UPSC Static Quiz – Economy : 24 July 2025

UPSC Static Quiz – Economy : 24 July 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.

Why Participate in the UPSC Static Quiz?

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.

#### Quiz-summary

0 of 5 questions completed

Questions:

#### Information

Best of Luck! 🙂

You have already completed the quiz before. Hence you can not start it again.

Quiz is loading...

You must sign in or sign up to start the quiz.

You have to finish following quiz, to start this quiz:

0 of 5 questions answered correctly

Your time:

Time has elapsed

You have reached 0 of 0 points, (0)

#### Categories

• Not categorized 0%

• Question 1 of 5 1. Question Consider the following pairs regarding committees related to the Indian economy and their primary recommendation areas: Narasimham Committee (I & II) : Financial Sector Reforms Kelkar Committee (2002) : Tax Reforms (Direct and Indirect Taxes) Abid Hussain Committee : Small Scale Industries Urjit Patel Committee : Monetary Policy Framework (Inflation Targeting) How many of the above pairs are correctly matched? a) Only one b) Only two (c) Only three (d) All four Correct Solution: D Narasimham Committee (I in 1991 and II in 1998) is correctly matched with Financial Sector Reforms. These committees made wide-ranging recommendations for reforming the banking sector and financial system in India. Kelkar Committee (Task Force on Direct and Indirect Taxes, 2002) is correctly matched with Tax Reforms. It provided a roadmap for comprehensive reforms in both direct and indirect taxation in India. Abid Hussain Committee (1997) is correctly matched with Small Scale Industries. This committee reviewed policies related to small-scale industries and recommended measures for their development and deregulation. Urjit Patel Committee (Expert Committee to Revise and Strengthen the Monetary Policy Framework, 2014) is correctly matched with Monetary Policy Framework (Inflation Targeting). It recommended the adoption of flexible inflation targeting as the nominal anchor for monetary policy in India, which was subsequently adopted. Incorrect Solution: D Narasimham Committee (I in 1991 and II in 1998) is correctly matched with Financial Sector Reforms. These committees made wide-ranging recommendations for reforming the banking sector and financial system in India. Kelkar Committee (Task Force on Direct and Indirect Taxes, 2002) is correctly matched with Tax Reforms. It provided a roadmap for comprehensive reforms in both direct and indirect taxation in India. Abid Hussain Committee (1997) is correctly matched with Small Scale Industries. This committee reviewed policies related to small-scale industries and recommended measures for their development and deregulation. Urjit Patel Committee (Expert Committee to Revise and Strengthen the Monetary Policy Framework, 2014) is correctly matched with Monetary Policy Framework (Inflation Targeting). It recommended the adoption of flexible inflation targeting as the nominal anchor for monetary policy in India, which was subsequently adopted.

#### 1. Question

Consider the following pairs regarding committees related to the Indian economy and their primary recommendation areas:

• Narasimham Committee (I & II) : Financial Sector Reforms

• Kelkar Committee (2002) : Tax Reforms (Direct and Indirect Taxes)

• Abid Hussain Committee : Small Scale Industries

• Urjit Patel Committee : Monetary Policy Framework (Inflation Targeting)

How many of the above pairs are correctly matched?

• a) Only one

• b) Only two

• (c) Only three

• (d) All four

Solution: D

• Narasimham Committee (I in 1991 and II in 1998) is correctly matched with Financial Sector Reforms. These committees made wide-ranging recommendations for reforming the banking sector and financial system in India.

• Kelkar Committee (Task Force on Direct and Indirect Taxes, 2002) is correctly matched with Tax Reforms. It provided a roadmap for comprehensive reforms in both direct and indirect taxation in India.

• Abid Hussain Committee (1997) is correctly matched with Small Scale Industries. This committee reviewed policies related to small-scale industries and recommended measures for their development and deregulation.

