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User Name :
chandan paswan
Total Marks :
200
Mark Scored :
-2
IA
1 How can two nations with the same money supply have different Gross Domestic
Product (GDP)?
1. Circulation of the same money supply happens differently in both economies.
2. Labour productivity can be different in the two economies.
Which of the above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. None
User Answer : C
Correct Answer : C
Answer Justification :
TS
Statement 2: Even if circulation of money becomes the same, how much the same
unity of labour produces in the two economies can be different. A low skilled
economy will not generate higher outputs, whereas a high skill base will generate
more output with the same money wages. So, 2 is also correct.
IN
SI
2 As per Classical Economic thought, if the buyers and sellers in each market take their
decisions following only their own self-interest, then which of these follow?
A. Market will inevitably fail
B. Markets will need to be corrected by government intervention.
C. There will be need of an effective regulator.
D. Markets will function well.
User Answer : C
Correct Answer : D
Answer Justification :
Justification: Classical thought is also known as the non-interventionist school.
As per them, markets function best without government interference. So, (b) is
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User Name :
chandan paswan
Total Marks
200
Mark Scored
-2
wrong.
Similarly, (c) will also be wrong.
Classical economists observe that markets generally regulate themselves, when free
of coercion. Adam Smith referred to this as a metaphorical "invisible hand," which
moves markets toward their natural equilibrium. So, (d) is correct and (a) incorrect.
IA
TS
3 Which of the following statements is correct about how Francois Bernier describes India?
A. A bleak situation in comparison to developments in Europe.
B. A land of high spiritual and scientific intelligence
C. A land of astounding beauty and natural resources
D. A highly affluent society integrated with the world
User Answer : A
Correct Answer : A
Answer Justification :
IN
SI
4 It is theorized that over the long run exchange rates between any two national currencies
adjust to reflect differences in the price levels in the two countries. The theory would
become invalid when
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IA
Justification: When trade happens without barriers, market forces start operating
across national borders.
TS
People would import only the cheapest commodities (assuming quality is same
everywhere), and only that nation will export which produces it cheapest. Exports
from all other nations will come to zero.
Gradually all nations will export the commodities of their comparative advantage
(e.g. Gems and Jewelleries from India) and import those of their least comparative
advantage (e.g. handicrafts imported by USA).
Slowly the exchange rates start converging, and reflect only the difference in prices
between nations, as hypothesized by the Purchasing Power Parity (PPP) theory.
IN
SI
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User Name :
chandan paswan
Total Marks
200
Mark Scored
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IA
Option (b): While level of inflation in an economy may show its international
competitiveness, this is not why GDP deflator is used. Moreover, the ration of real
and nominal GDP does not make much sense for international players as much the
actual price level does. Inflation may be high in an economy, yet it may be highly
competitive internationally due to low base prices of goods. So, (b) will be wrong.
TS
IN
SI
Justification: Statement 1: The resource rich Africa and Latin America have some
of the poorest countries in the world, whereas many prosperous countries have
scarcely any natural wealth.
The economic wealth, or well-being, of a country thus does not necessarily depend
on the mere possession of resources; it is how these resources are used in generating
a flow of production and how, as a consequence, income and wealth are generated
from that process.
So, 1 will be incorrect.
Statement 2: It is called as demographic dividend, but its fruition depends on how
skilled, healthy and well-managed is the labour force. India is a well known case.
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IA
7 Lingayats do not practise funerary rites prescribed in the Dharmashastras because they
believed
A. Funerary rites lead to environmental pollution.
B. After death a devotee will not return to this world.
C. Funerary rites are not needed as the soul will take another birth soon.
D. It was a Brahmanical practice and they opposed its domination.
User Answer : D
Correct Answer : B
Answer Justification :
TS
Justification: Lingayats believe that on death the devotee will be united with Shiva
and will not return to this world. Therefore they do not practise funerary rites such
as cremation, prescribed in the Dharmashastras. Instead, they ceremonially bury
their dead.
The Lingayats challenged the idea of caste and the "pollution" attributed to certain
groups by Brahmanas. They also questioned the theory of rebirth
IN
SI
Q Source: Page 147: Chapter 6: Themes in Indian History - II: 12th NCERT
8 An economy generally sacrifices consumption goods in order to produce more capital
goods. Why is it done?
1. To generate long-term growth
2. To avoid inflationary situations
Which of the above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. None
User Answer :
Correct Answer : C
Answer Justification :
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Justification: Statement 1 & 2: Capital goods are tools, implements and machines
etc that make production of consumption goods like furniture possible.
Since resources are limited in an economy, they can either be channelized for
immediate consumption or immediate investment to feed long-term consumption.
IA
If they are channelized for immediate consumption (i.e. say we are producing more
aerated drinks but not drink making machines), a time would come when demand
would overshoot supply and economic stagnation would follow.
If however, a balance is maintained by sacrificing some consumption goods to
produce more capital goods, we can have more aerated drinks in the future as there
will be more machines to fulfil demand.
TS
Only this generates long-term growth. This is why the RBI Governor has prescribed
moving from consumption spending to investment spending for the Indian economy.
Q Source: Page 11-12: Chapter 2: 12th Macroeconomics NCERT
IN
SI
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This system of guarantee assures individual account-holders that their banks will be
able to pay their money back in case of a crisis and there is no need to panic thus
avoiding bank runs.
This role of the monetary authority is known as the lender of last resort.
TS
IA
IN
SI
It can happen either by physical depreciation like wear and tear or obsolescence or
by changes in the demand for the services of the capital in question. So, 1 is correct.
Statement 2: Capital stock is anything that adds to the productive capacity of the
economy. Spending on infrastructure actually increase the capital stock of the
nation. So, 2 is wrong.
