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Daily Quiz: June 19, 2018
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- Question 1 of 7
1. Question
1 pointsCategory: EconomyConsider the following statements about Cash Reserve Ratio:
- It is the ratio of deposits which banks have to keep with RBI .
- The increase in CRR will lead to increase in lending capacity of banks.
- Banks get a fixed interest on CRR from RBI
Which of the above statements are incorrect?
Correct
It is the ratio of Deposits which banks have to keep with RBI. Under CRR a certain percentage of the total bank deposits has to be kept in the current account with RBI. Banks don’t earn anything on that.
Banks will not have access to this amount. They cannot use this money for any of their economic or commercial activities. Banks can’t lend this portion of money to corporate or individual borrowers. With increase in CRR the lending capacity of banks will decrease as they will have less money.
Incorrect
It is the ratio of Deposits which banks have to keep with RBI. Under CRR a certain percentage of the total bank deposits has to be kept in the current account with RBI. Banks don’t earn anything on that.
Banks will not have access to this amount. They cannot use this money for any of their economic or commercial activities. Banks can’t lend this portion of money to corporate or individual borrowers. With increase in CRR the lending capacity of banks will decrease as they will have less money.
- Question 2 of 7
2. Question
1 pointsCategory: EconomyThe Money Supply in the economy affects which of the following macroeconomic variables:
Correct
The amount of money supply in the economy impacts prices i.e. when money supply increases inflation increases and when money supply decreases inflation decreases.
Money supply impacts GDP also, as more money is required to increase the output. When the demand for money increases, rate of interest goes up in the economy. So, when money supply increases then rate of interest may cool/decrease in the economy and vice versa.
Incorrect
The amount of money supply in the economy impacts prices i.e. when money supply increases inflation increases and when money supply decreases inflation decreases.
Money supply impacts GDP also, as more money is required to increase the output. When the demand for money increases, rate of interest goes up in the economy. So, when money supply increases then rate of interest may cool/decrease in the economy and vice versa.
- Question 3 of 7
3. Question
1 pointsCategory: EconomyWith reference to Financial Resolution and Deposit Insurance bill 2017, consider the following statements:
1.It seeks to establish a Resolution Corporation to replace the existing Deposit Insurance and Credit Guarantee Corporation(DICGC)
2. Resolution Corporation will monitor banks only and anticipate their risk of failure
Which of the statements given above is/are correct?
Correct
Key Provisions of FRDI bill: It seeks to establish a Resolution Corporation to replace the existing Deposit Insurance and Credit Guarantee Corporation(DICGC) Resolution Corporation will monitor the financial firms such as banks and insurance companies, anticipate their risk of failure, take corrective action, and resolve them in case of such failure. The Corporation will also provide deposit insurance up to a certain limit, in case of bank failure.
Incorrect
Key Provisions of FRDI bill: It seeks to establish a Resolution Corporation to replace the existing Deposit Insurance and Credit Guarantee Corporation(DICGC) Resolution Corporation will monitor the financial firms such as banks and insurance companies, anticipate their risk of failure, take corrective action, and resolve them in case of such failure. The Corporation will also provide deposit insurance up to a certain limit, in case of bank failure.
- Question 4 of 7
4. Question
1 pointsCategory: EconomyWhich of the following will be included in a country’s national income?
- Expenditure on purchase of an old house.
- Brokerage on sale of shares.
- Meals given to the beggars.
- Commission on the sale on second hand car.
Select the correct answer using the codes given below.
Correct
In national income, all new goods and services produced are included. So, expenditure on purchase of an old house is not included. Brokerage on sale of shares is income of the agent for his services and it is included. Meals given to the beggars in not included because it is expenditure without any productive return. Commission on the sale on second hand car is again the income of the agent for his services and it will be included.
Incorrect
In national income, all new goods and services produced are included. So, expenditure on purchase of an old house is not included. Brokerage on sale of shares is income of the agent for his services and it is included. Meals given to the beggars in not included because it is expenditure without any productive return. Commission on the sale on second hand car is again the income of the agent for his services and it will be included.
- Question 5 of 7
5. Question
1 pointsCategory: EconomyAn engineer left his job and started preparing for UPSC exams. This kind of unemployment is called
Correct
Frictional unemployment is unemployment that occurs from the inevitable time delays in finding new employment in a free market. It may also be called ‘search unemployment as it relates to the time taken to search for new employment. For example, if you graduate from university, you can’t necessarily expect to find a job straight away which matches your skills. This period of searching for a job is known as frictional unemployment. Frictional unemployment will also occur when people are switching between jobs, either because they have been made redundant or are looking for new employment.
Incorrect
Frictional unemployment is unemployment that occurs from the inevitable time delays in finding new employment in a free market. It may also be called ‘search unemployment as it relates to the time taken to search for new employment. For example, if you graduate from university, you can’t necessarily expect to find a job straight away which matches your skills. This period of searching for a job is known as frictional unemployment. Frictional unemployment will also occur when people are switching between jobs, either because they have been made redundant or are looking for new employment.
- Question 6 of 7
6. Question
1 pointsCategory: EconomyConsider the following statements about the purchasing power parity
1.If the real exchange rate is equal to zero, currencies are at purchasing power parity.
2.If the real exchange rises above one, this means that goods abroad have become more expensive than goods at home.
3.The real exchange rate is taken as a measure of a country’s international competitiveness.
Which of the statements given above is/are correct?
Correct
If the real exchange rate is equal to one, currencies are at purchasing power parity.This means that goods cost the same in two countries when measured in the same currency. If the real exchange rises above one, this means that goods abroad have become more expensive than goods at home. The real exchange rate is often taken as a measure of a country’s international competitiveness
Incorrect
If the real exchange rate is equal to one, currencies are at purchasing power parity.This means that goods cost the same in two countries when measured in the same currency. If the real exchange rises above one, this means that goods abroad have become more expensive than goods at home. The real exchange rate is often taken as a measure of a country’s international competitiveness
- Question 7 of 7
7. Question
1 pointsCategory: EconomyNational Pharmaceutical Pricing Authority can cap the prices of which of the following?
- Drugs
- Medical devices
- Surgical Procedures
Select the correct answer using the code given below.
Correct
National Pharmaceutical Pricing Authority [NPPA] is an independent body under Department of Pharmaceuticals under Ministry of Chemicals and Fertilizers. Its functions are to fix/revise the controlled bulk drugs prices and formulations. National List of Essential Medicines contains 376 medicines. Criteria for inclusion into this list includes public health emergency, cost effective medicine etc. Once a drug or medical device is included in NLEM, its price can be capped by NPPA. Recently, NPPA capped the prices of knee implants. Surgical procedures are not covered under this.
Incorrect
National Pharmaceutical Pricing Authority [NPPA] is an independent body under Department of Pharmaceuticals under Ministry of Chemicals and Fertilizers. Its functions are to fix/revise the controlled bulk drugs prices and formulations. National List of Essential Medicines contains 376 medicines. Criteria for inclusion into this list includes public health emergency, cost effective medicine etc. Once a drug or medical device is included in NLEM, its price can be capped by NPPA. Recently, NPPA capped the prices of knee implants. Surgical procedures are not covered under this.