• Urjit Patel Committee (Expert Committee to Revise and Strengthen the Monetary Policy Framework, 2014) is correctly matched with Monetary Policy Framework (Inflation Targeting). It recommended the adoption of flexible inflation targeting as the nominal anchor for monetary policy in India, which was subsequently adopted.

Solution: D

• Question 2 of 5 2. Question Consider the following table regarding different economic concepts: Concept Primary Focus Example/Implication 1. Gini Coefficient Measures income or wealth inequality within a nation. A value of 0 represents perfect equality. 2. Phillips Curve Relationship between inflation and economic growth. Suggests higher growth leads to lower inflation. 3. Lorenz Curve Graphical representation of wealth distribution. The line of perfect equality is a 45-degree line. How many of the above are correctly matched? (a) Only one (b) Only two (c) All three (d) None Correct Solution: B Row 1: Gini Coefficient Primary Focus: Measures income or wealth inequality within a nation – Correct. Example/Implication: A value of 0 represents perfect equality (everyone has the same income/wealth), and a value of 1 (or 100%) represents perfect inequality (one person has all the income/wealth) – Correct. Row 2: Phillips Curve Primary Focus: Traditionally shows an inverse relationship between rates of unemployment and corresponding rates of inflation in an economy – Incorrect (stated as economic growth). Example/Implication: Suggests higher growth leads to lower inflation – Incorrect. The traditional short-run Phillips curve suggests lower unemployment (often associated with higher growth) leads to higher inflation, not lower. Row 3: Lorenz Curve Primary Focus: A graphical representation of the distribution of income or wealth – Correct. Example/Implication: It plots the cumulative percentage of total income received against the cumulative percentage of recipients, starting with the poorest. The line of perfect equality is a 45-degree line from the origin, indicating that, for example, 20% of the population earns 20% of the income. – Correct. Incorrect Solution: B Row 1: Gini Coefficient Primary Focus: Measures income or wealth inequality within a nation – Correct. Example/Implication: A value of 0 represents perfect equality (everyone has the same income/wealth), and a value of 1 (or 100%) represents perfect inequality (one person has all the income/wealth) – Correct. Row 2: Phillips Curve Primary Focus: Traditionally shows an inverse relationship between rates of unemployment and corresponding rates of inflation in an economy – Incorrect (stated as economic growth). Example/Implication: Suggests higher growth leads to lower inflation – Incorrect. The traditional short-run Phillips curve suggests lower unemployment (often associated with higher growth) leads to higher inflation, not lower. Row 3: Lorenz Curve Primary Focus: A graphical representation of the distribution of income or wealth – Correct. Example/Implication: It plots the cumulative percentage of total income received against the cumulative percentage of recipients, starting with the poorest. The line of perfect equality is a 45-degree line from the origin, indicating that, for example, 20% of the population earns 20% of the income. – Correct.

#### 2. Question

Consider the following table regarding different economic concepts:

Concept | Primary Focus | Example/Implication

1.Gini Coefficient | Measures income or wealth inequality within a nation. | A value of 0 represents perfect equality.
2.Phillips Curve | Relationship between inflation and economic growth. | Suggests higher growth leads to lower inflation.
3.Lorenz Curve | Graphical representation of wealth distribution. | The line of perfect equality is a 45-degree line.

How many of the above are correctly matched?

• (a) Only one

• (b) Only two

• (c) All three

Solution: B

• Row 1: Gini Coefficient Primary Focus: Measures income or wealth inequality within a nation – Correct. Example/Implication: A value of 0 represents perfect equality (everyone has the same income/wealth), and a value of 1 (or 100%) represents perfect inequality (one person has all the income/wealth) – Correct.

• Primary Focus: Measures income or wealth inequality within a nation – Correct.

• Example/Implication: A value of 0 represents perfect equality (everyone has the same income/wealth), and a value of 1 (or 100%) represents perfect inequality (one person has all the income/wealth) – Correct.

