Prelims Powerplay 2022 – Day 3 – Environment + CA

ECONOMY:

 Q.1) Of the following statements which explains the concept of Laffer curve

a) If we tax beyond a point, it won’t lead to much higher income, as no spending.

b) Inflation and unemployment have inverse relationship

c) Economic growth is initially leads to greater inequality, the followed by reduction in inequality

d) Distribution of income within the economy

Answer: A

Philips Curve – Inflation and unemployment have inverse relationship

Kuznets curve – Economic growth is initially leads to greater inequality, the followed by reduction in inequality

Lorenz curve – Distribution of income within the economy

Q.2) MSP is recommended by

a) Ministry of Commerce

b) Ministry of Agriculture

c) Ministry of Finance

d) Commission for Agricultural Costs and Prices

Answer: D

The minimum support prices are announced by the Government of India at the beginning of the sowing season for certain crops on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP)

The Commerce Ministry is working on a policy for promoting export of agriculture commodities. It currently fixes Minimum Export Prices for commodities

Q.3) Which of the above statement(s) is/are correct?

1) Price elasticity is relation of sales of production as compared to it’s price

2) Essential goods enjoy high elasticity

a) 1 only

b) 2 only

c) Both 1 and 2

d) Neither 1 nor 2

Answer: A

Elasticity is a measure of a variable’s sensitivity to a change in another variable, most commonly this sensitivity is the change in quantity demanded relative to changes in other factors, such as price. In business and economics, price elasticity refers to the degree to which individuals, consumers, or producers change their demand or the amount supplied in response to price or income changes.

If demand for a good or service is relatively static even when the price changes, demand is said to be inelastic, and its coefficient of elasticity is less than 1.0.

Examples of elastic goods include clothing or electronics, while inelastic goods are items like food and prescription drugs

 

 Q.4) Match the following

 

A)Budgetary Deficit

i)Total Receipts(Except Market borrowings)- Total expenditure

B)Fiscal Deficit

ii)Fiscal Deficit – Interest Payments

C)Revenue Deficit

iii)Total Receipts – Total Expenditure

D)Primary Deficit

iv) Revenue Receipts – Revenue Expenditure

 

a)A-1, B-2, C-3, D-4

b)A-3, B-4, C-1, D-2

c)A-3, B-1, C-4, D-3

d)A-2, B-1, C-4, D-3

Answer: C

 A) Budgetary Deficit –  Total Receipts – Total Expenditure

B)Fiscal Deficit – Total Receipts(Except Market borrowings)- Total expenditure

C)Revenue Deficit – Revenue Receipts – Revenue Expenditure

D)Primary Deficit – Fiscal Deficit – Interest Payments

 

 Q.5) Which of the following taxes not covered under GST?

A) Service Tax

B) Custom Duty

C)Luxury Tax

D)Entertainment Tax

Answer: B

Goods and Services Tax (GST) is an indirect tax (or consumption tax) used in India on the supply of goods and services. It is a comprehensive, multistage, destination-based tax: comprehensive because it has subsumed almost all the indirect taxes except a few state taxes. Multi-staged as it is, the GST is imposed at every step in the production process, but is meant to be refunded to all parties in the various stages of production other than the final consumer and as a destination-based tax, it is collected from point of consumption and not point of origin like previous taxes.

Goods and services are divided into five different tax slabs for collection of tax: 0%, 5%, 12%, 18% and 28%. However, petroleum products, alcoholic drinks, and electricity are not taxed under GST and instead are taxed separately by the individual state governments, as per the previous tax system

The single GST subsumed several taxes and levies, which included central excise duty, services tax, additional customs duty, surcharges, state-level value added tax

Taxes not covered under GST: Customs Duty, Stamp Duty, Vehicle Tax, Excise on Liquour, Entry taxes and tolls, Tax on sale and consumption of electricity etc…

Q.6) Consider the following statements regarding Monetary Policy.

  1. The Reserve Bank of India (RBI) is vested with the responsibility of conducting monetary policy under the provisions of Reserve Bank of India Act, 1934.
  2. The primary objective of monetary policy is to maintain price stability and achieve growth. 3. The inflation target is set by the Reserve Bank of India in consultation with Government of India, once in every five years.

Which of the above statements is/are correct?

a) 1, 2

b) 2 only

c) 1, 3

d) 2, 3

Answer: A

Monetary policy refers to the policy of the central bank with regard to the use of monetary instruments under its control to achieve the goals specified in the Act. The Reserve Bank of India (RBI) is vested with the responsibility of conducting monetary policy. This responsibility is explicitly mandated under the Reserve Bank of India Act, 1934. The primary objective of monetary policy is to maintain price stability while keeping in mind the objective of growth. Price stability is a necessary precondition to sustainable growth. In May 2016, the Reserve Bank of India (RBI) Act, 1934 was amended to provide a statutory basis for the implementation of the flexible inflation targeting framework. The amended RBI Act also provides for the inflation target to be set by the Government of India, in consultation with the Reserve Bank, once in every five years. Accordingly, the Central Government has notified in the Official Gazette 4 per cent Consumer Price Index (CPI) inflation as the target for the period from August 5, 2016 to March 31, 2021 with the upper tolerance limit of 6 per cent and the lower tolerance limit of 2 per cent. Prior to the amendment in the RBI Act in May 2016, the flexible inflation targeting framework was governed by an Agreement on Monetary Policy Framework between the Government and the Reserve Bank of India of February 20, 2015

 Q.7)Which of the above statement(s) is/are correct?