Q Source: Page 11: Chapter 2: 12th Macroeconomics NCERT
11 "The lotus which blooms without flower" or the "Fire raging in the ocean" were terms
used by the Kabir to describe
A. Socio-economic status of India
B. Efforts towards religious reforms in India
C. Nature of the Ultimate Reality
D. Poetical nature of Bhakti literature produced in India
User Answer : D
Correct Answer : C
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User Name :
chandan paswan
Total Marks
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Mark Scored
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Answer Justification :
Learning: Some of Kabir's poems are known as ulatbansi (upside-down sayings),
are written in a form in which everyday meanings are inverted.
These hint at the difficulties of capturing the nature of the Ultimate Reality in
words: expressions such as "the lotus which blooms without flower" or the "fire
raging in the ocean" convey a sense of Kabir's mystical experiences.
IA
He also used terms drawn from Vedantic traditions, alakh (the unseen), nirakar
(formless), Brahman, Atman, etc. Other terms with mystical connotations such as
shabda (sound) or shunya (emptiness) were drawn from yogic traditions.
TS
Q Source: Page 161: Chapter 6: Themes in Indian History- II: 12th NCERT
12 The term 'Base Effect' is often used while discussing inflationary trends in the Indian
economy. It refers to
A. Segment wise inflation trends
B. Cost push inflation
C. Demand pull inflation
D. None of the above
User Answer :
Correct Answer : D
Answer Justification :
IN
SI
Learning: The base effect refers to the impact of the rise in price level (i.e. last
year's inflation) in the previous year over the corresponding rise in price levels in the
current year (i.e., current inflation): if the price index had risen at a high rate in the
corresponding period of the previous year leading to a high inflation rate, some of
the potential rise is already factored in, therefore a similar absolute increase in the
Price index in the current year will lead to a relatively lower inflation rates.
On the other hand, if the inflation rate was too low in the corresponding period of
the previous year, even a relatively smaller rise in the Price Index will arithmetically
give a high rate of current inflation.
Q Source: Often appears in Business news and Economic Surveys
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User Name :
chandan paswan
Total Marks :
200
Mark Scored :
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IA
Justification: The basic macroeconomic identity that one should know is:
C+S+T = C+I+G.... (i)
TS
Any increase in investments can either be financed by high savings or high taxes.
So, 1 is correct.
Also, in equation (i), total income = C+S+T. When S increases C will decrease also
controlling inflationary trends in the economy.
IN
SI
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government, and grants given to state governments and other parties (even though
some of the grants may be meant for creation of assets).
Q Source: Page 64: Chapter 5: 12th Macroeconomics NCERT
TS
IA
15 The amara-nayaka system was a major political innovation of the Vijayanagara Empire.
The amara-nayakas were
A. Military commanders who were given territories to govern
B. Chiefs of major municipalities
C. Peasants who were made independent cultivators in order to encourage
greater loyalty to the crown
D. Independent spy advisors to the King
User Answer :
Correct Answer : A
Answer Justification :
Learning: Amara-nayakas collected taxes and other dues from peasants,
craftspersons and traders in the area.
They retained part of the revenue for personal use and for maintaining a stipulated
contingent of horses and elephants.
These contingents provided the Vijayanagara kings with an effective fighting force
with which they brought the entire southern peninsula under their control.
IN
SI
The amara-nayakas sent tribute to the king annually and personally appeared in the
royal court with gifts to express their loyalty.
Q Source: Page 175: Chapter 7: Themes in Indian History- II: 12th NCERT
16 The term 'factor cost' is often used in the estimation of national income. It is
A. Final market price of goods and services
B. Total Subsidies and taxes levied on factors
C. Total concessions given to units of production
D. None of the above
User Answer :
Correct Answer : D
Answer Justification :
Learning: Factor Cost or Factor Income are the incomes received by the owners of
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the production (the households) for rendering their factor services to the producers.
It is a measure of national income or output based on the cost of factors of
production, instead of market prices.
This allows the effect of any subsidy or indirect tax to be removed from the final
measure.
IA
TS
17 If Gross Domestic Product (GDP) at market prices is growing at 5% every year, what
does it necessarily imply?
1. Manufacturing activity must be growing nearly 5% annually.
2. Total volume of goods and services produced must be growing at 5% annually.
Which of the above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. None
User Answer : B
Correct Answer : D
Answer Justification :
IN
SI
Justification: GDP at market prices calculates total value of goods and services
produced within a year at market prices, and not at their actual cost of production.
So, even if only prices increased by 5% for all final goods and services produced,
GDP will increase by 5% without any 'real' increase in production
So, both 1 and 2 are incorrect.
Q Source: Page 28: Chapter 2: 12th Macroeconomics NCERT
18 If both the Consumer Price Index (CPI) and Wholesale Price Index (WPI) increased by
more than 10% within an year then
1. Prices of all goods and services musts have increased by more than 10% within a
year.
2. Labour wages must have increased by more than 10% within a year.
Which of the above is/are correct?
A. 1 only
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B. 2 only
C. Both 1 and 2
D. None
User Answer : A
Correct Answer : D
Answer Justification :
IA
Justification:CPI and WPI do not capture increase in prices of all goods and
services in the economy.
So, 1 will be wrong as prices of only sample (representative goods) may have
increase leaving the prices of other goods and services constant.
GDP deflator takes into account all such goods and services.
TS
CPI and WPI do not capture growth in labour wages. Even the CPI for workers
captures inflation in items consumed by the working class and not wages per se. So,
2 would be wrong.
IN
SI
19 The Mansabdari system was introduced by Akbar. What did 'Mansab' of an officer
imply in the system?
1. Salary of the officer
2. Land granted to the Officer
3. Number of soldiers maintained by the officer
Select the correct answer using the codes below.
A. 1 and 2 only
B. 1 and 3 only
C. 3 only
D. 1, 2 and 3
User Answer : C
Correct Answer : B
Answer Justification :
Learning: The word mansab is of Arabic origin meaning rank or position. The
system, hence, determined the rank of a government official.
