Indian Economy Test 83

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Indian Economy Test 83

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Weekly Quiz Competition

Question 1
1 / -0

Which of the following is/are correct about the budgeting process of the Government of India?
1. Unlike some other countries, the fiscal deficit of India is mostly financed from domestic sources.
2. Domestic sources meet around 98 per cent of India's deficit financing
3. Market borrowing constitutes around 84 per cent of domestic sources in India's deficit financing.

A
Only 1

B
Only 2

C
1 and 2

D
1,2 and 3
Question 2
1 / -0

Select the items which India shows in its current account, using the code given below:
1. Inflows due to exports and outflows due to imports.
2. Inflows and outflows due to income repatriation.
3. Inflows and outflow due to foreign portfolio investment.
4. External lending and borrowings.

A
Only 1

B
Only 2

C
1 and 2

D
Neither 1 nor 2

Solution

Foreign portfolio investments and loans are part of the capital account.
Question 3
1 / -0

Select the incorrect statements regarding the marginal standing facility rate of the RBI, using the code give below:
1. It is similar to the repo rate for the financial institutions.
2. It is on the lines of the liquidity adjustment facility and part of it.
3. Though it is a costlier route to fulfill overnight requirement of funds, it is not a penal rate.
4. Banks use this route once they exhaust all channels to raise short-term fund.

A
1,2 and 3

B
1,3 and 4

C
2,3 and 4

D
1,2,3 and 4

Solution

This route is only for banks, on the lines of the LAF but it is not its part. It is a penal rate that is why remains always higher than the repo rate. While putting this route in place the RBI has permitted banks to borrow maximum 1 per cent of their Net Demand and Time Liabilities, in coming times it was cut down, too. Similarly, it commenced with a rate 1 per cent higher than the current repo rate but over the time it went upto 3 per cent higher than the current repo (in the process of checking inflation, by end 2013).
Question 4
1 / -0

Select the correct statement/s about the new Bilateral Investment Treaty of India, using the code given below:
1. It aims to enhance comfort level and boost the confidence of foreign investors.
2. It projects India as a preferred foreign direct investment (FDI) destination.
3. It protects outbound Indian FDI.

A
1 and 2

B
2 and 3

C
1 and 3

D
1,2 and 3

Solution

The new BIT of India came into force in 2017 1st was launched in 1994). It also decides the Comprehensive Economic Cooperation Agreements (CEC As)/ Comprehensive Economics Partnership Agreements (CEPAs)/ Free Trade Agreements (FTAs).
Question 5
1 / -0

Consider the following statements and select the incorrect one/ones using the code given below:
1. Internal and Extra Budgetary Resources (IEBR) route is generally not used by the GoI while financing the Union Budget since the FRBM Act has been implement.
2. The FRBM Act puts very transparent checks and controls on the IEBR route.
3. For the fiscal 2016-17, the GoI has taken excuse from the FRBM Act so that extra resources can be mobilized via the IEBR.

A
1 and 2

B
2 and 3

C
1 and 3

D
1,2 and 3

Solution

Internal and Extra Budgetary Resources (IEBR) is an important part of the Central plan of the Government of India and constitutes the resources raised by the PSUs through profits, loans and equity. There is no checks and controls on the IEBR from the FRBM Act.
Question 6
1 / -0

Due to certain reasons, it becomes difficult for the Export Credit Guarantee Corporation to cover pure commercial risks of the medium and long term exports originating from India. Select the answer using the code give below:
1. Long repayment period
2. The large value of contracts
3. Difficult economic and political conditions in the importing countries
4. Non-availability of re-insurance for such external projects.

A
1,2 and 3

B
1,3 and 4

C
2,3 and 4

D
1,2,3 and 4

Solution

Overseas projects undertaken by the Indian firms face many political and commercial risks in the importing countries-to provide adequate credit insurance cover to such firms, the government has set up the ECGC under the Ministry of Commerce and Industry, for medium and long term exports.
Question 7
1 / -0

Select the correct one/ones about the merchant banks in India, using the code given below:
1. They are non-banking finance companies regulated by the SEBI.
2. Recently, they have been allowed to disburse loans to the corporate sector.