1)Cess should be shared with states

2)A cess is levied on tax payable and not on taxable income

 

a) 1 only

b) 2 only

c) Both 1 and 2

d) Neither 1 nor 2

Answer: B

A cess is a form of tax levied by the government on tax with specific purposes till the time the government gets enough money for that purpose. Different from the usual taxes and duties like excise and personal income tax, a cess is imposed as an additional tax besides the existing tax (tax on tax). For example, the Swachh Bharat cess is levied by the government for cleanliness activities that it is undertaking across India.

Both Cess and surcharge need not be shared with states

  Q.8) Which of the following are regulated by Reserve Bank of India (RBI)?

  1. Stock-exchanges
  2. Merchant Banking Companies
  3. Venture Capital Fund Companies

Select the correct answer code:

a) 1 only

b) 1, 2

c) 1, 3

d) None of the above

Answer: D

Merchant Banker/Venture Capital Fund Company/stock-exchanges/stock brokers/sub-brokers are regulated by Securities and Exchange Board of India, and Insurance companies are regulated by  Insurance Regulatory and Development Authority. Similarly, Chit Fund Companies are regulated by the respective State Governments and Nidhi Companies are regulated by Ministry of Corporate Affairs, Government of India. Companies that do financial business but are regulated by other  regulators are given specific exemption by the Reserve Bank from its regulatory requirements for avoiding duality of regulation

 

 Q.9)Hard currency is usually preferred because

  1. It is seen as politically and economically stable.
  2. It is widely accepted around the world as a form of payment for goods and services.
  3. It is not likely to depreciate or appreciate suddenly.

Select the correct answer code:

a) 1, 2

b) 1, 3

c) 1, 2, 3

d) 2, 3

Answer: C

Hard currency refers to money that is issued by a nation that is seen as politically and economically stable. Hard currencies are widely accepted around the world as a form of payment for goods and services and may be preferred over the domestic currency.

A hard currency is expected to remain relatively stable through a short period of time, and to be highly liquid in the forex or foreign exchange (FX) market. The most tradable currencies in the world are the U.S. dollar (USD), European euro (EUR), Japanese yen (JPY), British pound (GBP), Swiss franc (CHF), Canadian dollar (CAD) and the Australian dollar (AUD). All of these currencies have the confidence of international investors and businesses because they are not generally prone to dramatic depreciation or appreciation.

 

 Q.10) Consider the following statements regarding GDP deflator.

  1. The GDP deflator is basically a measure of inflation.
  2. It helps show the extent to which the increase in gross domestic product has happened on account of higher prices rather than increase in output.
  3. the deflator covers the entire range of goods and services produced in the economy — as against the limited commodity baskets for the wholesale or consumer price indices.

Which of the above statements is/are correct?

a) 1 only

b) 1, 2

c) 1, 3

d) 1, 2, 3

 

Answer: D

 The GDP deflator, also called implicit price deflator, is a measure of inflation. It is the ratio of the value of goods and services an economy produces in a particular year at current prices to that of prices that prevailed during the base year.

This ratio helps show the extent to which the increase in gross domestic product has happened on account of higher prices rather than increase in output.

Since the deflator covers the entire range of goods and services produced in the economy — as against the limited commodity baskets for the wholesale or consumer price indices — it is seen as a more comprehensive measure of inflation.

Changes in consumption patterns or introduction of goods and services are automatically reflected in the GDP deflator. This allows the GDP deflator to absorb changes to an economy’s consumption or investment patterns.

Often, the trends of the GDP deflator will be similar to that of the CPI.

CURRENT AFFAIRS:

 Q.1) Consider the following statements about National Food Security Act 2013

 Pregnant women and lactating mothers will also be entitledto receive maternity benefit of not less than Rs. 6,000.

  1. Eldest woman of the household of age 18 years or

above to be the head of the household for the purpose of issuing of ration cards.

Which of the above statement(s) is/are correct?

a) 1 only

b) 2 only

c) Both 1 and 2

d) Neither 1 nor 2

Answer: C

 Both are correct. For extra reading, https://en.wikipedia.org/wiki/National_Food_Security_Act,_2013#:~:text=The%20National%20Food%20Security%20Act,retroactive%20to%205%20July%202013.

 

 Q.2) What does Pabbi 2021 refers to?

 a) Saudi arabia’s business initiative to open up the nation

b) Anti-terror operation by Shanghai Cooperation Organisation

c) Type of submarine sold to Australia under the AUKUS agreement

d) Initiative to reduce desertification

Answer: B

The decision to hold the joint exercise “Pabbi-Antiterror-2021” was announced in March this year during the 36th meeting of the Council of the Regional Anti-Terrorist Structure (RATS) held in Tashkent.

