Check 34 questions of Economy for UPSC IAS Prelims 2020 exam preparation which have been previously asked in the past year's Prelims exam. After conducting a detailed analysis we can observe that in the year 2019, 13 questions based on Economy were asked in the paper; in 2018, 15 questions and in 2017, 6 questions were asked from the Economy section.
UPSC IAS Prelims 2020: Questions Based on Economy from 2019 Paper
Ques 1: What was the purpose of the Inter-Creditor Agreement signed by Indian banks and financial institutions recently?
(a) To lessen the Government of India's perennial burden of fiscal deficit and current account deficit
(b) To support the infrastructure projects of Central and State Governments
(c) To act as independent regulator in case of applications for loans of Rs. 50 crore or more
(d) To aim at faster resolution of stressed assets of Rs. 50 crore or more which are-under consortium lending
Answer: d
Ques 2: The Chairmen of public sector banks are selected by the
(a) Banks Board Bureau
(b) Reserve Bank of India
(c) Union Ministry of Finance
(d) Management of concerned bank
Answer: a
Ques 3: The economic cost of food grains to the Food Corporation of India is Minimum Support Price and bonus (if any) paid to the farmers plus
(a) transportation cost only
(b) interest cost only
(c) procurement incidentals and distribution cost
(d) procurement incidentals and charges for godowns
Answer: c
Ques 4: Consider the following statements:
- Most of India's external debt is owed by governmental entities.
- All of India's external debt is denominated in US dollars.
Which of the statements given above is / are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer: d
Ques 5: Which of the following is not included in the assets of a commercial bank in India?
(a) Advances
(b) Deposits
(e) Investments
(d). Money at call and short notice
Answer: b
Ques 6: In the context of India, which of the following factors is/are contributor/ contributors to reducing the risk of a currency crisis?
- The foreign currency earnings of India's IT sector
- Increasing the government expenditure
- Remittances from Indians abroad
Select the correct answer using the code given below.
(a) 1 only
(b) 1 and 3 only
(c) 2 only
(d) 1, 2 and 3
Answer: b
Ques 7: Which of the following is issued by registered foreign portfolio investors to overseas investors who want to be part of the Indian stock market without registering themselves directly?
(a) Certificate of Deposit
(b) Commercial Paper
(c) Promissory Note
(d) Participatory Note
Answer: d
Ques 8: With reference to India's Five-Year Plans, which of the following statements is/are correct?
- From the Second Five-Year Plan, there was a determined thrust towards substitution of basic and capital good industries.
- The Fourth Five-Year Plan adopted the objective of correcting the earlier trend of increased concentration of wealth and economic power.
- In the Fifth Five-Year Plan, for the first time, the financial sector was included as an integral part of the Plan.
Select the correct answer using the code given below.
(a) 1 and 2 only
(b) 2 only
(c) 3 only
(d) 1, 2 and 3
Answer: a
Ques 8: Consider the following statements
- Purchasing Power Parity (PPP) exchange rates are calculated by comparing the prices of the same basket of goods and services in different countries.
- In terms of PPP dollars, India is the sixth-largest economy in the world.
Which of the statements given above is / are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer: a
Ques 9: Which one of the following is not the most likely measure the Government/RBI takes to stop the slide of Indian rupee?
(a) Curbing imports of non-essential goods-and promoting exports
(b) Encouraging Indian borrowers to issue rupee-denominated Masala Bonds
(c) Easing conditions relating to external commercial borrowing
(d) Following an expansionary monetary policy
Answer: d
Ques 11: Consider the following statements:
The Reserve Bank of India's recent directives relating to 'Storage of Payment System Data', popularly known as data diktat, command the payment system providers that
- they shall ensure that entire data relating to payment systems operated by them are stored in a system only in India
- they shall ensure that the systems are owned and operated by public sector enterprises
- they shall submit the consolidated system audit report to the Comptroller and Auditor General of India by the end of the calendar year
Which of the statements given above is/are correct?