Every civil and military officer was given a 'mansab' and different numbers which
could be divided by ten were used for ranking officers.It was also meant for fixing
the salaries and allowances of officers.
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chandan paswan
Total Marks :
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It was a system whereby nobles were granted the rights to hold a jagir, which meant
revenue assignments (not land itself) for services rendered by them but the authority
bestowed upon them was not unbridled but with the direct control of these nobles in
the hands of the king. So, 2 would be wrong.
Q Source: Page 214: Chapter 8: Themes in Indian History- II: 12th NCERT
TS
IA
The total cost to society as a whole for producing one further unit, or taking one
further action, in an economy is called as social cost.
IN
SI
This total cost of producing one extra unit of something is not simply the direct cost
borne by the producer, but also must include the costs to the external environment
and other stakeholders.
The idea of SMC is taken into account in evaluating investment projects.
Q Source: Improvisation on concept of marginal cost asked in Previous UPSC
papers: Chapter 2 (Point on Externalities): 12th Macroeconomics NCERT
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User Name :
chandan paswan
Total Marks
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Mark Scored
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D. None
User Answer :
Correct Answer : C
Answer Justification :
Learning: The difference between a nation's gross national product (GNP) and
gross domestic product (GDP) is called NFIA.
IA
Net foreign factor income or NFIA is the difference between the aggregate amount
that a country's citizens and companies earn abroad, and the aggregate amount that
foreign citizens and overseas companies earn in that country.
The NFIA level is generally not substantial in most nations, since factor payments
earned by their citizens and those paid to foreigners more or less offset each other.
TS
However, the NFAI's impact may be significant in smaller nations with substantial
foreign investment in relation to their economy and few assets overseas, since their
GDP will be quite high compared to GNP.
IN
SI
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IA
Third, the economy tends to be subject to substantial fluctuations and may suffer
from prolonged periods of unemployment or inflation. The overall level of
employment and prices in the economy depends upon the level of aggregate demand
which is a function of the spending decisions of millions of private economic agents
apart from the government.
Q Source: Page 62: Chapter 5: 12th Macroeconomics NCERT
TS
23 During a situation of low demand, what role monetary policy can play?
1. It can boost aggregate demand by printing more currency.
2. It can Increase liquidity in the market by selling bonds to the public.
Which of the above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. None
User Answer :
Correct Answer : D
Answer Justification :
IN
SI
Justification: Printing currency does not come under monetary policy. It is a part of
fiscal policy when the government desires to borrow freshly printed money from
RBI in exchange for government securities. So, 1 is incorrect.
It will however stimulate demand.
Selling bonds to the public will actually reduce the liquidity in the market as public
now invest their savings in bonds and bills. So, 2 would not stimulate aggregate
demand and actually reduce it.
Q Source: Chapter 4: 12th Macroeconomics NCERT
24 Which of the following were the consequences of the Green Revolution in India?
1. Revival of agricultural growth
2. Self-sufficiency in food grain production
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TEST - 11
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TS
Q Source: Page 62: Chapter 4: 12th NCERT: Social Change and Development in
India
IN
SI
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User Name :
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Total Marks :
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Option (b): We cannot say. Moreover, the government is not spending excess money
and total supply in the economy is increasing.
Option (c): If tax yields were low, then a situation of budget surplus maynot be
achieved. Even if achieved, we cannot surely conclude this is the case.
TS
IA
Learning: The following may not apply to the present situation when Planning
Commission has been abolished.
For stepping up the rate of economic development five-year plans were formulated.
The expenditure incurred on the items relating to five year plans is termed as plan
expenditure. Such expenditure is incurred by the Central Government.
IN
SI
A provision is made for such expenditure in the budget of the Central Government.
Assistance given by the Central Government to the State Governments and Union
Territories for plan purposes also forms part of the plan expenditure.
Q Source: Chapter 5: 12th NCERT Macroeconomics
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TEST - 11
User Name :
chandan paswan
Total Marks
200
Mark Scored
-2
User Answer :
Correct Answer : D
Answer Justification :
Justification: The concept of human capital recognizes that not all labor is equal
and that the quality of employees can be improved by investing in them. The
education, experience and abilities of an employee have an economic value for
employers and for the economy as a whole.
IA
TS
IN
SI
Justification: The value of the currency notes and coins is derived from the
guarantee provided by the issuing authority of these items.
Every currency note bears on its face a promise from the Governor of RBI that if
someone produces the note to RBI, or any other commercial bank, RBI will be
responsible for giving the person purchasing power equal to the value printed on the
note.
The same is also true of coins. Currency notes and coins are therefore called fiat
money. They do not have intrinsic value like a gold or silver coin. They are also
called legal tenders as they cannot be refused by any citizen of the country for
settlement of any kind of transaction.
Q Source: Page 40: Chapter 3: 12th Macroeconomics NCERT
29 What is speculative demand of money?
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TS
When they invest in bonds, different people have different expectations regarding
the future movements in the market rate of interest based on their private
information regarding the economy.
IN
SI
When the interest rate is very high everyone expects it to fall in future and hence
anticipates capital gains from bond-holding. Hence people convert their money into
bonds. Thus, speculative demand for money is low.
The reverse condition is true also.
Q Source: Page 40: Chapter 3: 12th Macroeconomics NCERT
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User Name :
chandan paswan
Total Marks
200
Mark Scored
-2
Correct Answer : D
Answer Justification :
Justification: It lives in dense riverine forests, high valleys, and mountains of the
Kashmir valley and northern Chamba in Himachal Pradesh. So, 2 is wrong.
IA
Hangul, the only Asiatic survivor or sub-species of the European red deer, was once
widely distributed in the mountains of Kashmir.
But, they are now scattered within 141 km of the Dachigam National Park located
on foothills of Zabarwan range on the outskirts of Srinagar.
TS
IN
SI
Justification: A liquidity trap occurs when low / zero interest rates fail to stimulate
consumer spending and monetary policy becomes ineffective.