India is likely to send a three-member team to participate in the Pabbi anti-terror exercise in Pakistan’s Nowshera district

 

 Q.3) What does Nord Stream refers to?

 a) US-Canada oil pipeline

b) Russia-Germany offshore natural gas pipeline

c) Intra-EU river navigation system

d) New class of anti-submarine missiles developed by Russia

Answer: B

 Nord Stream is a system of offshore natural gas pipelines in Europe, running under the Baltic Sea from Russia to Germany.

Nord Stream 1 is owned and operated by Nord Stream AG, whose majority shareholder is the Russian state company Gazprom

The Nord Stream projects have been fiercely opposed by the United States and Ukraine, as well as by other Central and Eastern European countries, because of concerns that the pipelines would increase Russia’s influence in Europe, and because of the knock-on reduction of transit fees for use of the existing pipelines in Central and Eastern European countries.

 

Q.4) Which states among the following have anti-conversion laws?

1) odisha

2) Jharkhand

3) Madhya Pradesh

a) 1,2

b)1,3

c)2,3

d)1,2,3

Answer: D

 

Currently, there are at least nine statesin the country where legislations onunlawful conversions are in force

  • Odisha,
  • Madhya Pradesh,
  • Arunachal Pradesh,
  • Gujarat,
  • Himachal Pradesh,
  • Chhattisgarh,
  • Jharkhand,
  • Uttarakhand and
  • Uttar Pradesh

 

 Q.5) “Global Gateway” a global infrastructure financing initiative has been launched by?

 a) EU

b) USA

c) QUAD

d) World Bank

Answer: A

 Recently, the European Commission launched ‘Global Gateway’, EU strategy on global infrastructure financing with the aim to mobilize up to €300 billion in investments between 2021-2027.

This is considered a challenge to China-led BRI

Q.6) Consider the facts about BlueDot Network

 

  1. a) It was launched jointly by countries of Quad
  2. b) It aims to promote clean Telecom companies and network

Which of the above statement(s) is/are correct?

 

a) 1 only

b) 2 only

c) Both 1 and 2

d) Neither 1 nor 2

 

Answer: D

 It was launched by USA, Japan and Australia. India joined only later.

It aims to promote trusted standards for global infrastructure development.

 Q.7) Consider the facts about Pralay Missile

 1) It is an anti-submarine missile

2) It’s advantage is the ability to carry higher payloads than existing systems

Which of the above statement(s) is/are correct?

 

a) 1 only

b) 2 only

c) Both 1 and 2

d) Neither 1 nor 2

 

Answer: B

 

Pralay is a canisterised surface-to-surface tactical short-range ballistic missile (SRBM) for battlefield use developed by the Defence Research and Development Organisation (DRDO) of India.

 

The missile is the amalgamation of technologies developed for exoatmospheric interceptor missile Prithvi Defence Vehicle (PDV) from Indian Ballistic Missile DefenceProgramme and Prahaar tactical missile.

 

At the moment, the only means for the Indian Army to strike targets at distances of close to 500 km is the BrahMos supersonic cruise missile, which though deadly accurate, can carry a payload of only about 200 kg or so, besides being somewhat expensive. As such, the Indian Army in recent times has felt the need for a SRBM with a range of around 500 km that can also carry a sizeable payload.

 

That is the reason behind this missile

 

 

Q.8) What is the significance behind “OSCAR 1” satellite?

 

1) It was the first non-governmental satellite thatwas built by private citizens

2) It was the first satellite to reach its own orbit afterbeing ejected as a secondary payload of anotherprimary mission.

3) It was deployed in Geosynchronous Orbit

 

Which of the above statement(s) is/are correct?

 

a) 1,2

b) 1,3

c) 2,3

d) 1,2,3

 

Answer: A

 

It was launched successfully in December, 1961, (60years ago) and first non-governmental satellite thatwas built by private citizens.

It was the first satellite to reach its own orbit afterbeing ejected as a secondary payload of anotherprimary mission.

It was deployed in low-Earth orbit, just above theatmosphere and its function post deployment was totransmit the letters “HI” in Morse code.

 

 

Q.9) Shakti Criminal law to curb crimes against women was passed by which state?

 

a) Uttar Pradesh

b) Kerala

c) Telangana

d) Maharashtra

 

Answer: D

 

The Bill was cleared by Maharashtra Assembly to curbcrimes against women and children.

Important provisions of the bill include the introduction of  death penalty for offences such as

causing grievous hurt by use of acid, rape, and gangrape.

 

Q.10) Consider the facts about Chinese App ban?

 

1) Ban was recommended by Ministry of Home Affairs

2) Ban is actually notified by Ministry of Information Technology

3) Ban is implemented using provisions of Section 69A of the Information Technology (IT) Act

 

Which of the above statement is incorrect?

 

a) 1 only

b) 2 only

c) 3 only

d) None of them are incorrect

 

Answer: D

For more facts(Important topic), read the detailed report by Hindu newspaper

https://www.thehindu.com/news/national/the-hindu-explains-what-will-be-the-impact-of-chinese-apps-ban/article31991127.ece

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