilitates legal immunity for private healthcare providers treating such diseases. Ensures better surveillance, data collection, and targeted public health interventions. Select the correct answer using the code below: (a) 1 and 2 only (b) 1 and 3 only (c) 2 and 3 only (d) 1, 2 and 3 Correct Answer: B Explanation: Notifiable diseases are Diseases legally required to be reported to government authorities for effective monitoring and response. E.g. Cholera, tuberculosis, AIDS, dengue. Statement 1 is correct: Notifiable diseases must be reported to health authorities, enabling timely detection and response to outbreaks. Statement 2 is incorrect: There is no legal immunity granted to healthcare providers under notifiability provisions. In fact, mandatory reporting is legally enforced. Statement 3 is correct: Notification improves systematic tracking, data analysis, and evidence-based policy decisions for disease control. Power to Declare Notifiable Disease lies with the State Government under public health legislation. The Centre can recommend diseases for notification. Incorrect Answer: B Explanation: Notifiable diseases are Diseases legally required to be reported to government authorities for effective monitoring and response. E.g. Cholera, tuberculosis, AIDS, dengue. Statement 1 is correct: Notifiable diseases must be reported to health authorities, enabling timely detection and response to outbreaks. Statement 2 is incorrect: There is no legal immunity granted to healthcare providers under notifiability provisions. In fact, mandatory reporting is legally enforced. Statement 3 is correct: Notification improves systematic tracking, data analysis, and evidence-based policy decisions for disease control. Power to Declare Notifiable Disease lies with the State Government under public health legislation. The Centre can recommend diseases for notification.

#### 25. Question

Which of the following are the benefits of declaring a disease as notifiable in India?

• Helps in early warning and control of disease outbreaks.

• Facilitates legal immunity for private healthcare providers treating such diseases.

• Ensures better surveillance, data collection, and targeted public health interventions.

Select the correct answer using the code below:

• (a) 1 and 2 only

• (b) 1 and 3 only

• (c) 2 and 3 only

• (d) 1, 2 and 3

Explanation:

Notifiable diseases are Diseases legally required to be reported to government authorities for effective monitoring and response. E.g. Cholera, tuberculosis, AIDS, dengue.

• Statement 1 is correct: Notifiable diseases must be reported to health authorities, enabling timely detection and response to outbreaks.

• Statement 2 is incorrect: There is no legal immunity granted to healthcare providers under notifiability provisions. In fact, mandatory reporting is legally enforced.

• Statement 3 is correct: Notification improves systematic tracking, data analysis, and evidence-based policy decisions for disease control.

• Power to Declare Notifiable Disease lies with the State Government under public health legislation. The Centre can recommend diseases for notification.

• The Centre can recommend diseases for notification.

Explanation:

Notifiable diseases are Diseases legally required to be reported to government authorities for effective monitoring and response. E.g. Cholera, tuberculosis, AIDS, dengue.

• Statement 1 is correct: Notifiable diseases must be reported to health authorities, enabling timely detection and response to outbreaks.

• Statement 2 is incorrect: There is no legal immunity granted to healthcare providers under notifiability provisions. In fact, mandatory reporting is legally enforced.

• Statement 3 is correct: Notification improves systematic tracking, data analysis, and evidence-based policy decisions for disease control.

• Power to Declare Notifiable Disease lies with the State Government under public health legislation. The Centre can recommend diseases for notification.

• The Centre can recommend diseases for notification.

