UPSC Static Quiz – Economy : 08 July 2024

UPSC Static Quiz – Economy : 08 July 2024 We will post 5 questions daily on static topics mentioned in the UPSC civil services preliminary examination syllabus. Each week will focus on a specific topic from the syllabus, such as History of India and Indian National Movement, Indian and World Geography, and more.We are excited to bring you our daily UPSC Static Quiz, designed to help you prepare for the UPSC Civil Services Preliminary Examination. Each day, we will post 5 questions on static topics mentioned in the UPSC syllabus. This week, we are focusing on Indian and World Geography.

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• Question 1 of 5 1. Question Consider the following statements regarding Concessional finance. Concessional finance is below-market-rate finance provided by major financial institutions, such as development banks and multilateral funds, to developing countries to accelerate development objectives. Concessional finance cannot be in the form of grants or equity investments. Concessional finance targets high-impact projects responding to globally significant development challenges. How many of the above statements is/are correct? (a) Only one (b) Only two (c) All three (d) None Correct Solution: b) Statement 2 is incorrect. Concessional finance is below market rate finance provided by major financial institutions, such as development banks and multilateral funds, to developing countries to accelerate development objectives. The term concessional finance does not represent a single mechanism or type of financial support but comprises a range of below market rate products used to accelerate a climate or development objective. Concessional finance targets high-impact projects responding to globally significant development challenges – from climate change mitigation and resilience to vaccine deployment, water sanitation and education – that otherwise could not go ahead without specialised financial support. The most common financial products used to deliver concessional finance come in the form of loans, grants and, to some extent, equity investments. Incorrect Solution: b) Statement 2 is incorrect. Concessional finance is below market rate finance provided by major financial institutions, such as development banks and multilateral funds, to developing countries to accelerate development objectives. The term concessional finance does not represent a single mechanism or type of financial support but comprises a range of below market rate products used to accelerate a climate or development objective. Concessional finance targets high-impact projects responding to globally significant development challenges – from climate change mitigation and resilience to vaccine deployment, water sanitation and education – that otherwise could not go ahead without specialised financial support. The most common financial products used to deliver concessional finance come in the form of loans, grants and, to some extent, equity investments.

#### 1. Question

Consider the following statements regarding Concessional finance.

• Concessional finance is below-market-rate finance provided by major financial institutions, such as development banks and multilateral funds, to developing countries to accelerate development objectives.

• Concessional finance cannot be in the form of grants or equity investments.

• Concessional finance targets high-impact projects responding to globally significant development challenges.

How many of the above statements is/are correct?

• (a) Only one

• (b) Only two

• (c) All three

Solution: b)

Statement 2 is incorrect.

Concessional finance is below market rate finance provided by major financial institutions, such as development banks and multilateral funds, to developing countries to accelerate development objectives. The term concessional finance does not represent a single mechanism or type of financial support but comprises a range of below market rate products used to accelerate a climate or development objective.

Concessional finance targets high-impact projects responding to globally significant development challenges – from climate change mitigation and resilience to vaccine deployment, water sanitation and education – that otherwise could not go ahead without specialised financial support.

The most common financial products used to deliver concessional finance come in the form of loans, grants and, to some extent, equity investments.

Solution: b)

Statement 2 is incorrect.

The most common financial products used to deliver concessional finance come in the form of loans, grants and, to some extent, equity investments.

• Question 2 of 5 2. Question Which of the following are recognised as “Three Sisters” by the World Trade Organization’s (WTO) Sanitary and Phytosanitary Measures (SPS) Agreement? International Plant Protection Convention (IPPC) Codex Alimentarius Commission Pacific Plant Protection Organization World Organization for Animal Health (OIE) Select the correct answer code: a) 2, 4 b) 1, 2, 4 c) 2, 3, 4 d) 1, 2, 3 Correct Solution: b) The International Plant Protection Convention (IPPC) is one of the “Three Sisters” recognized by the World Trade Organization’s (WTO) Sanitary and Phytosanitary Measures (SPS) Agreement, along with the Codex Alimentarius Commission for food safety standards and the World Organization for Animal Health (OIE) for animal health standards. Incorrect Solution: b) The International Plant Protection Convention (IPPC) is one of the “Three Sisters” recognized by the World Trade Organization’s (WTO) Sanitary and Phytosanitary Measures (SPS) Agreement, along with the Codex Alimentarius Commission for food safety standards and the World Organization for Animal Health (OIE) for animal health standards.

#### 2. Question

Which of the following are recognised as “Three Sisters” by the World Trade Organization’s (WTO) Sanitary and Phytosanitary Measures (SPS) Agreement?

