Create a custom practice set
Pick category, difficulty, number of questions, and time limit. Start instantly with your own quiz.
Generate QuizEconomics – Medium Level – GK Questions
Free practice for SSC, UPSC, Banking & Railway exams. No login required.
Tier 1 Capital, often referred to as core capital, primarily consists of equity shares and disclosed reserves, making it the most reliable form of capital for a bank to absorb losses on a going-concern basis.
- True
- False
Answer: True
Tier 1 capital represents the highest quality of capital because it is fully available to absorb losses without the bank being required to cease operations. It includes common equity, retained earnings, and certain disclosed reserves. In contrast, Tier 2 capital (supplementary capital like subordinated debt) is less secure and only absorbs losses on a 'gone-concern' (liquidation) basis.
Under the Basel III international regulatory framework, what is the primary purpose of the 'Capital Conservation Buffer' (CCB)?
- To protect banks against systemic risks arising from cross-border lending
- To ensure banks build up capital outside periods of stress that can be drawn down when losses are incurred
- To penalize banks that hold excessive amounts of sovereign debt
- To guarantee depositors that their savings are 100% insured against bank failures
Answer: To ensure banks build up capital outside periods of stress that can be drawn down when losses are incurred
The CCB is an additional layer of high-quality capital (usually 2.5% of risk-weighted assets) that banks must hold during normal economic times. The objective is to create a financial cushion that allows banks to absorb losses during periods of economic or financial stress without breaching their minimum capital requirements or requiring taxpayer bailouts.
The Bretton Woods Conference of 1944, which laid the foundation for the post-WWII international economic order, primarily resulted in the creation of which two institutions?
- World Trade Organization (WTO) and World Health Organization (WHO)
- International Monetary Fund (IMF) and International Bank for Reconstruction and Development (IBRD)
- Bank for International Settlements (BIS) and Asian Development Bank (ADB)
- United Nations Development Programme (UNDP) and Food and Agriculture Organization (FAO)
Answer: International Monetary Fund (IMF) and International Bank for Reconstruction and Development (IBRD)
The Bretton Woods Conference established the IMF to oversee the fixed exchange rate system and provide short-term balance of payments support, while the IBRD (now part of the World Bank Group) was created to provide long-term capital for the reconstruction of war-torn Europe and subsequent development of poorer nations. The WTO was not created until 1995, replacing the GATT.
The 'Washington Consensus' refers to a set of ten economic policy prescriptions, including fiscal discipline, trade liberalization, and privatization, that were traditionally promoted for developing countries by Washington-based institutions like the IMF, World Bank, and the ___.
- 75
- two
- Consumer Price Index (CPI)
- US Treasury
Answer: US Treasury
Coined by economist John Williamson in 1989, the Washington Consensus represented the dominant neoliberal paradigm of the late 20th century. It advocated for free markets, deregulation, and minimal state intervention. In recent years, it has faced severe criticism for ignoring institutional realities and social safety nets, leading to a shift toward more nuanced, context-specific development strategies.
The 'Udyam Registration' portal is an online, paperless, and self-declaration based platform introduced by the government for the registration of Micro, Small, and Medium Enterprises (MSMEs).
- True
- False
Answer: True
Launched in July 2020, Udyam Registration replaced the older Udyog Aadhaar system. It is completely free, requires no document uploads (relying instead on PAN and GSTIN integration for automatic data fetching), and provides MSMEs with a permanent, verifiable identity that allows them to easily access priority sector credit, government subsidies, and delayed payment protections.
The 'Gig Economy' is characterized by short-term contracts or freelance work as opposed to permanent jobs, and the workers participating in this ecosystem are legally and economically classified as ___ workers.
- 1965
- indifference
- middle-income (and creditworthy low-income)
- gig
Answer: gig
Gig workers, such as ride-hailing drivers or food delivery partners, operate outside the traditional employer-employee relationship. While this model offers flexibility, it raises significant economic and policy challenges regarding the lack of social security, health insurance, and job stability, prompting recent government initiatives to draft welfare codes specifically for unorganized and gig workers.