• Row 2: Phillips Curve Primary Focus: Traditionally shows an inverse relationship between rates of unemployment and corresponding rates of inflation in an economy – Incorrect (stated as economic growth). Example/Implication: Suggests higher growth leads to lower inflation – Incorrect. The traditional short-run Phillips curve suggests lower unemployment (often associated with higher growth) leads to higher inflation, not lower.

• Primary Focus: Traditionally shows an inverse relationship between rates of unemployment and corresponding rates of inflation in an economy – Incorrect (stated as economic growth).

• Example/Implication: Suggests higher growth leads to lower inflation – Incorrect. The traditional short-run Phillips curve suggests lower unemployment (often associated with higher growth) leads to higher inflation, not lower.

• Row 3: Lorenz Curve Primary Focus: A graphical representation of the distribution of income or wealth – Correct. Example/Implication: It plots the cumulative percentage of total income received against the cumulative percentage of recipients, starting with the poorest. The line of perfect equality is a 45-degree line from the origin, indicating that, for example, 20% of the population earns 20% of the income. – Correct.

• Primary Focus: A graphical representation of the distribution of income or wealth – Correct.

• Example/Implication: It plots the cumulative percentage of total income received against the cumulative percentage of recipients, starting with the poorest. The line of perfect equality is a 45-degree line from the origin, indicating that, for example, 20% of the population earns 20% of the income. – Correct.

Solution: B

• Primary Focus: Measures income or wealth inequality within a nation – Correct.

• Primary Focus: Traditionally shows an inverse relationship between rates of unemployment and corresponding rates of inflation in an economy – Incorrect (stated as economic growth).

• Primary Focus: A graphical representation of the distribution of income or wealth – Correct.

• Question 3 of 5 3. Question Consider the following statements regarding ‘Angel Investors’ in the startup ecosystem: Angel investors are typically large venture capital firms that provide late-stage funding to established startups. They invest their personal disposable funds in early-stage startups in exchange for convertible debt or ownership equity. Angel investment is regulated by SEBI under the same guidelines as Initial Public Offerings (IPOs). How many of the above statements are correct? (a) Only one (b) Only two (c) All three (d) None Correct Solution: A Statement 1 is incorrect: Angel investors are typically high-net-worth individuals who provide capital for startups, usually in the very early stages (seed funding or pre-seed funding), not large venture capital firms focusing on late-stage funding. Venture capital firms usually come in after angel investors. Statement 2 is correct: Angel investors invest their own personal funds into promising early-stage companies. In return for their investment, they typically receive convertible debt (which can convert to equity later) or ownership equity in the startup. They often also provide mentorship and industry connections. Statement 3 is incorrect: Angel investment is a form of private investment and is not regulated by SEBI under the same stringent guidelines as Initial Public Offerings (IPOs), which involve public issuance of shares. Incorrect Solution: A Statement 1 is incorrect: Angel investors are typically high-net-worth individuals who provide capital for startups, usually in the very early stages (seed funding or pre-seed funding), not large venture capital firms focusing on late-stage funding. Venture capital firms usually come in after angel investors. Statement 2 is correct: Angel investors invest their own personal funds into promising early-stage companies. In return for their investment, they typically receive convertible debt (which can convert to equity later) or ownership equity in the startup. They often also provide mentorship and industry connections. Statement 3 is incorrect: Angel investment is a form of private investment and is not regulated by SEBI under the same stringent guidelines as Initial Public Offerings (IPOs), which involve public issuance of shares.

#### 3. Question

Consider the following statements regarding ‘Angel Investors’ in the startup ecosystem:

• Angel investors are typically large venture capital firms that provide late-stage funding to established startups.

• They invest their personal disposable funds in early-stage startups in exchange for convertible debt or ownership equity.

• Angel investment is regulated by SEBI under the same guidelines as Initial Public Offerings (IPOs).

How many of the above statements are correct?