In such as situation, an increase in the money supply could fail to increase spending
because interest rates can't fall further.
A liquidity trap means consumers' preference for liquid assets (cash) is greater than
the rate at which the quantity of money is growing.
So any attempt by policymakers to get individuals to hold non-liquid assets in the
form of consumption by increasing the money supply won't work.
Q Source: Page 39: Chapter 3: 12th Macroeconomics NCERT
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TS
This means the real or effective interest rate (or return on loan) that the bank
receives is only 4% (10-6).
If inflation increases, real returns to banks decrease and thus 2 would be correct.
IN
SI
If interest rates spike suddenly, bonds become unattractive for bond holders. This is
because now a lower priced bond can offer the same fixed return that now their high
priced bond (purchased at promise of low interest rates) does. So, 3 is also correct.
Q Source: Page 39: Chapter 3: 12th Macroeconomics NCERT
33 Chronologically, which of these event(s) happened after the invasion of Nadir Shah?
1. Ahmad Shah Abdali defeats the Marathas in the third battle of Panipat
2. The diwani of Bengal transferred to the East India Company
3. Humayun defeated by Sher Shah
Select the correct answer using the codes below.
A. 1 and 2 only
B. 2 only
C. 1 and 3 only
D. 1, 2 and 3
User Answer :
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User Name :
chandan paswan
Total Marks
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Mark Scored
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Correct Answer : A
Answer Justification :
Learning: The Mughal empire had been weakened by ruinous wars of succession in
the three decades following the death of Aurangzeb, the Hindu Marathas of the
Maratha Empire had captured vast swathes of territory in Central and Northern
India, whilst many of the Mughal nobles had asserted their independence and
founded small states.
IA
Its ruler, Muhammad Shah, proved unable to stop the disintegration of the empire.
TS
The imperial court administration was corrupt and weak whereas the country was
extremely rich whilst Delhi's prosperity and prestige was still at a high. Nadir Shah,
attracted by the country's wealth, then sought plunder like so many other foreign
invaders before him.
Q Source: Page 221: Chapter 8: Themes in Indian History- II: 12th NCERT
IN
SI
Justification: It is not (a) since all currency that can be classified as either narrow or
broad money is issued by the RBI.
It cannot be (d) either as whether narrow or broad money all are convertible upto
legal limits.
RBI publishes figures for four alternative measures of money supply, viz. M1, M2,
M3 and M4.
M1 is most liquid and easiest for transactions whereas M4 is least liquid of all. M3
is the most commonly used measure of money supply. It is also known as aggregate
monetary resources
Q Source: Page 40: Chapter 3: 12th Macroeconomics NCERT
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chandan paswan
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TS
IA
35 Banks hold a part of the money people keep in their bank deposits as reserve money.
Why?
1. It is profitable for the banks to do so.
2. It is mandated by the RBI.
3. It helps avoid bank failures.
4. It is contributed to the forex reserves.
Select the correct answer using the codes below.
A. 1 and 2 only
B. 2 and 3 only
C. 1 only
D. 2, 3 and 4 only
User Answer :
Correct Answer : B
Answer Justification :
Justification: Keeping reserves is costly for banks, as, otherwise, they could lend
this balance to interest earning investment projects. So, 1 is wrong.
RBI requires commercial banks to keep reserves in order to ensure that banks have a
safe cushion of assets to draw on when account holders want to be paid. So, 2 and 3
are correct.
4 is wrong as Forex reserves are made of foreign exchange, SDR and Gold.
IN
SI
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chandan paswan
Total Marks
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Mark Scored
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bequeath or mortgage these lands at will. So, both 1 and 2 are wrong.
Zamindars also derived their power from the fact that they could often collect
revenue on behalf of the state, a service for which they were compensated
financially.
TS
IA
It can be in cash, gold or securities etc. Therefore, as SLR increases, banks have less
to lend.
IN
SI
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User Name :
chandan paswan
Total Marks :
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If a member of the public produces a currency note to RBI the latter must pay her
value equal to the figure printed on the note.
Similarly, the deposits are also refundable by RBI on demand from deposit-holders.
These items are claims which the general public, government or banks have on RBI
and hence are considered to be the liability of RBI.
TS
IA
Learning:In Sanskrit sources, the usage of the words "Yona", "Yauna", "Yonaka",
"Yavana" or "Javana" etc. appears repeatedly, and particularly in relation to the
Greek kingdoms which neighbored or sometimes occupied the Punjab region over a
period of several centuries from the 4th century BCE to the first century CE.
IN
SI
Examples are the Seleucid Empire, the Greco-Bactrian Kingdom and the Indo-Greek
Kingdom.
The Yavanas are mentioned in detail in Sangam literature epics such as
Pattinappalai, describing their brisk trade with the Early Cholas in the Sangam
period.
Q Source:Page 174: Chapter 7: Themes in Indian History - II: 12th NCERT
40 If RBI undertakes Open Market Operations (OMOs), which of the following is most
likely to occur?
A. The GDP of India will suddenly increase.
B. It will alter the total money supply in the economy in the short-term.
C. Foreign Institutional Investors (FIIs) will suddenly withdraw from the Indian
markets.
D. It will immediately cut operating costs for banks.
User Answer :
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User Name :
chandan paswan
Total Marks
200
Mark Scored
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Correct Answer : B
Answer Justification :
Justification:RBI purchases (or sells) government securities to the general public in
a bid to increase (or decrease) the stock of high powered money in the economy.
FIIs would not withdraw as OMOs concern with general public. Moreover, OMOs
only affect money supply, and not the confidence of FIIs. So, (c) will be wrong.
IA
GDP of India may increase or decrease, but that is a medium term phenomenon
about which nothing can be accurately said. (a) is not the most appropriate here.
Operating and lending costs of banks can be cut if their reserve size is reduced.
OMOs do not aim at this, and hence (d) is wrong.