• International Plant Protection Convention (IPPC)

• Codex Alimentarius Commission

• Pacific Plant Protection Organization

• World Organization for Animal Health (OIE)

Select the correct answer code:

• b) 1, 2, 4

• c) 2, 3, 4

• d) 1, 2, 3

Solution: b)

The International Plant Protection Convention (IPPC) is one of the “Three Sisters” recognized by the World Trade Organization’s (WTO) Sanitary and Phytosanitary Measures (SPS) Agreement, along with the Codex Alimentarius Commission for food safety standards and the World Organization for Animal Health (OIE) for animal health standards.

Solution: b)

• Question 3 of 5 3. Question Consider the following statements regarding Standing Deposit Facility (SDF). It has been introduced by Reserve Bank of India. Like marginal standing facility (MSF), the SDF will be available on all days of the week, throughout the year. It aims to induce liquidity in the system to promote growth. How many of the above statements is/are correct? (a) Only one (b) Only two c) All three d) None Correct Solution: b) Statement 3 is incorrect. In 2018, the amended Section 17 of the RBI Act empowered the Reserve Bank to introduce the SDF – an additional tool for absorbing liquidity without any collateral. By removing the binding collateral constraint on the RBI, the SDF strengthens the operating framework of monetary policy. The SDF is also a financial stability tool in addition to its role in liquidity management. The main purpose of SDF is to reduce the excess liquidity in the system, and control inflation. Both the standing facilities — the MSF (marginal standing facility) and the SDF will be available on all days of the week, throughout the year. Incorrect Solution: b) Statement 3 is incorrect. In 2018, the amended Section 17 of the RBI Act empowered the Reserve Bank to introduce the SDF – an additional tool for absorbing liquidity without any collateral. By removing the binding collateral constraint on the RBI, the SDF strengthens the operating framework of monetary policy. The SDF is also a financial stability tool in addition to its role in liquidity management. The main purpose of SDF is to reduce the excess liquidity in the system, and control inflation. Both the standing facilities — the MSF (marginal standing facility) and the SDF will be available on all days of the week, throughout the year.

#### 3. Question

Consider the following statements regarding Standing Deposit Facility (SDF).

• It has been introduced by Reserve Bank of India.

• Like marginal standing facility (MSF), the SDF will be available on all days of the week, throughout the year.

• It aims to induce liquidity in the system to promote growth.

How many of the above statements is/are correct?

• (a) Only one

• (b) Only two

• c) All three

Solution: b)

Statement 3 is incorrect.

In 2018, the amended Section 17 of the RBI Act empowered the Reserve Bank to introduce the SDF – an additional tool for absorbing liquidity without any collateral. By removing the binding collateral constraint on the RBI, the SDF strengthens the operating framework of monetary policy. The SDF is also a financial stability tool in addition to its role in liquidity management.

The main purpose of SDF is to reduce the excess liquidity in the system, and control inflation.

Both the standing facilities — the MSF (marginal standing facility) and the SDF will be available on all days of the week, throughout the year.

Solution: b)

Statement 3 is incorrect.

The main purpose of SDF is to reduce the excess liquidity in the system, and control inflation.

Both the standing facilities — the MSF (marginal standing facility) and the SDF will be available on all days of the week, throughout the year.

• Question 4 of 5 4. Question Consider the following statements regarding Exchange Traded Funds (ETF). ETFs are passive funds listed and traded on stock exchanges like shares. In an ETF, one can buy and sell units at prevailing market price on a real time basis during market hours. Usually the fund manager selects stocks based on customers choice. How many of the above statements is/are incorrect? (a) Only one (b) Only two (c) All three (d) None Correct Solution: a) Statement 3 is incorrect. Exchange Traded Funds (ETFs): Typically, an ETF mirrors a particular index, which means the group of stocks in the ETF would be similar to those in the index that it is benchmarked to. They are traded on stock exchanges like shares. Usually, ETFs are passive funds where the fund manager doesn’t select stocks on your behalf. Instead, the ETF simply copies an index and endeavours to accurately reflect its performance. In an ETF, one can buy and sell units at prevailing market price on a real time basis during market hours. Incorrect Solution: a) Statement 3 is incorrect. Exchange Traded Funds (ETFs): Typically, an ETF mirrors a particular index, which means the group of stocks in the ETF would be similar to those in the index that it is benchmarked to. They are traded on stock exchanges like shares. Usually, ETFs are passive funds where the fund manager doesn’t select stocks on your behalf. Instead, the ETF simply copies an index and endeavours to accurately reflect its performance. In an ETF, one can buy and sell units at prevailing market price on a real time basis during market hours.

#### 4. Question

Consider the following statements regarding Exchange Traded Funds (ETF).

• ETFs are passive funds listed and traded on stock exchanges like shares.