• (a) Only one

• (b) Only two

• (c) All three

Solution: A

• Statement 1 is incorrect: Angel investors are typically high-net-worth individuals who provide capital for startups, usually in the very early stages (seed funding or pre-seed funding), not large venture capital firms focusing on late-stage funding. Venture capital firms usually come in after angel investors.

• Statement 2 is correct: Angel investors invest their own personal funds into promising early-stage companies. In return for their investment, they typically receive convertible debt (which can convert to equity later) or ownership equity in the startup. They often also provide mentorship and industry connections.

• Statement 3 is incorrect: Angel investment is a form of private investment and is not regulated by SEBI under the same stringent guidelines as Initial Public Offerings (IPOs), which involve public issuance of shares.

Solution: A

• Question 4 of 5 4. Question Consider the following statements regarding India’s Goods and Services Tax (GST) regime: Integrated GST (IGST) is levied on all inter-state supplies of goods and services. The GST Council can recommend special provisions with respect to certain states, including those in the North-Eastern region. Compensation Cess under GST is levied on select luxury and demerit goods to compensate states for revenue loss for an indefinite period. The ‘Reverse Charge Mechanism’ under GST requires the recipient of goods or services to pay the tax directly to the government instead of the supplier. How many of the above statements are correct? a) Only one b) Only two (c) Only three (d) All four Correct Solution: C Statement 1 is correct: Integrated GST (IGST) is levied by the Centre on all inter-state supplies of goods and services. The revenue is then apportioned between the Centre and the consuming State. Statement 2 is correct: The GST Council has the power to recommend special provisions or rates for certain states, particularly those in hilly and North-Eastern regions, considering their unique circumstances and developmental needs. Statement 3 is incorrect: Compensation Cess under GST is levied on select luxury and demerit goods. However, the provision to compensate states for revenue loss due to GST implementation was for a specified period from the date of GST rollout. While the cess collection might continue for servicing debt taken to pay compensation, the compensation period itself was not indefinite. Statement 4 is correct: The ‘Reverse Charge Mechanism’ (RCM) under GST is a system where the liability to pay tax falls on the recipient of the goods or services, instead of the supplier. This is applicable for specified categories of supplies or suppliers. Incorrect Solution: C Statement 1 is correct: Integrated GST (IGST) is levied by the Centre on all inter-state supplies of goods and services. The revenue is then apportioned between the Centre and the consuming State. Statement 2 is correct: The GST Council has the power to recommend special provisions or rates for certain states, particularly those in hilly and North-Eastern regions, considering their unique circumstances and developmental needs. Statement 3 is incorrect: Compensation Cess under GST is levied on select luxury and demerit goods. However, the provision to compensate states for revenue loss due to GST implementation was for a specified period from the date of GST rollout. While the cess collection might continue for servicing debt taken to pay compensation, the compensation period itself was not indefinite. Statement 4 is correct: The ‘Reverse Charge Mechanism’ (RCM) under GST is a system where the liability to pay tax falls on the recipient of the goods or services, instead of the supplier. This is applicable for specified categories of supplies or suppliers.

#### 4. Question

Consider the following statements regarding India’s Goods and Services Tax (GST) regime:

• Integrated GST (IGST) is levied on all inter-state supplies of goods and services.

• The GST Council can recommend special provisions with respect to certain states, including those in the North-Eastern region.

• Compensation Cess under GST is levied on select luxury and demerit goods to compensate states for revenue loss for an indefinite period.

• The ‘Reverse Charge Mechanism’ under GST requires the recipient of goods or services to pay the tax directly to the government instead of the supplier.

How many of the above statements are correct?

• a) Only one

• b) Only two

• (c) Only three

• (d) All four

Solution: C

• Statement 1 is correct: Integrated GST (IGST) is levied by the Centre on all inter-state supplies of goods and services. The revenue is then apportioned between the Centre and the consuming State.