TS
IN
SI
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Mark Scored :
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IA
TS
Learning:It states that individuals try to save more during an economic recession,
which essentially leads to a fall in aggregate demand and hence in economic growth.
Such a situation is harmful for everybody as investments give lower returns than
normal.
This theory was heavily criticized by non-Keynesian economists on the ground that
an increase in savings allows banks to lend more. This will make interest rates go
down and lead to an increase in lending and, therefore, spending.
IN
SI
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User Name :
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before you deliver mail or pay for a ticket before they board a train; you cannot
cheaply or easily prevent people from entering a park or from listening to a radio
station. So, 2 is not always correct.
Q Source: Page 63: Chapter 5: 12th Macroeconomics NCERT
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IA
44 Which of the following taxes form part of revenue receipts of the Government of India?
1. Corporation Tax
2. Excise Taxes
3. Income Tax
Select the correct answer using the code below.
A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. 1, 2 and 3
User Answer :
Correct Answer : D
Answer Justification :
IN
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on goods imported into and exported out of India) and service tax.
Q Source:Page 63: Chapter 5: 12th Macroeconomics NCERT
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To some extent this is corroborated by the fact that bhaktas hailed from diverse
social backgrounds ranging from Brahmanas to artisans and cultivators and even
from castes considered "untouchable".
IA
Statement 2 & 3: The compositions of Andal, a woman Alvar, were widely sung.
Another woman, Karaikkal Ammaiyar, a devotee of Shiva, adopted the path of
extreme asceticism in order to attain her goal. So, 3 is wrong.
TS
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47 Which of these bills presented along with the Annual Financial Statement, provides
details of the imposition, abolition, remission, alteration or regulation of taxes proposed in
the Budget?
A. Appropriate Bill
B. Medium Term Framework Bill
C. Finance Bill
D. Budget Amendment Bill
User Answer :
Correct Answer : C
Answer Justification :
Learning:While the Finance Bill generally seeks approval of the Parliament for
raising resources through taxes, cess etc., an Appropriation Bill seeks Parliament's
approval for the withdrawal from the Consolidated Fund of India to meet the
approved expenditures of the Government. So, (a) is wrong.
No such bill as (b) exists.
IN
SI
Finance Bill is a secret bill introduced every year in Lok Sabha (Lower chamber of
the Parliament) immediately after the presentation of the Union Budget, to give
effect to the financial proposals of the Government of India for the immediately
following financial year.
It is through the Finance Act that amendments are made to the various Acts like
Income Tax Act 1961, Customs Act 1962 etc.
Q Source:Page 62 (Footnote): Chapter 5: 12th Macroeconomics NCERT
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B. 1 and 2 only
C. 1, 2 and 3 only
D. 1, 2, 3, 4 and 5
User Answer :
Correct Answer : D
Answer Justification :
IA
Learning:Budget documents classify total revenue expenditure into plan and nonplan expenditure.
Plan revenue expenditure relates to central Plans (the Five-Year Plans) and central
assistance for State and Union Territory Plans.
TS
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Other items include small savings (Post-Office Savings Accounts, National Savings
Certificates, etc), provident funds and net receipts obtained from the sale of shares in
Public Sector Undertakings (PSUs).
TS
IA
IN
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Learning:Statement 1: He had helped establish the nationalistic Dayanand AngloVedic School and became a follower of Dayanand Saraswati (founder of the Arya
Samaj). He was not its co-founder.
Statement 2: In 1921, he had founded Servants of the People Society, a non-profit
welfare organisation, in Lahore, which shifted based to Delhi after partition, and has
branches in many parts of India.
Statement 3: In 1888 and 1889 he was a delegate to the annual sessions of Indian
National Congress (INC) and was
elected as its President in the Calcutta Special Session of 1920.
Q Source:150th birth anniversary of Lala Lajpat Rai.
51 The exercise of Gender Budgeting usually involves which of these activities in India?
1. Special initiatives for empowering women
2. Examination of the utilisation of resources allocated for women
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52 The Central Bank does not intervene via foreign reserve transactions in the system of
A. Flexible Exchange Rates
B. Fixed Exchange Rates
C. Managed Exchange rates
D. All of the above
User Answer :
Correct Answer : A
Answer Justification :
Learning:In a system of flexible exchange rates (also known as floating exchange
rates), the exchange rate is determined by the forces of market demand and supply.
In a completely flexible system, the central banks follow a simple set of rules - they
do nothing to directly affect the level of the exchange rate, in other words they do
not intervene in the foreign exchange market (and therefore, there are no official
reserve transactions).
Q Source:Page 80: Chapter 6: 12th Macroeconomics NCERT
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53 The Union Government has issued detailed guidelines to tackle the outbreak of Zika
Virus Disease in the wake of reported cases in Americas. Which of the following would
help best control its outbreak in India?
A. Controlling mosquito population
B. Proper Polio immunization
C. Cutting down air pollution in cities
D. Sterilizing soil by special chemicals
User Answer :
Correct Answer : A
Answer Justification :
TS
Learning:Zika virus is spread to people through mosquito bites. The most common
symptoms of Zika virus disease are fever, rash, joint pain, and conjunctivitis (red
eyes). The illness is usually mild with symptoms lasting from several days to a
week. Severe disease requiring hospitalization is uncommon.
The World Health Organisation (WHO) has declared an international public health
emergency over the explosive spread of the mosquito-borne Zika virus.
Q Source:http://pib.nic.in/newsite/PrintRelease.aspx?relid=135922
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Statement 2: Only when persistently high fiscal deficit is run by the government, it
crowds out private sector investment, leads to inflation and slows down the
economy.
But a carefully crafted fiscal deficit will actually facilitate production by private
sector by building human and physical capital. So, 2 is also wrong.
TS
IA
Learning:An open economy is one that trades with other nations in goods and
services and, most often, also in financial assets.
First, when a nation buys foreign goods, this spending escapes as a leakage from the
circular flow of income decreasing aggregate demand.
