Daily Quiz: UPSC Prelims Marathon – November 14

Interest on public debt: It is not included in the national income as it is the interest paid on loans taken by government to meet its consumption purposes.

Winning of a lottery prize: It will not be included in the national income as it does not add to the flow of goods and services in the economy.

Profit earned by foreign banks in India: It is not included in the national income as it is a part of the factor income paid abroad. It is subtracted from domestic income to get national income.

Payment of fees to a lawyer engaged by a firm: It is an intermediate expenditure for the firm because it involves purchase of services by one production unit (firm) from another production unit (lawyer). So, it is deducted from the value of output of the firm to arrive at the value added. So, it is not included in national income.

A mismatch in the expected revenue and expenditure can result in revenue deficit. Revenue deficit arises when the government’s actual net receipts is lower than the projected receipts. On the contrary, if the actual receipts are higher than expected one, it is termed as revenue surplus. A revenue deficit does not mean actual loss of revenue.

Mind, revenue deficit includes only such transactions which affect current income and expenditure of the government.

LEI is a 20-digit unique code to identify parties to financial transactions worldwide. It is a global reference number that uniquely identifies every legal entity or structure that is party to a financial transaction, in any jurisdiction.

The LEI system was developed by G20 in response to inability of financial institutions to identify organisations uniquely, so that their financial transactions in different national jurisdictions can be fully tracked. The first LEIs were issued in December 2012.

Legal Entity Identifier India Limited (LEIL), a wholly-owned subsidiary of Clearing Corporation of India (CCI), acts as a local operating unit (LOU) for issuing globally compatible legal entity identifiers (LEIs) in India. Besides, entities can also obtain LEI from any of local operating units (LOU) accredited by Global Legal Entity Identifier Foundation (GLEIF) – the entity tasked to support implementation and use of LEI.

Concepts of Money Supply:

Ml = C + DD + OD

Where, C = Currency with the public

DD = Demand deposits with the public in the commercial and cooperative banks.

OD = Other deposits held by the public with Reserve Bank of India

M2 = M1 + Savings deposits with the post office savings banks.

M3= M1+ Time Deposits with the banks.

M4 = M3 + Total Deposits with Post Office Savings Organisation.

1. Monopoly- Companies that achieve a monopoly over an industry create cost-push inflation. A monopoly reduces supply to meet its profit goal.
2. Wage inflation- Wage inflation occurs when workers have enough leverage to force through wage increases. Companies then pass higher costs through to consumers
3. Natural disasters cause inflation by disrupting supply. A good example is right after Japan’s earthquake in 2011. It disrupted the supply of auto parts.
4. Black money is a factor of Demand pull inflation. Growth in unaccounted money leads to more demand for goods.

Post Office in India is becoming high tech today. Post office is not only medium of sending letters. People can avail multiple financial services at Post Offices such as

1. ATM: Some selected post office also offers ATM services. Postal department is issuing separate ATM card to customer for this services. Postal department is planning to extend this facility to every city.
2. Small Saving Schemes : Customers can also invest in small saving schemes using post office. NSC, MIS and SukanyaSamrriddhi Account are most popular small saving investment option offered by post office.
3. Reverse E-commerce: Indian Post office is working on Reverse E-commerce platform. Using this model anyone can sell their products to other company via postal department. This means post office will act as seller for them.
4. Mutual Fund Investment: Only few selected mutual funds schemes are available for investment through post office. Principal, SBI, UTI, Franklin Templeton and Reliance Mutual are some of them.
5. India Post Payment Bank has been set up as a Public Limited Company under Department of Posts with 100% Government of India (GOI) equity. It leverages DoP’s network, resources and reach to make low-cost, quality and simple financial services easily accessible to customers in the country.

An indifference curve is a graph showing combination of two goods that give the consumer equal satisfaction and utility. Each point on an indifference curve indicates that a consumer is indifferent between the two and all points give him the same utility.