UPSC Static Quiz – Economy : 1 November 2025

UPSC Static Quiz – Economy : 1 November 2025 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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Participating in daily quizzes helps reinforce your knowledge and identify areas that need improvement. Regular practice will enhance your recall abilities and boost your confidence for the examination. By covering various topics throughout the week, you ensure a comprehensive revision of the syllabus.

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• Question 1 of 5 1. Question The Tarapore Committee constituted by the Reserve Bank of India, was a) Economic Capital Framework (ECF) Committee b) High Powered Committee on Urban Co-operative Banks c) Committee on Capital Account Convertibility (CAC) d) Committee on Offshore Rupee Markets Correct Solution: c) The Committee on Capital Account Convertibility (CAC) or Tarapore Committee was constituted by the Reserve Bank of India for suggesting a roadmap on full convertibility of Rupee on Capital Account. Incorrect Solution: c) The Committee on Capital Account Convertibility (CAC) or Tarapore Committee was constituted by the Reserve Bank of India for suggesting a roadmap on full convertibility of Rupee on Capital Account.

#### 1. Question

The Tarapore Committee constituted by the Reserve Bank of India, was

• a) Economic Capital Framework (ECF) Committee

• b) High Powered Committee on Urban Co-operative Banks

• c) Committee on Capital Account Convertibility (CAC)

• d) Committee on Offshore Rupee Markets

Solution: c)

The Committee on Capital Account Convertibility (CAC) or Tarapore Committee was constituted by the Reserve Bank of India for suggesting a roadmap on full convertibility of Rupee on Capital Account.

Solution: c)

• Question 2 of 5 2. Question Consider the following statements regarding Vostro accounts. A Vostro account is an account that a domestic bank holds for a foreign bank in the domestic bank’s currency. For an Indian entity, In case of trade with a foreign country, payments in rupee for the export and import of goods will go to these Vostro accounts. The objective behind permitting Vostro accounts is to promote growth of global trade with emphasis on exports from India and to support the interest of the global trading community in the rupee. How many of the above statements are correct? (a) Only one (b) Only two (c) All three (d) None Correct Solution: C Vostro accounts are opened to facilitate trade in rupee. A Vostro account is an account that a domestic bank holds for a foreign bank in the domestic bank’s currency — which, in the case of India, is the rupee. Payments in rupee for the export and import of goods will go to these Vostro accounts. The owners and beneficiaries of this money will be the exporters and importers in both the countries. The banks will keep the record of money transferred. What is a Nostro account? Two kinds of accounts, Vostro and Nostro, are often mentioned together. Both Vostro and Nostro are technically the same type of account, with the difference being who opens the account and where. So, if an Indian bank like the SBI wants to open an account in the United States, it will get in touch with a bank in the US, which will open a Nostro account and accept payments for SBI in dollars. The account opened by the Indian bank in the US will be a Nostro account for the Indian bank, while for the US bank, the account will be considered a Vostro account. What led to creation of the Vostro accounts? RBI put in place a mechanism to settle international trade in rupees “in order to promote growth of global trade with emphasis on exports from India and to support the increasing interest of the global trading community in the rupee”. Incorrect Solution: C Vostro accounts are opened to facilitate trade in rupee. A Vostro account is an account that a domestic bank holds for a foreign bank in the domestic bank’s currency — which, in the case of India, is the rupee. Payments in rupee for the export and import of goods will go to these Vostro accounts. The owners and beneficiaries of this money will be the exporters and importers in both the countries. The banks will keep the record of money transferred. What is a Nostro account? Two kinds of accounts, Vostro and Nostro, are often mentioned together. Both Vostro and Nostro are technically the same type of account, with the difference being who opens the account and where. So, if an Indian bank like the SBI wants to open an account in the United States, it will get in touch with a bank in the US, which will open a Nostro account and accept payments for SBI in dollars. The account opened by the Indian bank in the US will be a Nostro account for the Indian bank, while for the US bank, the account will be considered a Vostro account. What led to creation of the Vostro accounts? RBI put in place a mechanism to settle international trade in rupees “in order to promote growth of global trade with emphasis on exports from India and to support the increasing interest of the global trading community in the rupee”.