• In an ETF, one can buy and sell units at prevailing market price on a real time basis during market hours.

• Usually the fund manager selects stocks based on customers choice.

How many of the above statements is/are incorrect?

• (a) Only one

• (b) Only two

• (c) All three

Solution: a)

Statement 3 is incorrect.

Exchange Traded Funds (ETFs):

• Typically, an ETF mirrors a particular index, which means the group of stocks in the ETF would be similar to those in the index that it is benchmarked to.

• They are traded on stock exchanges like shares.

• Usually, ETFs are passive funds where the fund manager doesn’t select stocks on your behalf. Instead, the ETF simply copies an index and endeavours to accurately reflect its performance.

• In an ETF, one can buy and sell units at prevailing market price on a real time basis during market hours.

Solution: a)

Statement 3 is incorrect.

Exchange Traded Funds (ETFs):

• Typically, an ETF mirrors a particular index, which means the group of stocks in the ETF would be similar to those in the index that it is benchmarked to.

• They are traded on stock exchanges like shares.

• Usually, ETFs are passive funds where the fund manager doesn’t select stocks on your behalf. Instead, the ETF simply copies an index and endeavours to accurately reflect its performance.

• In an ETF, one can buy and sell units at prevailing market price on a real time basis during market hours.

• Question 5 of 5 5. Question Consider the following statements regarding Foreign Exchange Management Act. Foreign Exchange Management Act came as a successor to the Foreign Exchange Regulation Act, with changing economic conditions in a post-liberalisation India. This act makes offences related to foreign exchange as criminal offenses. Enforcement Directorate (ED) has the power to register a case against an organisation under the Foreign Exchange Management Act (FEMA) for alleged foreign exchange violation. How many of the above statements is/are correct? (a) Only one (b) Only two (c) All three (d) None Correct Solution: b) Statement 2 is incorrect. The Enforcement Directorate (ED) can register a case under the Foreign Exchange Management Act (FEMA) for alleged foreign exchange violation. What is the aim of the FEMA (Foreign Exchange Management Act)? FEMA came in 1999 as a successor to the Foreign Exchange Regulation Act or FERA of 1973, with changing economic conditions in a post-liberalisation India. So what changed with the FEMA? Reflecting the major change in mindset was the decision to make offences or violations under this law a civil offence rather than criminal one, and making transactions that are part of the current account, such as travelling abroad for tourism, education, etc., a matter of right while putting in place restrictions on the capital account. Incorrect Solution: b) Statement 2 is incorrect. The Enforcement Directorate (ED) can register a case under the Foreign Exchange Management Act (FEMA) for alleged foreign exchange violation. What is the aim of the FEMA (Foreign Exchange Management Act)? FEMA came in 1999 as a successor to the Foreign Exchange Regulation Act or FERA of 1973, with changing economic conditions in a post-liberalisation India. So what changed with the FEMA? Reflecting the major change in mindset was the decision to make offences or violations under this law a civil offence rather than criminal one, and making transactions that are part of the current account, such as travelling abroad for tourism, education, etc., a matter of right while putting in place restrictions on the capital account.

#### 5. Question

Consider the following statements regarding Foreign Exchange Management Act.

• Foreign Exchange Management Act came as a successor to the Foreign Exchange Regulation Act, with changing economic conditions in a post-liberalisation India.

• This act makes offences related to foreign exchange as criminal offenses.

• Enforcement Directorate (ED) has the power to register a case against an organisation under the Foreign Exchange Management Act (FEMA) for alleged foreign exchange violation.

How many of the above statements is/are correct?

• (a) Only one

• (b) Only two

• (c) All three

Solution: b)

Statement 2 is incorrect.

The Enforcement Directorate (ED) can register a case under the Foreign Exchange Management Act (FEMA) for alleged foreign exchange violation.

What is the aim of the FEMA (Foreign Exchange Management Act)?

FEMA came in 1999 as a successor to the Foreign Exchange Regulation Act or FERA of 1973, with changing economic conditions in a post-liberalisation India.

So what changed with the FEMA?

Reflecting the major change in mindset was the decision to make offences or violations under this law a civil offence rather than criminal one, and making transactions that are part of the current account, such as travelling abroad for tourism, education, etc., a matter of right while putting in place restrictions on the capital account.

Solution: b)

Statement 2 is incorrect.

The Enforcement Directorate (ED) can register a case under the Foreign Exchange Management Act (FEMA) for alleged foreign exchange violation.

What is the aim of the FEMA (Foreign Exchange Management Act)?

FEMA came in 1999 as a successor to the Foreign Exchange Regulation Act or FERA of 1973, with changing economic conditions in a post-liberalisation India.

So what changed with the FEMA?

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