(a) 1 only
(b) 1 and 2 only
(c) 3 only
(d) 1, 2 and 3
Answer: a
Ques 12: The money multiplier in an economy increases with which one of the following?
(a) Increase in the cash reserve ratio
(b) Increase in the banking habit of the population
(c) Increase in the statutory liquidity ratio
(d) Increase in the population of the country
Answer: b
Ques 13: In a given year in India, official poverty lines are higher in some states than in others because
(a) poverty rates vary from State to State
(b) price levels vary from State to State
(c) Gross State Product varies from State to State
(d) quality of public distribution varies from State to State
Answer: b
UPSC IAS Prelims 2020: Questions Based on Economy from 2018 Paper
Ques 1: Which one of the following best describes the term "Merchant Discount Rate" sometimes seen in news ?
(a) The incentive given by a bank to a merchant for accepting payments through debit cards pertaining to that bank.
( b) The amount paid back by banks to their customers when they use debit cards for financial transactions for purchasing goods or services.
(c) The charge to a merchant by a bank for accepting payments from his customers through the bank's debit cards.
(d) The incentive given by the Government, to merchants for promoting digital payments by their customers through Point of Sale (PoS) machines and debit cards.
Answer. c
Ques 2: Consider the following statements
- The Fiscal Responsibility and Budget Management (FRBM) Review Committee Report has recommended a debt to GDP ratio of 60% for the general (combined) government by 2023, comprising 40% for the Central Government and 20% for the State Governments.
- The Central Government has domestic liabilities of 21% of GDP as compared to that of war of GDP of the State 2 Governments.
- As per the Constitution of India, it is mandatory for a State to take the Central Government’s consent for raising any loan if the former owes any outstanding liabilities to the latter.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
Answer.c
Ques 3: Consider the following statements
- The quantity of imported edible oils is more than the domestic production of
edible oils in the last five years.
- The Government does not impose any customs duty on all the imported edible
oils a special case.
Which of two statements given above is/are correct
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer. a
Ques 4: Which one of the following links all the ATMs in India ?
(a) Indian banks' Association
(b) National Securities Depository Limited
(c) National Payments Corporation of India
(d) Reserve Bank of India
Answer.c
Ques 5: Which one of the following statements correctly describes the meaning of legal tender money ?
(a) The money which is tendered in courts of law to defray the fee of legal cases
(b) The money which a creditor is under compulsion to accept in settlement of his claims
(c) The bank money in the form of cheques, drafts, bills of exchange, etc.
(d) The metallic money in circulation in a country
Answer. B
Ques 6: If a commodity is provided free to the public by the Government, then
(a) the opportunity cost is zero.
(b) the opportunity cost is ignored.
(c) the opportunity cost is transferred from the consumers of the product to the tax-paying public.
(d) the opportunity cost is transferred from the consumers of the product to the Government.
Answer. d
Ques 7: Increase in absolute and per capita real GNP do not connote a higher level of economic development, if
(a) industrial output fails to keep pace with agricultural output.
(b) agricultural output fails to keep pace with industrial output.
(c) poverty and unemployment increase.
(d) imports grow faster than exports.
Answer.c
Ques 8: Consider the following statements: Human capital formation as a concept is better explained in terms of a process, which enables
- individuals of a country to accumulate more capital.
- increasing the knowledge, skill levels and capacities of the people of the country.
- accumulation of tangible wealth.
- accumulation of intangible wealth.
Which of the statements given above is/are correct?
(a) 1 and 2
(b) 2 only
(c) 2 and 4
(d) 1, 3 and 4
Answer.b
Ques 9: Despite being a high saving economy, capital formation may not result in significant increase in output due to
(a) weak administrative machinery
(b) illiteracy
(c) high population density
(d) high capital-output ratio
Answer.d
Ques 10: Consider the following statements:
- The Reserve Bank of India manages and services Government of India Securities but not any State Government Securities.
- Treasury bills are issued by the Government of India and there are no treasury bills issued by the State Governments.