Which specialized agency of the United Nations is primarily responsible for setting global standards for labor rights, promoting decent work, and addressing issues like child labor and forced labor?
- World Trade Organization (WTO)
- International Labour Organization (ILO)
- United Nations Development Programme (UNDP)
- World Health Organization (WHO)
Answer: International Labour Organization (ILO)
Founded in 1919 as part of the League of Nations and later becoming the first specialized agency of the UN, the ILO brings together governments, employers, and workers to set labor standards and formulate policies. It is unique for its tripartite structure and is the global authority on issues like minimum wages, occupational safety, and the eradication of exploitative labor practices.
The 'Fiscal Multiplier' measures the ratio of the change in national income to the initial change in ___ that caused it.
- six
- Demand deposits
- government spending (or autonomous expenditure)
- below
Answer: government spending (or autonomous expenditure)
When the government injects a certain amount of money into the economy (e.g., building a highway), that money becomes income for workers, who then spend a portion of it, creating income for others. The fiscal multiplier quantifies this ripple effect, showing how an initial $1 of government spending can ultimately generate more than $1 in total GDP growth.
The phenomenon where inflation pushes taxpayers into higher income tax brackets, resulting in an increase in their tax burden without any actual increase in their real purchasing power, is known as ___.
- not (or never)
- 41
- Paris
- bracket creep (or fiscal drag)
Answer: bracket creep (or fiscal drag)
Bracket creep occurs in progressive tax systems where tax brackets are not indexed to inflation. As nominal wages rise merely to keep pace with inflation, individuals are pushed into higher marginal tax rates. This stealthily increases government revenue at the expense of the taxpayer's real disposable income, acting as a hidden tax.
The Multidimensional Poverty Index (MPI) developed by NITI Aayog relies solely on household income and consumption expenditure data to classify families as Below Poverty Line (BPL).
- True
- False
Answer: False
The National MPI, modeled after the Global MPI, deliberately moves away from purely income-based metrics. Instead, it assesses deprivations across three equally weighted dimensions: Health (nutrition, child mortality), Education (years of schooling, attendance), and Standard of Living (cooking fuel, sanitation, drinking water, electricity, housing, and assets).
The 'Ease of Doing Business' index, which was historically published by the World Bank and used to rank countries on regulatory efficiency, was discontinued in 2021 due to data irregularities and is being replaced by a new framework called ___.
- Consumer Price Index (CPI)
- B-READY (or Business Ready)
- gig
- NPCI (or National Payments Corporation of India)
Answer: B-READY (or Business Ready)
The World Bank scrapped the flagship Ease of Doing Business report following an ethics audit that revealed data manipulation in previous editions. To restore credibility, the Bank launched the 'Business Ready' (B-READY) project, which aims to evaluate the business environment with a more robust, transparent, and balanced methodology that includes labor rights and environmental sustainability.
The 'Carbon Border Adjustment Mechanism' (CBAM) proposed by the European Union is essentially a tariff levied on carbon-intensive imported goods to prevent 'carbon leakage' and protect domestic industries.
- True
- False
Answer: True
CBAM is a landmark climate policy that forces importers to buy certificates corresponding to the carbon price they would have paid if the goods were produced under EU carbon pricing rules. It aims to prevent 'carbon leakage'—where EU companies move production to countries with lax climate laws—and forces global trading partners like India to decarbonize their export sectors.
To provide long-term, patient capital for India's massive infrastructure needs and to avoid the asset-liability mismatches faced by commercial banks, the government established the ___ in 2021.
- banks
- snob
- capital
- NaBFID (or National Bank for Financing Infrastructure and Development)
Answer: NaBFID (or National Bank for Financing Infrastructure and Development)
NaBFID was set up as a specialized Development Financial Institution (DFI) with a target to support the National Infrastructure Pipeline. Unlike commercial banks that rely on short-term deposits, NaBFID raises long-term funds from domestic and international capital markets, providing the crucial long-gestation 'patient capital' required for massive, multi-year infrastructure projects.