• Question 26 of 30 26. Question 1 points British colonial policy went through two policy phases. At first, the new colonial apparatus exercised caution, and occupied India with a mix of military power and subtle diplomacy. This, however, pushed them into contradictions. For, whatever their sense of the strangeness of the country and the thinness of colonial presence, the British colonial state represented the great conquering discourse of Enlightenment rationalism, entering India precisely at the moment of its greatest unchecked arrogance. As inheritors and representatives of this discourse, which carried everything before it, this colonial state could hardly adopt for long such a self-denying attitude. It had restructured everything in Europe—the productive system, the political regimes, the moral and cognitive orders—and would do the same in India, particularly as some empirically inclined theorists of that generation considered the colonies a massive laboratory of utilitarian or other theoretical experiments. Consequently, the colonial state could not settle simply for eminence at the cost of its marginality; it began to take initiatives to introduce the logic of modernity into Indian society. But this modernity did not enter a passive society. Sometimes, its initiatives were resisted by pre-existing structural forms. At times, there was a more direct form of collective resistance. Which of the following statements, *if true, could be seen as supporting the arguments in the passage: a) British colonial policies led to ‘development of underdevelopment’ b) Modernity was imposed upon India by the British and, therefore, led to underdevelopment. c) Throughout the history of colonial conquest, natives have often been experimented on by the colonisers. d) The change in British colonial policy was induced by resistance to modernity in Indian society. Correct Correct Option: C Justification: Statement A is incorrect: The passage doesn’t describe ‘development of under-development’. It was the capitalist policies of British will led to this underdevelopment. Statement B is incorrect: That modernity was imposed on India can be inferred from the last two lines of the passage, but this led to ‘underdevelopment’ cannot be generalized. Statement C is correct: As the passage suggests “…empirically inclined theorists of that generation considered the colonies a massive laboratory of utilitarian or other theoretical experiments.” That is, colonizers regarded colonies as laboratories of practical or theoretical experiments. Statement D is incorrect: The passage doesn’t support this argument. Even though there was resistance to modernity but the passage doesn’t show that this led to a change in British colonial policy. Incorrect Correct Option: C Justification: Statement A is incorrect: The passage doesn’t describe ‘development of under-development’. It was the capitalist policies of British will led to this underdevelopment. Statement B is incorrect: That modernity was imposed on India can be inferred from the last two lines of the passage, but this led to ‘underdevelopment’ cannot be generalized. Statement C is correct: As the passage suggests “…empirically inclined theorists of that generation considered the colonies a massive laboratory of utilitarian or other theoretical experiments.” That is, colonizers regarded colonies as laboratories of practical or theoretical experiments. Statement D is incorrect*: The passage doesn’t support this argument. Even though there was resistance to modernity but the passage doesn’t show that this led to a change in British colonial policy.

#### 26. Question

British colonial policy went through two policy phases. At first, the new colonial apparatus exercised caution, and occupied India with a mix of military power and subtle diplomacy. This, however, pushed them into contradictions. For, whatever their sense of the strangeness of the country and the thinness of colonial presence, the British colonial state represented the great conquering discourse of Enlightenment rationalism, entering India precisely at the moment of its greatest unchecked arrogance. As inheritors and representatives of this discourse, which carried everything before it, this colonial state could hardly adopt for long such a self-denying attitude. It had restructured everything in Europe—the productive system, the political regimes, the moral and cognitive orders—and would do the same in India, particularly as some empirically inclined theorists of that generation considered the colonies a massive laboratory of utilitarian or other theoretical experiments. Consequently, the colonial state could not settle simply for eminence at the cost of its marginality; it began to take initiatives to introduce the logic of modernity into Indian society. But this modernity did not enter a passive society. Sometimes, its initiatives were resisted by pre-existing structural forms. At times, there was a more direct form of collective resistance.

Which of the following statements, *if true*, could be seen as supporting the arguments in the passage:

• a) British colonial policies led to ‘development of underdevelopment’

• b) Modernity was imposed upon India by the British and, therefore, led to underdevelopment.

• c) Throughout the history of colonial conquest, natives have often been experimented on by the colonisers.

• d) The change in British colonial policy was induced by resistance to modernity in Indian society.

Correct Option: C

Justification:

Statement A is incorrect: The passage doesn’t describe ‘development of under-development’. It was the capitalist policies of British will led to this underdevelopment.

Statement B is incorrect: That modernity was imposed on India can be inferred from the last two lines of the passage, but this led to ‘underdevelopment’ cannot be generalized.

Statement C is correct: As the passage suggests “…empirically inclined theorists of that generation considered the colonies a massive laboratory of utilitarian or other theoretical experiments.” That is, colonizers regarded colonies as laboratories of practical or theoretical experiments. Statement D is incorrect: The passage doesn’t support this argument. Even though there was resistance to modernity but the passage doesn’t show that this led to a change in British colonial policy.

Correct Option: C

Justification:

Statement A is incorrect: The passage doesn’t describe ‘development of under-development’. It was the capitalist policies of British will led to this underdevelopment.

Statement B is incorrect: That modernity was imposed on India can be inferred from the last two lines of the passage, but this led to ‘underdevelopment’ cannot be generalized.

• Question 27 of 30 27. Question 1 points Find the wrong number series given below: 18, 55, 167, 504, 1516, 4660 a) 4660 b) 1676 c) 5500 d) 1846 Correct Correct Option: A Justification: 18 3 + 1 = 55 55 3 + 2 = 167 167 3 + 3 = 504 504 3 + 4 = 1516 1516 3 + 5 = 4553 Incorrect Correct Option: A Justification: 18 3 + 1 = 55 55 3 + 2 = 167 167 3 + 3 = 504 504 3 + 4 = 1516 1516 3 + 5 = 4553

#### 27. Question

Find the wrong number series given below: 18, 55, 167, 504, 1516, 4660

Correct Option: A

Justification:

18 3 + 1 = 55 55 3 + 2 = 167 167 3 + 3 = 504 504 3 + 4 = 1516 1516 * 3 + 5 = 4553