#### 2. Question

Consider the following statements regarding Vostro accounts.

• A Vostro account is an account that a domestic bank holds for a foreign bank in the domestic bank’s currency.

• For an Indian entity, In case of trade with a foreign country, payments in rupee for the export and import of goods will go to these Vostro accounts.

• The objective behind permitting Vostro accounts is to promote growth of global trade with emphasis on exports from India and to support the interest of the global trading community in the rupee.

How many of the above statements are correct?

• (a) Only one

• (b) Only two

• (c) All three

Solution: C

Vostro accounts are opened to facilitate trade in rupee.

A Vostro account is an account that a domestic bank holds for a foreign bank in the domestic bank’s currency — which, in the case of India, is the rupee.

Payments in rupee for the export and import of goods will go to these Vostro accounts. The owners and beneficiaries of this money will be the exporters and importers in both the countries. The banks will keep the record of money transferred.

What is a Nostro account?

Two kinds of accounts, Vostro and Nostro, are often mentioned together. Both Vostro and Nostro are technically the same type of account, with the difference being who opens the account and where.

So, if an Indian bank like the SBI wants to open an account in the United States, it will get in touch with a bank in the US, which will open a Nostro account and accept payments for SBI in dollars.

The account opened by the Indian bank in the US will be a Nostro account for the Indian bank, while for the US bank, the account will be considered a Vostro account.

What led to creation of the Vostro accounts?

RBI put in place a mechanism to settle international trade in rupees “in order to promote growth of global trade with emphasis on exports from India and to support the increasing interest of the global trading community in the rupee”.

Solution: C

Vostro accounts are opened to facilitate trade in rupee.

A Vostro account is an account that a domestic bank holds for a foreign bank in the domestic bank’s currency — which, in the case of India, is the rupee.

What is a Nostro account?

Two kinds of accounts, Vostro and Nostro, are often mentioned together. Both Vostro and Nostro are technically the same type of account, with the difference being who opens the account and where.

So, if an Indian bank like the SBI wants to open an account in the United States, it will get in touch with a bank in the US, which will open a Nostro account and accept payments for SBI in dollars.

The account opened by the Indian bank in the US will be a Nostro account for the Indian bank, while for the US bank, the account will be considered a Vostro account.

What led to creation of the Vostro accounts?

• Question 3 of 5 3. Question Consider the following statements. Core inflation is a measure of the total inflation within an economy, including commodities such as food and energy prices. Core inflation typically rises and falls more gradually than inflation in food and fuel. The Eight Core Industries comprise nearly two-third of the weight of items included in the IIP. How many of the above statements are incorrect? (a) Only one (b) Only two (c) All three (d) None Correct Solution: B Only Statement 2 is correct. Core inflation — that is the inflation rate when prices of food and fuel are taken away. Core inflation typically rises and falls more gradually than inflation in food and fuel. Eight core industrial sectors that support infrastructure such as coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity have a total weight of nearly 40% in the Index of Industrial Production (IIP). Incorrect Solution: B Only Statement 2 is correct. Core inflation — that is the inflation rate when prices of food and fuel are taken away. Core inflation typically rises and falls more gradually than inflation in food and fuel. Eight core industrial sectors that support infrastructure such as coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity have a total weight of nearly 40% in the Index of Industrial Production (IIP).

#### 3. Question

Consider the following statements.

• Core inflation is a measure of the total inflation within an economy, including commodities such as food and energy prices.

• Core inflation typically rises and falls more gradually than inflation in food and fuel.

• The Eight Core Industries comprise nearly two-third of the weight of items included in the IIP.

How many of the above statements are incorrect?

• (a) Only one

• (b) Only two

• (c) All three

Solution: B

Only Statement 2 is correct.

Core inflation — that is the inflation rate when prices of food and fuel are taken away. Core inflation typically rises and falls more gradually than inflation in food and fuel.