The National Infrastructure Pipeline (NIP), launched to provide a clear roadmap for infrastructure development in India, covers both economic infrastructure (like roads) and social infrastructure (like health and education).
- True
- False
Answer: True
The NIP is a massive, multi-year investment plan aimed at boosting economic growth and creating jobs. It comprehensively includes traditional economic assets like highways, railways, and power plants, but crucially also integrates social infrastructure like affordable housing, urban water supply, and healthcare facilities, recognizing their equal importance for holistic development.
One of the primary macroeconomic motivations for the RBI to introduce a retail CBDC is to counter the rising threat of private cryptocurrencies and preserve the sovereignty of the national fiat currency.
- True
- False
Answer: True
The proliferation of private cryptocurrencies poses risks to monetary policy transmission, financial stability, and capital flight. By offering a safe, sovereign-backed digital alternative that leverages modern payment technologies, the central bank can satisfy public demand for digital assets while retaining control over the money supply and the domestic payment ecosystem.
The Central Bank Digital Currency (CBDC) being piloted by the RBI, known as the e-Rupee, is legally classified as:
- A decentralized cryptocurrency similar to Bitcoin
- A sovereign fiat currency and legal tender, exactly equivalent to physical cash
- A private stablecoin pegged to the US Dollar
- An electronic voucher that expires if not used within a year
Answer: A sovereign fiat currency and legal tender, exactly equivalent to physical cash
The e-Rupee (e₹) is a digital token issued by the RBI that represents legal tender. It holds the exact same value as physical paper currency and can be exchanged one-to-one with fiat money. Unlike volatile, decentralized cryptocurrencies, the CBDC is centralized, risk-free, and aims to reduce the massive costs associated with printing, storing, and transporting physical cash.
The 'Twin Balance Sheet' problem in the Indian economy refers to the simultaneous over-leveraging of corporate houses and the massive accumulation of Non-Performing Assets (NPAs) by commercial banks.
- True
- False
Answer: True
Coined in the mid-2010s, the Twin Balance Sheet problem severely stalled private investment and credit growth in India. Corporates were burdened with heavy debt from past infrastructure booms and could not invest further, while banks, choked by bad loans from these same corporates, became risk-averse and stopped lending, creating a severe macroeconomic bottleneck.
Which of the following best describes the concept of 'Non-Tariff Barriers' (NTBs) in international trade?
- Standard customs duties levied on imported luxury goods
- Restrictions such as quotas, embargoes, and stringent sanitary/phytosanitary standards
- Subsidies provided to domestic exporters by the government
- Taxes levied on the repatriation of profits by foreign multinational corporations
Answer: Restrictions such as quotas, embargoes, and stringent sanitary/phytosanitary standards
As the WTO has successfully driven down traditional tariff barriers globally, countries have increasingly resorted to NTBs to protect domestic industries. These include import quotas, complex licensing requirements, and excessively strict health, safety, or environmental standards that effectively block foreign goods from entering the domestic market.
The economic practice of exporting a product to a foreign market at a price that is lower than the price charged in its home market, or lower than its cost of production, is known as ___.
- dumping
- John Maynard Keynes
- dividend (or window of opportunity)
- substitutes
Answer: dumping
Dumping is considered a predatory and unfair trade practice under WTO rules. It is often used by foreign producers to capture market share or drive domestic competitors out of business. To counter this, importing nations can impose 'Anti-Dumping Duties' to level the playing field and protect their domestic industries from material injury.
The 'Velocity of Money' refers to the speed at which physical currency notes are printed and distributed by the central bank to commercial banks.
- True
- False
Answer: False
The Velocity of Money is a macroeconomic metric that measures the frequency at which one unit of currency is used to purchase domestically-produced goods and services within a specific time period. A high velocity indicates a booming, active economy where money changes hands rapidly, while a low velocity suggests hoarding and economic stagnation.