IN
SI
Second, our exports to foreigners enter as an injection into the circular flow,
increasing aggregate demand for domestically produced goods.
Total foreign trade (exports + imports) as a proportion of GDP is a common
measure of the degree of openness of an economy.
Even a closed economy can have high number of FIs or have high GDP growth rate
or high circulation of money supply. So, other options are wrong.
Q Source:Page 76: Chapter 6: 12th Macroeconomics NCERT
56 Union Law Ministry has constituted an expert committee to review the Specific Relief
Act, 1963. The review will help
A. Ensure ease of doing business
B. Reduce atrocities against Scheduled Castes
C. Cut down total number of laws in the country
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Learning:The committee has been tasked to examine the Act in the context of
present scenario involving many issues and dealing with its various provisions.
IA
The present scenario issues mainly include public private partnerships, contract
based infrastructure development and other public projects involving enforceability
of the contracts and huge investments thereof.
TS
The review of the Act will also ensure ease of doing business as it has been not
amended since its inception to meet need of changing time.
Q Source: http://pib.nic.in/newsite/PrintRelease.aspx?relid=135898
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Learning:The current account records exports and imports in goods and services
and transfer payments.
Trade in services denoted as invisible trade (because they are not seen to cross
national borders) includes both factor income (payment for inputs-investment
income, that is, the interest, profits and dividends on our assets abroad minus the
income foreigners earn on assets they own in India) and non-factor
income (shipping, banking, insurance, tourism, software services, etc.).
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Transfer payments are receipts which the residents of a country receive 'for free',
without having to make any present or future payments in return.
They consist of remittances, gifts and grants. They could be official or private.
TS
IA
IN
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Statement 2: Higher FDI movements also indicate demand for rupee as investors
must convert their currency into rupees for investments.
Statement 3: Due to political instability FIIs can fly away from the country, FDI
becomes less attractive. So, exchange rate fluctuates due to in and out movement of
foreign capital.
Q Source: Page 79: Chapter 6: 12th Macroeconomics NCERT
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User Answer :
Correct Answer : C
Answer Justification :
Learning:The term Agrarian Structure denotes all of the existing and lasting
production and living conditions found in a rural region. It comprises social,
technological, and economic elements and determines the achievable productivity,
income and its distribution, and the rural population's social situation.
IA
The system of land tenure governs the traditional or legal rights individuals or
groups have to land and the resulting social relationships among the rural
population. Its components are the system of land ownership and system of labour
organization.
TS
The land management system covers the factors on which the cultivation of land is
possible. The main factors on which the cultivation of a land depends are land, labor
and capital.
Q Source: Page 58: Chapter 4: 12th NCERT: Social Change and Development in
India
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Justification:Gross fiscal deficit = Total expenditure - (Revenue receipts + Nondebt creating capital receipts)
Non-debt creating capital receipts are those receipts which are not borrowings and,
therefore, do not give rise to debt. Examples are recovery of loans and the proceeds
from the sale of PSUs.
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Factor payments include payment towards land, labour, raw material etc. Since these
are regular payments towards factors which are already productive, they don't add to
their productive capacity. For e.g. a training programme may have increased labour
productivity. Mere wage payment may not lead to the same. So, (a) is not most
appropriate here.
By the same logic, (c) is incorrect.
IN
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Transfer payments do not directly absorb resources or create output. They are
considered as a redistribution of resources in the economic system, e.g. pensions.
So, (d) is also not correct.
Learning:Investment expenditure refers to the expenditure incurred either by an
individual or a firm or the government for the creation of new capital assets like
machinery, building etc.
Net investment expenditure is calculated by deducting the depreciation charges from
the value of existing capital assets.
Q Source:Page 7: Chapter 1: 12th Macroeconomics NCERT
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TS
The term became widely used in the 1980s until the 1990s because the United States
experienced the "twin" deficits during this timeframe. However, there is no reason
why current account deficits and government budget deficits occurs at the same
time.
This is an insightful article on the issue
http://www.thehindubusinessline.com/opinion/columns/harish-damodaran/the-twindeficits-myth/article3961796.ece
India was running high twin deficits in the post-2008 phase.
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agreement.
Major General Jai Shanker Menon of India has been appointed as the Head of
Mission and Force Commander of the United Nations Disengagement Observer
Force (UNDOF).
IA
Q
Source:http://www.thehindu.com/news/international/ban-appoints-major-general-m
enon-as-undof-head/article8188708.ece
TS
66 If we subtract 'X' from the fiscal deficit we will obtain 'Primary deficit'. Here 'X is
A. Interest payments
B. Major subsidies
C. Defence expenditure
D. Recovery of loans
User Answer :
Correct Answer : A
Answer Justification :
IN
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67 Which of these are recent reforms in the International Monetary Fund (IMF)?
1. Voting quotas of some emerging economies has been increased.
2. IMF's Executive Board will now consist entirely of elected Executive Directors.
Which of the above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. None
User Answer :
Correct Answer : C
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Learning:The reforms were agreed upon by the 188 members of the IMF in 2010 in
the aftermath of the global financial meltdown. However, there implementations
were delayed due to the time taken by the US Congress to approve the changes.
Q
Source:http://www.thehindu.com/business/india-gets-more-voting-rights-in-imf-ref
orms/article8163827.ece
IN
SI
68 Which of the following cities have been shortlisted under the Smart Cities Mission?
1. Bhubneshwar
2. Jabalpur
3. Udaipur
4. Guwahati
Select the correct answer using the codes below.
A. 1 and 2 only
B. 2 and 4 only
C. 1 only
D. 1, 2, 3 and 4
User Answer :
Correct Answer : D
Answer Justification :
Learning:The Union Ministry of Urban Development has shortlisted 20 cities from
11 States and Delhi Union Territory in the list of first batch of Smart Cities Mission.
Among the shortlisted 20 Smart cities, 3 are from Madhya Pradesh, 2 each are from
Maharashtra, Rajasthan Tamil Nadu, Karnataka, Gujarat and Andhra Pradesh and 1
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70 Functioning of which of the following authorities have a bearing on the Indian financial
markets?