Correct Option: A

Justification:

18 3 + 1 = 55 55 3 + 2 = 167 167 3 + 3 = 504 504 3 + 4 = 1516 1516 * 3 + 5 = 4553

• Question 28 of 30 28. Question 1 points Complete the series FAG, GAF, HAI, IAH, ____? a) JAK b) HAL c) HAK d) JAI Correct Correct Option: A Justification: Explanation: Looking at first letters: F, G, H and I. They are in alphabetical order. So, next letter is J. Second letter will be same i.e. A Third letters are G, F, I and H. From G, -1 and +3 alternatively. So, H + 3 = K. Thus, next in the series is JAK. Incorrect Correct Option: A Justification: Explanation: Looking at first letters: F, G, H and I. They are in alphabetical order. So, next letter is J. Second letter will be same i.e. A Third letters are G, F, I and H. From G, -1 and +3 alternatively. So, H + 3 = K. Thus, next in the series is JAK.

#### 28. Question

Complete the series FAG, GAF, HAI, IAH, ____?

Correct Option: A

Justification:

Explanation:

Looking at first letters: F, G, H and I. They are in alphabetical order. So, next letter is J.

Second letter will be same i.e. A

Third letters are G, F, I and H. From G, -1 and +3 alternatively. So, H + 3 = K.

Thus, next in the series is JAK.

Correct Option: A

Justification:

Explanation:

Looking at first letters: F, G, H and I. They are in alphabetical order. So, next letter is J.

Second letter will be same i.e. A

Third letters are G, F, I and H. From G, -1 and +3 alternatively. So, H + 3 = K.

Thus, next in the series is JAK.

• Question 29 of 30 29. Question 1 points Look at this series: 53, 53, 40, 40, 27, 27, … What number should come next? a) 12 b) 14 c) 27 d) 53 Correct Correct Option: B Justification: Explanation: In this series, each number is repeated, then 13 is subtracted to arrive at the next number. Incorrect Correct Option: B Justification: Explanation: In this series, each number is repeated, then 13 is subtracted to arrive at the next number.

#### 29. Question

Look at this series: 53, 53, 40, 40, 27, 27, … What number should come next?

Correct Option: B

Justification:

Explanation:

In this series, each number is repeated, then 13 is subtracted to arrive at the next number.

Correct Option: B

Justification:

Explanation:

In this series, each number is repeated, then 13 is subtracted to arrive at the next number.

• Question 30 of 30 30. Question 1 points Some of the letters are missing in the following letter series which are given in that order as one of the alternatives below it. Choose the correct alternative. a b _ _ b a a _ _ a b _ a) a a a a a b) a a b a a c) a a b a b d) b a a b b Correct Correct Option: B Justification: Explanation: The best way to solve is to substitute the alternatives and check. If (a) is substituted, then the letter series is abaabaaaaaba: No pattern can be found. If (b) is substituted, then the letter series is abaabaabaaba: the pattern is aba aba aba aba If (c) is substituted, then the letter series is abaabaabaabb: No pattern can be found. If (d) is substituted, then the letter series is abbabaaababb: No pattern can be found. Incorrect Correct Option: B Justification: Explanation: The best way to solve is to substitute the alternatives and check. If (a) is substituted, then the letter series is abaabaaaaaba: No pattern can be found. If (b) is substituted, then the letter series is abaabaabaaba: the pattern is aba aba aba aba If (c) is substituted, then the letter series is abaabaabaabb: No pattern can be found. If (d) is substituted, then the letter series is abbabaaababb: No pattern can be found.

#### 30. Question

Some of the letters are missing in the following letter series which are given in that order as one of the alternatives below it. Choose the correct alternative.

a b _ _ b a a _ _ a b _

• a) a a a a a

• b) a a b a a

• c) a a b a b

• d) b a a b b

Correct Option: B

Justification:

Explanation:

The best way to solve is to substitute the alternatives and check.

If (a) is substituted, then the letter series is abaabaaaaaba: No pattern can be found.

If (b) is substituted, then the letter series is abaabaabaaba: the pattern is aba aba aba aba

If (c) is substituted, then the letter series is abaabaabaabb: No pattern can be found.

If (d) is substituted, then the letter series is abbabaaababb: No pattern can be found.

Correct Option: B

Justification:

Explanation:

The best way to solve is to substitute the alternatives and check.

If (a) is substituted, then the letter series is abaabaaaaaba: No pattern can be found.

If (b) is substituted, then the letter series is abaabaabaaba: the pattern is aba aba aba aba

If (c) is substituted, then the letter series is abaabaabaabb: No pattern can be found.

If (d) is substituted, then the letter series is abbabaaababb: No pattern can be found.

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