Daily Quiz: UPSC Prelims Marathon – October 30, 2018

World Bank publishes the International Poverty Line. International Poverty Line is the benchmark for “extreme poverty. As differences in the cost of living across the world evolve, the global poverty line has to be periodically updated to reflect these changes. Since 2008, the last update, we have used $1.25 as the global line. As of October 2015, the new global line has been updated to $1.90.

Statement 1 is correct. Liquidity trap is a situation in which the general public is prepared to hold on to whatever amount of money is supplied, at a given rate of interest. They do so because of the fear of adverse events like deflation, war.

Statement 2 is incorrect. Liquidity trap arises when there’s a lot of capital in the economy, but it’s not used for investment or spending. Instead, it’s hoarded or used for non-productive activities. As a result, low interest rates and easy money don’t translate into healthy economic growth, well-paying jobs and higher prices. In other words, the demand needed to drive the economy is lackluster.

Statement 1 is correct. Financial Sector Assessment Program (FSAP) is a joint program of the International Monetary Fund (IMF) and the World Bank (WB involved in developing countries and region only), undertakes a comprehensive and in-depth analysis of a country’s financial sector.

Statement 2 is incorrect. Financial Sector Assessment Program (FSAP) undertakes a comprehensive and in-depth analysis of a country’s financial sector. It is conducted every five years. Last FSAP for India was conducted in 2011-12 and the report was published by IMF in January 2013. The FSAP assessment acknowledges that India has recorded strong growth in recent years in both economic activity and financial assets with size of the financial system remaining broadly stable in terms of GDP at about 136 per cent.

Statement 1 is incorrect. MDR is charge or fee imposed on the merchants by the bank for accepting payment from their customers in credit and debit cards for cards usage in their stores. MDR charges are usually shared in pre-agreed proportion between them and are expressed in percentage of the transaction amount. MDR compensates bank issuing card, a bank which puts up swiping machine (Point-of-Sale or PoS terminal) and network providers such as Mastercard or Visa for their services.

Statement 2 is correct. The Union Cabinet has decided that government will bear Merchant Discount Rate (MDR) charges on transactions up to Rs. 2,000 made through debit cards, BHIM UPI or Aadhaar-enabled payment systems (AePS) effect from 1 January, 2018 by reimbursing the same to the banks. As a result of this approval, consumer and merchant will not suffer any additional burden in form of MDR thereby leading to greater adoption of digital payment modes for such transactions. It will help to move towards less cash economy, since such transactions account for a sizeable percentage of transaction volume.

Statement 1 is incorrect. The Act empowers the Central and state governments concurrently to control production, supply and distribution of certain commodities in view of rising prices. The Act empowers the Centre to order states to impose stock limits and bring hoarders to task, in order to smoothen supplies and cool prices. Generally the Centre specifies upper limits in the case of stock holding and states prescribe specific limits. However, in case there is a difference between states and the Centre, the act specifies that the latter will prevail.

Statement 2 is correct. Food and civil supply authorities execute the provisions of the Act. They generally raid the premises of the businessmen to find out violations along with the local police, who have the power to arrest.

The World Inequality Lab (WIL) issues the World Inequality Report. It is an organisation that aims to promote research on global inequality dynamics. According to World Inequality Report 2018, Income inequality in India has reached historically high levels with share of national income accruing to India’s top 1% earners touching 22% in 2014, while share of top 10% was around 56%.

Statement 1 is correct. INX is first International Exchange at the international financial services centre (IFSC) GIFT city Gandhinagar.

Statement 2 is incorrect. INX is wholly-owned subsidiary of Bombay Stock Exchange (BSE). Statement 3 is correct. INX trades in equity derivatives, currency derivatives, commodity derivatives including Index and Stocks. It also offers depository receipts and bonds.