• Statement 2 is correct: The GST Council has the power to recommend special provisions or rates for certain states, particularly those in hilly and North-Eastern regions, considering their unique circumstances and developmental needs.

• Statement 3 is incorrect: Compensation Cess under GST is levied on select luxury and demerit goods. However, the provision to compensate states for revenue loss due to GST implementation was for a specified period from the date of GST rollout. While the cess collection might continue for servicing debt taken to pay compensation, the compensation period itself was not indefinite.

Statement 4 is correct: The ‘Reverse Charge Mechanism’ (RCM) under GST is a system where the liability to pay tax falls on the recipient of the goods or services, instead of the supplier. This is applicable for specified categories of supplies or suppliers.

Solution: C

• Question 5 of 5 5. Question Which of the following are generally considered objectives of monetary policy conducted by a central bank? Maintaining price stability. Ensuring adequate flow of credit to productive sectors. Managing exchange rate stability. Reducing income inequality. Select the correct answer code: (a) 1 and 2 only (b) 1, 3, and 4 only (c) 1, 2 and 3 only (d) 1, 2, 3 and 4 Correct Solution: C Maintaining price stability (controlling inflation) is a primary and often statutory objective of most central banks, including the RBI. (Correct) Ensuring adequate flow of credit to productive sectors is also an important objective, often pursued through various policy tools and priority sector lending guidelines to support economic growth. (Correct) Managing exchange rate stability and preventing excessive volatility in the foreign exchange market is another key objective, especially for emerging economies, to maintain external sector stability. (Correct) Reducing income inequality is primarily an objective of fiscal policy (through taxation and government expenditure programs) and broader socio-economic policies, rather than a direct or primary objective of monetary policy. (Incorrect) Incorrect Solution: C Maintaining price stability (controlling inflation) is a primary and often statutory objective of most central banks, including the RBI. (Correct) Ensuring adequate flow of credit to productive sectors is also an important objective, often pursued through various policy tools and priority sector lending guidelines to support economic growth. (Correct) Managing exchange rate stability and preventing excessive volatility in the foreign exchange market is another key objective, especially for emerging economies, to maintain external sector stability. (Correct) Reducing income inequality is primarily an objective of fiscal policy (through taxation and government expenditure programs) and broader socio-economic policies, rather than a direct or primary objective of monetary policy. (Incorrect)

#### 5. Question

Which of the following are generally considered objectives of monetary policy conducted by a central bank?

• Maintaining price stability.

• Ensuring adequate flow of credit to productive sectors.

• Managing exchange rate stability.

• Reducing income inequality.

Select the correct answer code:

• (a) 1 and 2 only

• (b) 1, 3, and 4 only

• (c) 1, 2 and 3 only

• (d) 1, 2, 3 and 4

Solution: C

• Maintaining price stability (controlling inflation) is a primary and often statutory objective of most central banks, including the RBI. (Correct)

• Ensuring adequate flow of credit to productive sectors is also an important objective, often pursued through various policy tools and priority sector lending guidelines to support economic growth. (Correct)

• Managing exchange rate stability and preventing excessive volatility in the foreign exchange market is another key objective, especially for emerging economies, to maintain external sector stability. (Correct)

Reducing income inequality is primarily an objective of fiscal policy (through taxation and government expenditure programs) and broader socio-economic policies, rather than a direct or primary objective of monetary policy. (Incorrect)

Solution: C

• Maintaining price stability (controlling inflation) is a primary and often statutory objective of most central banks, including the RBI. (Correct)

Join our Official Telegram Channel HERE for Motivation and Fast Updates

Join our Twitter Channel HERE

Follow our Instagram Channel HERE

Stay Consistent

Consistency is key in UPSC preparation. By making the UPSC Static Quiz a part of your daily routine, you will steadily improve your knowledge base and exam readiness. Join us every day to tackle new questions and make your journey towards UPSC success more structured and effective.