- Treasury bills offer are issued at a discount from the par value. Which of the statements given above is/are correct?
(a) 1 and 2 only
(b) 3 Only
(c) 2 and 3 only
(d) 1, 2 and 3
Answer.c
Ques 11: Consider the following statements:
- Capital Adequacy Ratio (CAR) is the amount that banks have to maintain in the form of their own funds to offset any loss that banks incur if the account-holders fail to repay dues.
- CAR is decided by each individual bank.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer.a
Ques 12: With reference to digital payments, consider the following statements:
- BHIM app allows the user to transfer money to anyone with a UPI-enabled bank account.
- While a chip-pin debit card has four factors of authentication, BHIM app has only two factors of authentication.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer.a
Ques 13: With reference to the governance of public sector banking in India, consider the following statements
- Capital infusion into public sector banks by the Government of India has steadily increased in the last decade.
- To put the public sector banks in order, the merger of associate banks with the parent State Bank of India has been affected.
Which of the statements given above is/are correct ?
(a) 1 only
- b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer.c
Ques 14: With reference to the governance of public sector banking in India, consider the following statements
- Capital infusion into public sector banks by the Government of India has steadily increased in the last decade.
- To put the public sector banks in order, the merger of associate banks with the parent State Bank of India has been affected.
Which of the statements given above is/are correct ?
(a) 1 only
- b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer.c
Ques 15: Regarding Money Bill, which of the following statements is not correct?
(a ) A bill shall be deemed to be a Money Bill if it contains only provisions relating to imposition, abolition, remission, alteration or regulation of any tax.
(b) A Money Bill has provisions for the custody of the Consolidated Fund of India or the Contingency Fund of India.
(c) A Money Bill is concerned with the appropriation of moneys out of the Contingency Fund of India.
(d) A Money Bill deals with the regulation of borrowing of money or giving of any guarantee by the Government of India.
Answer.c
UPSC IAS Prelims 2020: Questions Based on Economy from 2017 Paper
Ques 1: With reference to 'National Investment and Infrastructure Fund', which of the following statements is/are correct?
- It is an organ of NITI Aayog.
- It has a corpus of Rs. 4, 00,000 crore at present.
Select the correct answer using the code given below:
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer. d
Ques 2: What is/are the most likely advantages of implementing 'Goods and Services Tax (GST)'?
- It will replace multiple taxes collected by multiple authorities and will thus create a single market in India.
- It will drastically reduce the 'Current Account Deficit' of India and will enable it to increase its foreign exchange reserves.
- It will enormously increase the growth and size of economy of India and will enable it to overtake China in the near future.
Select the correct answer using the code given below:
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
Answer. a
Ques 3: Consider the following statements :
- Tax revenue as a percent of GDP of India has steadily increased in the last decade.
- Fiscal deficit as a percent of GDP of India has steadily increased in the last decade.
Which of the statements given above is/are correct ?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer. d
Ques 4: What is the purpose of setting up of Small 9 Finance Banks (SFBs) in India?
- To supply credit to small business units
- To supply credit to small and marginal farmers
- To encourage young entrepreneurs to set up business particularly in rural areas.
Select the correct answer using the code given below:
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
Answer. A
Ques 5: Which of the following is a most likely consequence of implementing the 'Unified Payments Interface (UPI)’?
(a) Mobile wallets will not be necessary for online payments.
(b) Digital currency will totally replace the physical currency in about two decades.
(c) FDI inflows will drastically increase.
(d) Direct transfer of subsidies to poor people will become very effective.
Answer. a
Ques 6: Which of the following statements is/are correct regarding the Monetary Policy Committee (MPC)?
- It decides the RBI's benchmark interest rates.
- It is a 12-member body including the Governor of RBI and is reconstituted every year.
- It functions under the chairmanship of the Union Finance Minister.
Select the correct answer using the code given below :
(a) 1 only
(b) 1 and 2 only
(c) 3 only
(d) 2 and 3 only
Answer. a