Eight core industrial sectors that support infrastructure such as coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity have a total weight of nearly 40% in the Index of Industrial Production (IIP).

Solution: B

Only Statement 2 is correct.

Core inflation — that is the inflation rate when prices of food and fuel are taken away. Core inflation typically rises and falls more gradually than inflation in food and fuel.

• Question 4 of 5 4. Question Which of the following could help countries come out of Middle-Income Trap? Increase Capital Accumulation Accelerate Infrastructure Pipeline Boost Private Investment Implement Structural Reforms Increase Labor Force Participation How many of the above options is/are correct? a) Only two b) Only three c) Only four d) All five Correct Solution: d) Action Needed Description Greater Divestitures Privatize inefficient public enterprises to raise funds, improve productivity, and attract foreign investment. Boost Middle Class Cut taxes or replace income tax with a consumption tax to increase disposable income and simplify the tax system. Increase Labor Force Participation Invest in education and skill development; support initiatives like the New Education Policy and Skill India Mission. Accelerate Infrastructure Pipeline Invest in and speed up the execution of infrastructure projects, such as roads and power, to enhance connectivity and quality of life. Build on Manufacturing Momentum Enhance India’s role as a global manufacturing hub with initiatives like PLI; improve ease of doing business and labour laws. Boost Private Investment Attract more foreign and domestic investment through support for infrastructure and manufacturing projects. Implement Structural Reforms Undertake targeted reforms to improve productivity and competitiveness in sectors like finance, urban planning, and e-commerce. Increase Capital Accumulation Boost investment to achieve the USD 30 trillion economy goal, with government support for infrastructure and manufacturing. Incorrect Solution: d) Action Needed Description Greater Divestitures Privatize inefficient public enterprises to raise funds, improve productivity, and attract foreign investment. Boost Middle Class Cut taxes or replace income tax with a consumption tax to increase disposable income and simplify the tax system. Increase Labor Force Participation Invest in education and skill development; support initiatives like the New Education Policy and Skill India Mission. Accelerate Infrastructure Pipeline Invest in and speed up the execution of infrastructure projects, such as roads and power, to enhance connectivity and quality of life. Build on Manufacturing Momentum Enhance India’s role as a global manufacturing hub with initiatives like PLI; improve ease of doing business and labour laws. Boost Private Investment Attract more foreign and domestic investment through support for infrastructure and manufacturing projects. Implement Structural Reforms Undertake targeted reforms to improve productivity and competitiveness in sectors like finance, urban planning, and e-commerce. Increase Capital Accumulation Boost investment to achieve the USD 30 trillion economy goal, with government support for infrastructure and manufacturing.

#### 4. Question

Which of the following could help countries come out of Middle-Income Trap?

• Increase Capital Accumulation

• Accelerate Infrastructure Pipeline

• Boost Private Investment

• Implement Structural Reforms

• Increase Labor Force Participation

How many of the above options is/are correct?

• a) Only two

• b) Only three

• c) Only four

• d) All five

Solution: d)

Action Needed | Description

Greater Divestitures | Privatize inefficient public enterprises to raise funds, improve productivity, and attract foreign investment.

Boost Middle Class | Cut taxes or replace income tax with a consumption tax to increase disposable income and simplify the tax system.

Increase Labor Force Participation | Invest in education and skill development; support initiatives like the New Education Policy and Skill India Mission.

Accelerate Infrastructure Pipeline | Invest in and speed up the execution of infrastructure projects, such as roads and power, to enhance connectivity and quality of life.

Build on Manufacturing Momentum | Enhance India’s role as a global manufacturing hub with initiatives like PLI; improve ease of doing business and labour laws.

Boost Private Investment | Attract more foreign and domestic investment through support for infrastructure and manufacturing projects.

Implement Structural Reforms | Undertake targeted reforms to improve productivity and competitiveness in sectors like finance, urban planning, and e-commerce.

Increase Capital Accumulation | Boost investment to achieve the USD 30 trillion economy goal, with government support for infrastructure and manufacturing.