[Solution] – Tuesday Economy Quiz #6

Q.1) Match the following set of pairs:

A. WPI                            1. Department of economic affairs
B. IIP                               2. CSO
C. Economic survey      3. Office of economic advisor

Select the correct answer using the codes given below.

A      B       C
a)        2      1        3
b)        3      1        2
c)        3      2        1
d)       2      3        1

Ans-[C]

Explanation- WPI is released by the office of economic advisor which is an attached office with the Ministry of Commerce and Industry. Check here.

IIP and CPI is released by the CSO and

Economic survey is released by the Department of economic affairs, Ministry of finance.

Q.2) Masala Bonds are recently in news. Consider the following statements with respect to it.
1. Masala bonds carries a risk on account of currency fluctuation.
2. Indian finance Railway corporation will issue Masala Bond to raise funds for the capital expenditure.

Which of them are incorrect?
a) Only 1
b) Only 2
c) Both 1 and 2
d) None of the above

Ans-[A]

Explanation– Masala bonds are rupee-denominated borrowings by Indian entities in overseas markets. The International Finance Corporation (IFC), the investment arm of the World Bank, first time issued a ₹1,000 crore Masala bond to fund infrastructure projects in India. These bonds were listed on the London Stock Exchange . IFC named them Masala bonds to give a local flavour by calling to mind Indian culture and cuisine. One of the feature of Masala bonds is that they Masala bonds don’t carries a risk on account of currency fluctuation.

Indian finance Railway corporation will issue Masala Bond to raise funds for the capital expenditure, it was recently in news.

Q.3) Global Talent competitiveness Index is released by which business school?
a) INSEAD Business school
b) London School of Economics
c) Wharton Business school
d) London Business School

Ans-[A]

Explanation–  It is released by INSEAD business school. The Global Talent Competitiveness Index (GTCI) is an annual benchmarking study measuring the ability of countries to compete for talent. Designed as a practical tool for governments, businesses and non-profit organisations, GTCI ranks over 100 economies according to their ability to develop, attract and retain talent. This year index was released in Davos.

Q.4) Match the following:
A. Bombay Plan                          1. Jay Prakash Narayan
B. Sarvodaya Plan                      2. JRD Tata
C. Gandhian Plan                       3. Sriman Narayan Agarwal

Select the correct answer using the  codes given below.

A       B       C
a)       3       1        2
b)       3      2        1
c)       2       1        3
d)       2       3        1

Ans-[C]

Explanation- Bombay plan was made by leading businessmen of India of that time which included JRD Tata too. Gandhian Plan was made by SN Agarwal and Sarvodya Plan was released by JP Narayan.

Q.5) Consider the following statements:
1. Stand up India scheme is for educated unemployed youth exclusively
2. Refinancing in it will be done through MUDRA bank.

Select the correct statement using the codes given given below:
a) 1 only
b) 2 only
c) Both 1 and 2
d) None of the above

Ans[D]

Explanation- Stand up India scheme is  to promote entrepreneurship among SC/ST and Women entrepreneurs exclusively and to not all educated unemployed youth. For them, there is startup India scheme.

The stand up India Scheme is intended to facilitate at least two such projects (one for SC/ST and one for Woman) per bank branch, on an average one for each category of entrepreneur. It is expected to benefit at least 2.5 lakh borrowers.

The expected date of reaching the target of at least 2.5 lakh approvals is 36 months from the launch of the Scheme.

The Stand Up India Scheme provides for:

• Refinance window through Small Industries Development Bank of India (SIDBI) with an initial amount of Rs. 10,000 crore. Thus, statement 2 is wrong as it says about MUDRA.

• Creation of a credit guarantee mechanism through the National Credit Guarantee Trustee Company (NCGTC).
• Handholding support for borrowers both at the pre loan stage and during operations. This would include increasing their familiarity with factoring services, registration with online platforms and e-market places as well as sessions on best practices and problem solving.

Q.6) Consider the following statements:
1. SEZ don’t have to pay for regular duties for sale in domestic market.
2. SEZ products are cheaper than imports from FTA partner countries.

Select the correct statement using the codes given below.
a) 1 only
b) 2 only
c) Both 1 and 2
d) None of the above

Ans-[D]

Explanation- SEZ have to pay for regular duties for sale in domestic markets. This makes their product costly than imports from FTA partner countries. You can read about SEZ in our previous documents.

Q.7) Greenfield is a term referring to:
a) Investment in renewable energy sources
b) Investment in the sports ground
c) Investment in the new manufacturing plant or workshop
d) Investment in the projects meant for greenhouse gases mitigation

Ans-[C]

Explanation- Greenfiled investment is a term denoting investment in the new manufacturing plant or workshop.

Q.8) Which of the following are instruments of the Indian Money Market
1. Commercial Bills
2. Repo and Reverse Repo rate
3. Cash management bill

Select the correct answer using the codes given below.
a) 1 and 3
b) Only 2
c) 1 and 2
d) 1, 2 and 3

Ans- [D]

Explanation- A money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities are traded. The money market is used by participants as a means for borrowing and lending in the short term, from several days to just under a year. These all are money market instruments.

Q.9) Identify the correct statements:
1. NBFC can issue cheques to its customers
2. Depositor insurance facility is not available for NBFC depositor.

Select the correct statement using the codes given below.
a) Only 1
b) Only 2
c) Both 1 and 2
d) None of them

Ans-[B]

Explanation– As per RBI, a Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 engaged in the business of loans and advances, acquisition of shares/stocks/bonds/debentures/securities issued by Government or local authority or other marketable securities of a like nature, leasing, hire-purchase, insurance business, chit business but does not include any institution whose principal business is that of agriculture activity, industrial activity, purchase or sale of any goods (other than securities) or providing any services and sale/purchase/construction of immovable property. A non-banking institution which is a company and has principal business of receiving deposits under any scheme or arrangement in one lump sum or in installments by way of contributions or in any other manner, is also a non-banking financial company.

NBFCs lend and make investments and hence their activities are similar to that of banks; however there are a few differences as given below:

1. NBFC cannot accept demand deposits;
2. NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself;
3. Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs, unlike in case of banks.

Q.10) Consider the following statement:
1. Depreciation of the currency is the decrease in price of domestic currency in terms of foreign currency under pegged exchange rate.
2. Devaluation is the decrease in the price of currency under the floating exchange rate through official route.

Select the incorrect statement using the codes given below.
a) 1 only
b) 2 only
c) Both 1 and 2
d) None of the above

Ans-[C]

Explanation– Both are wrong.
Depreciation of the currency is the decrease in price of domestic currency in terms of foreign currency under floating exchange rate due to market forces.
Devaluation is the decrease in the price of currency under the fixed exchange rate through official route.