1. Reserve Bank of India (RBI)
2. Future Commodities Regulator (FCR)
3. Securities and Exchange Board of India (SEBI)
Select the correct answer using the code below.
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A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. 1, 2 and 3
User Answer :
Correct Answer : C
Answer Justification :
IA
TS
We will covering more questions on SEBI and other financial bodies when we touch
Ramesh Singh's book on Indian economy.
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D. 1, 2 and 3
User Answer :
Correct Answer : A
Answer Justification :
IA
TS
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74 Suppose the economy has slowed down causing massive unemployment and high
inflation. Keynesians may solve the problem by?
A. Reducing the regulation of financial markets
B. Liberalizing private economic system
C. A combination of fiscal stimulus and appropriate monetary policies
D. De-nationalizing public sector units to increase efficiency of economic
system
User Answer :
Correct Answer : C
Answer Justification :
Justification:Options (a) and (b) do not give any clear way as to how the crisis
would be managed. Also, both (a) and (b) may lead to further deterioration of the
situation as per Keynesians.
Option (d) may not solve the crisis as greater privatization does not solve the
problems of high unemployment. It is also not clear how this will tackle inflation.
So, (d) is incorrect.
Learning:Keynesian economists often argue that private sector decisions sometimes
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Learning:Entry or outgo of foreign exchange in India has the potential to alter total
money supply. This is because the inflow must be converted into Indian currency,
and the outflow must be converted from Indian currency back to foreign exchange.
IN
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User Answer :
Correct Answer : C
Answer Justification :
Learning:It appears from Ibn Battuta's account that there was considerable
differentiation among slaves.
IA
Some female slaves in the service of the Sultan were experts in music and dance,
and Ibn Battuta enjoyed their performance at the wedding of the Sultan's sister.
Female slaves were also employed by the Sultan to keep a watch on his nobles.
Q Source:Page 135: Chapter 5: Themes in Indian History- II: 12th NCERT
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TS
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TS
Justification:The highway toll tax will be collected by the government i.e. by the
National Highways Authority of India (NHAI) unlike in the build, operate and
transfer (BOT) toll model in which the private sector collects it. Thus, private party
does not have to bear traffic and inflation risks as the project cost are also inflation
indexed. So, 2 is wrong.
There is distribution of risk between the government and private players in this
model, hence, it will speed up the construction of highways in the country. So, 1 is
wrong.
The private developer will be able to recover his investment from the government by
receiving annuity payments over a period of 15 years. For toll collection, there is a
separate provision for operation and management payments by the government to
the concessionaire.
IN
SI
Q Source:http://pib.nic.in/newsite/PrintRelease.aspx?relid=135821
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Sufi silsilas began to crystallise in different parts of the Islamic world around the
twelfth century. The word silsila literally means a chain, signifying a continuous
link between master and disciple, stretching as an unbroken spiritual genealogy to
the Prophet.
TS
IA
Suppose a nation has the same stock of land, labour and capital, and yet the next
year its GDP increased by more than it increased last year.
Either the individual productivities of factors would have increased, or the total
combined productivity of the economy has increased.
IN
SI
This can happen either by better technology, better infrastructure etc that improve
the total factor productivity of the economy.
So, it is called as the part of the output not explained by the change in inputs.
Q Source:Improvisation- Often appears in Business news and Economic Surveys:
Chapter 2: 12th Macroeconomics NCERT
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A. Sadasiya Raya
B. Krishnadevaraya
C. Venkata I
D. Thimma Bhupala
User Answer :
Correct Answer : B
Answer Justification :
IA
TS
IN
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82 The error of double counting in the estimation of national income is related to which of
the following goods?
A. Consumption goods
B. Intermediate goods
C. Consumer durables
D. Capital goods
User Answer :
Correct Answer : B
Answer Justification :
Justification:Intermediate goods are crucial inputs to any production process and a
significant part of our manpower and capital stock are engaged in production of
these goods.
However, since we are dealing with value of output, we should realise that the value
of the final goods already includes the value of the intermediate goods that have
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83 The difference between Gross Domestic Product (GDP) and Gross National Product
(GNP) is
A. Depreciation
B. Subsidies
C. Indirect and Direct Taxes
D. Net Factor Income from abroad
User Answer :
Correct Answer : D
Answer Justification :
IN
SI
84 Ain-i Akbari written by Abu'l Fazl deals with records of administrative arrangements
made for
1. Ensuring cultivation by the state
2. Collection of revenue by the agencies of the state
3. Regulation of the relationship between the state and rural zamindars
Select the correct answer using the codes below.
A. 1 and 2 only
B. 1 only
C. 2 and 3 only
D. 1, 2 and 3
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User Answer :
Correct Answer : D
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The Ain-i-Akbari is itself divided into five books. The first book deals with the
imperial household, and the second with the servants of the emperor, the military
and civil services. The third book deals with the imperial administration, containing
the regulations for the judicial and executive departments. The fourth book contains
information about Hindu philosophy, science, social customs and literature. The
fifth book contains sayings of Akbar
TS
IN
SI
Learning: Some sources suggest that the headman was chosen through the
consensus of the village elders, and that this choice had to be ratified by the
zamindar.
Headmen held office as long as they enjoyed the confidence of the village elders,
failing which they could be dismissed by them.
The chief function of the headman was to supervise the preparation of village
accounts, assisted by the accountant or patwari of the panchayat.
Q Source:Page 202: Chapter 8: Themes in Indian History- II: 12th NCERT
86 Cash Reserve Ratio (CRR) as a part of monetary policy instruments is used to control
1. Inflation
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2. Fiscal deficit
3. Foreign Direct Investment (FDI)
Select the correct answer using the codes below.