A
Only 1

B
Only 2

C
1 and 2

D
Neither 1 nor 2

Solution

They can not disburse loans to any kind of clientele. They provide a variety of financial services in the security market management of share issue, underwriting of new share issue, merger of the companies, etc.
Question 8
1 / -0

Select the NRI bank account from the given list which India does not permit to be opened in the country:

A
Foreign Currency Non-Resident (Bank) account [FCNR(B) account]

B
Non-Resident External account (NRE account)

C
Non-Resident Ordinary Rupee account (NRO account

D
None of the above

Solution

Foreign Exchange Management (Deposit) Regulations, 2000 permits Non-Resident Indians (NRIs) to have deposit accounts with authorized dealers and with banks authorized by the Reserve Bank of India (RBI). There are only three such NRI accounts, which have already been given in the question.
Question 9
1 / -0

Select the incorrect statements regarding the 'angel investors' , using the code given below:
1. The investors who provide financial backing to entrepreneurs for starting their business.
2. They are investors with positive spillover effects.
3. They may provide finance as loan or as share capital in the upcoming business.
4. They usually invest in person rather then the economic viability of the business.
5. They are usually from the entrepreneur's family and friends but may be from outside, too.
6. Venture capital funds serve similar purpose to the extent arrangement of investible capital is concerned.

A
1, 2 and 5

B
2, 3 and 4

C
3, 5 and 6

D
None of the above

Solution

All the statements are correct about the angel investors-a term introduced in the Union Budget 2013-14. The SEBI puts them in the Category I AIF : the Alternative Investment Funds (AIFs) with 'positive spillover effects'. The venture capital funds also come under this. A venture fund invests in business rather then the person (opposite to the angle investor).
Question 10
1 / -0

Select the correct statements about the security market in India, using the code given below:
1. As the ADRs and GDRs are for the foreigners with respect to Indian companies, the IDRs are for the Indians with respect to the foreign companies.
2. Due to availability of better routes for foreign investments in the Indian security market, the IDR route has lost its relevance.
3. The IDRs are today a very popular route for Indians to invest in the foreign security market.
4. India allows debt and non-debt, both forms of the securities under ADR, GDR and IDR.

A
1 and 2

B
2 and 3

C
3 and 4

D
1 and 4

Solution

Today, India allows liberal foreign investments in its security market that is why the American/Global Depository Receipts (ADRc/GDRs) has lost their relevance. The Indian Depository Receipts (IDRs) were never a popular route of investment for Indians-by now only one company (Standard Chartered Bank) has issued it in India which went for its full redemption by mid-2011.

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Indian Economy Test 83

Result

Indian Economy Test 83

Score

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Rank

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SHARING IS CARING

Question 1

Only 1

Only 2

1 and 2

1,2 and 3

Question 2

Only 1

Only 2

1 and 2

Neither 1 nor 2

Solution

Question 3

1,2 and 3

1,3 and 4

2,3 and 4

1,2,3 and 4

Solution

Question 4

1 and 2

2 and 3

1 and 3

1,2 and 3

Solution

Question 5

1 and 2

2 and 3

1 and 3

1,2 and 3

Solution

Question 6

1,2 and 3

1,3 and 4

2,3 and 4

1,2,3 and 4

Solution

Question 7

Only 1

Only 2

1 and 2

Neither 1 nor 2

Solution

Question 8

Foreign Currency Non-Resident (Bank) account [FCNR(B) account]

Non-Resident External account (NRE account)

Non-Resident Ordinary Rupee account (NRO account

None of the above

Solution

Question 9

1, 2 and 5

2, 3 and 4

3, 5 and 6

None of the above

Solution

Question 10

1 and 2

2 and 3

3 and 4

1 and 4

Solution

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