A. 1 and 2 only
B. 2 and 3 only
C. 1 only
D. 1, 2 and 3
User Answer :
Correct Answer : C
Answer Justification :
chandan paswan
TEST - 11
User Name :
TS
If RBI decides to increase CRR, banks will keep more cash with RBI and lend less.
Lower money circulation would reduce economic activity, demand and thus manage
inflation.
IN
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actual collection. The jama was the amount assessed, as opposed to hasil, the
amount collected.
Akbar decreed that while he should strive to make cultivators pay in cash, the option
of payment in kind was also to be kept open. So, 2 is incorrect.
While fixing revenue, the attempt of the state was to maximise its claims.
IA
TS
Appointment of two officers with specific responsibilities and jurisdiction was only
to avoid concentration of authority in one single individual and also to see that one
acts as a check over the other.
IN
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TS
The real exchange rates are nothing but the nominal exchange rates multiplied by
the price indices of the two countries.
This means the market price level of goods and services, given by indices of
inflation. So if the price level in the US is higher than the price level in India, then
the real exchange rate of the rupee versus the dollar will be greater than the nominal
exchange rate.
Suppose the nominal exchange rate is Rs 50 and US prices are greater than Indian
prices, a dollar will buy more in India than what Rs 50 will buy in the US.
IN
SI
90 Which of the following were the main features of the Mansabdari system?
1. The king himself appointed the mansabdars
2. A mansabdar could be asked to give only military assistance.
3. The mansabdari system was hereditary.
Select the correct answer using the codes below.
A. 1 only
B. 1 and 2 only
C. 3 only
D. 1 and 3 only
User Answer :
Correct Answer : A
Answer Justification :
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Justification:The King could enhance the mansab, lower it or remove it and not just
appoint it. So, 1 is correct.
A mansabdar could be asked to perform any civil or military service. So, 2 is
incorrect.
The mansabdari system was not hereditary as appointments were made by the King.
So, 3 is incorrect.
IA
TS
IN
SI
Learning:In India currency notes are issued by the Reserve Bank of India (RBI),
which is the monetary authority in India.
However, coins are issued by the Government of India. The responsibility for
coinage vests with the Government of India on the basis of the Coinage Act, 2011 as
amended from time to time. The Government of India is also responsible for the
designing and minting of coins in various denominations.
Apart from currency notes and coins, the balance in savings, or current account
deposits, held by the public in commercial banks is also considered money.
Q Source:Page 40: Chapter 3: 12th Macroeconomics NCERT
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In fact, the ideal of sulh-i kul was implemented through state policies.
Statement 2: Akbar abolished the tax on pilgrimage in 1563 and jizya in 1564 as the
two were based on religious discrimination.
All Mughal emperors gave grants to support the building and maintenance of places
of worship. Even when temples were destroyed during war, grants were later issued
for their repair.
IN
SI
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IN
SI
94 Why higher GDP does not necessarily imply higher welfare for a nation?
1. It may not be uniformly distributed.
2. It does not include the spending by the unorganized sector.
3. It does not capture extent of environmental degradation.
Select the correct answer using the codes below.
A. 1 and 2 only
B. 2 only
C. 1 and 3 only
D. 1, 2 and 3
User Answer :
Correct Answer : C
Answer Justification :
Justification:Statement 1: Rise in GDP may be concentrated in the hands of very
few individuals or firms. For the rest, the income may in fact have fallen. In such a
case the welfare of the entire country cannot be said to have increased.
Statement 2: It captures spending by all groups as it accounts for all goods and
services consumed in the economy. 2 is incorrect.
Statement 3: Take an example to understand this statement.
For e.g. the value added of the refinery will be counted as part of the GDP of the
economy. But in carrying out the production the refinery may also be polluting the
nearby river. This may cause harm to the people who use the water of the river.
Hence their utility will fall. So, 3 is correct.
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TS
Option (d) referring mainly to FIIs is more related to the overall attractiveness of the
economy and its GDP growth rate rather than its export products.
IN
SI
A nation can run a BoP surplus even by importing less and exporting just enough to
maintain it or by receiving large sums of lent money to foreign institutions. So, (c) is
also wrong.
Q Source:Page 79: Chapter 6: 12th Macroeconomics NCERT
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Justification:Statement 1: Planting the same crop in the same place each year zaps
nutrients from the earth and leaves soil weak and unable to support healthy plant
growth. This is because the same nutrient is depleted again and again without
replenishment.
Since soil structure and quality becomes so poor, farmers are forced to use chemical
fertilizers to encourage plant growth and fruit production.
IA
TS
These pests each have a wild population with its own biodiversity, and their
populations are constantly changing and adapting to being able to eat the crops or
benefit from the presence of whatever crops are being grown.
The monoculture crops, however, are not changing, and are not able to adapt
because they have no genetic variability and are not allowed to reproduce naturally.
Q Source: Improvisation: Page 63: Chapter 4: 12th NCERT: Social Change and
Development in India
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From the financing side Gross fiscal deficit = Net borrowing at home + Borrowing
from RBI + Borrowing from abroad
Net borrowing at home includes that directly borrowed from the public through debt
instruments (for example, the various small savings schemes) and indirectly from
commercial banks through Statutory Liquidity Ratio (SLR).
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Justification & Learning: The CPSEs fulfilling the following criteria are eligible to
be considered for grant of Maharatna status.
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The hardy lichens are useful bio-indicators for air pollution, especially sulphur
dioxide pollution, since they derive their water and essential nutrients mainly from
the atmosphere rather than from the soil. So, they are not likely to be found there
due to heavy damage. Statement 3 is correct.
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Thus, everyone in the economy will hold their wealth in money balance and if
additional money is injected within the economy it will be used up to satiate people's
craving for money balances without increasing the demand for bonds and without
further lowering the rate of interest below the floor R minimum. Such a situation is
called a liquidity trap.
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