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Generate QuizEconomics – GK Questions
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The revenue or profit that a sovereign government earns by issuing currency, specifically the difference between the face value of a coin/note and its actual cost of production and distribution, is known as ___.
- frictional
- seigniorage
- street vendors
- Mobile
Answer: seigniorage
When a central bank prints a Rs. 2000 note, the physical cost of paper and ink might be just Rs. 3, but the note commands Rs. 2000 in purchasing power. This massive margin is seigniorage. While it is a legitimate source of revenue for the state, excessive reliance on printing money to fund fiscal deficits leads to hyperinflation, effectively acting as a hidden tax on the public's cash holdings.
Under the Pradhan Mantri Awaas Yojana - Gramin (PMAY-G), the financial assistance provided for constructing a pucca house is uniform across all geographical terrains, offering the exact same amount to beneficiaries in plain areas and difficult hilly regions.
- True
- False
Answer: False
The scheme recognizes the logistical challenges and higher cost of transporting construction materials to remote, difficult terrains. Therefore, the unit assistance is deliberately higher for beneficiaries in hilly states, difficult areas, and IAP districts (e.g., Rs. 1.30 lakh) compared to those in the plains (e.g., Rs. 1.20 lakh) to ensure the subsidy is practically sufficient to build a quality house.
The Deendayal Antyodaya Yojana - National Rural Livelihoods Mission (DAY-NRLM) primarily focuses on poverty alleviation by:
- Providing direct cash transfers to landless laborers
- Mobilizing rural women into Self-Help Groups (SHGs) and linking them to formal credit and skill development
- Distributing free tractors and farm equipment to marginal farmers
- Guaranteeing 200 days of urban wage employment
Answer: Mobilizing rural women into Self-Help Groups (SHGs) and linking them to formal credit and skill development
DAY-NRLM operates on the philosophy that the poor have a strong innate capability to lift themselves out of poverty if organized into robust, participatory institutions. By federating millions of rural women into SHGs, the scheme builds social capital, promotes financial literacy, facilitates access to bank credit, and eventually supports them in setting up micro-enterprises.
The PM SVANidhi scheme was launched during the pandemic to provide affordable working capital loans of up to Rs. 10,000 specifically to ___, who were severely impacted by the lockdowns.
- street vendors
- Refinery Products
- multiplier
- National Income
Answer: street vendors
Street vendors operate entirely in the informal cash economy and rarely possess the collateral required for traditional bank loans. PM SVANidhi (Street Vendor's AtmaNirbhar Nidhi) provided collateral-free, short-term micro-credit with an interest subsidy to help them restart their small businesses and sustain their livelihoods without falling into the debt trap of local moneylenders.
The Doha Development Agenda, launched by the WTO in 2001, successfully concluded in 2015 with a comprehensive treaty that eliminated all agricultural export subsidies globally.
- True
- False
Answer: False
The Doha Round was explicitly designed to prioritize the needs of developing countries, particularly regarding agricultural market access and the reduction of Western farm subsidies. However, it repeatedly stalled due to irreconcilable differences between developed nations (US/EU) and emerging economies (India/China) over the 'Special Safeguard Mechanism' and domestic support limits, effectively leaving the round in an indefinite deadlock.
In the context of the TRIPS agreement and Indian Patent Law, what does Section 3(d) of the Indian Patents Act aim to prevent?
- The importation of generic medicines from African nations
- The 'evergreening' of patents by pharmaceutical companies through minor, trivial modifications to existing drugs
- The compulsory licensing of life-saving cancer drugs during public health emergencies
- The copyright infringement of traditional indigenous knowledge
Answer: The 'evergreening' of patents by pharmaceutical companies through minor, trivial modifications to existing drugs
Section 3(d) is a critical public health safeguard in Indian law. It mandates that a new form of a known substance (like a new salt or polymorph) is only patentable if it demonstrates a significant enhancement in known 'efficacy'. This prevents big pharma from making tiny, ineffective changes to a drug whose patent is expiring just to secure a new 20-year monopoly and keep generic, affordable versions off the market.
The WTO agreement that prohibits member countries from imposing local content requirements or trade-balancing conditions on foreign investors is known as the ___ Agreement.
- TRIMs (or Trade-Related Investment Measures)
- Laffer
- frictional
- lending (or credit)
Answer: TRIMs (or Trade-Related Investment Measures)
TRIMs ensures that foreign direct investment is not subjected to discriminatory domestic regulations. For example, a host country cannot force a foreign automobile manufacturer to source 50% of its spare parts locally, nor can it restrict the company's imports based on the volume of its exports. This promotes a fair, rules-based environment for global capital flows.
'Tax Buoyancy' measures the responsiveness of tax revenue growth to changes in GDP, whereas 'Tax Elasticity' measures the responsiveness of tax revenue to discretionary changes in the tax rate or structure.
- True
- False
Answer: True
Tax Buoyancy is a broader macroeconomic metric; if buoyancy is > 1, tax revenues are growing faster than the economy without any explicit policy changes (due to better compliance or progressive brackets). Tax Elasticity isolates the pure impact of a specific policy shift (like cutting the corporate tax rate) on revenue collection, holding GDP constant.
The 'Wagner's Law' of increasing state activity suggests that:
- As an economy industrializes and per capita income rises, the share of public expenditure in the Gross Domestic Product (GDP) tends to increase secularly
- Government intervention always leads to a reduction in market efficiency and deadweight loss
- Tax revenues will inevitably fall as tax rates are pushed beyond the optimal point
- Federal systems are inherently more fiscally disciplined than unitary governments
Answer: As an economy industrializes and per capita income rises, the share of public expenditure in the Gross Domestic Product (GDP) tends to increase secularly
Formulated by Adolph Wagner in the late 19th century, this law observes that economic development brings about complex social and economic relationships (like urbanization, monopolies, and externalities) that the free market cannot handle alone. Consequently, the state must expand its role to provide infrastructure, regulate markets, and offer social welfare, causing government spending to grow faster than the economy.
Under the Insolvency and Bankruptcy Code (IBC), 2016, a resolution plan for a defaulting corporate debtor can only be approved by the Committee of Creditors (CoC) if it secures a minimum voting threshold of ___% of the financial debt.
- crowding out
- Production
- 66
- public
Answer: 66
Originally set at 75%, the threshold was lowered to 66% by the government to prevent a single, stubborn minority creditor from blocking viable resolution plans and forcing the liquidation of a company. This supermajority requirement ensures that the collective wisdom of the majority creditors prevails, facilitating faster and more realistic revival of stressed assets.
The SARFAESI Act, 2002 empowers banks to enforce security interests and auction collateral to recover bad loans, and this power extends equally to unsecured loans and agricultural land.
- True
- False
Answer: False
The SARFAESI Act strictly applies only to *secured* loans where a tangible asset has been pledged as collateral. It explicitly excludes unsecured loans (like credit card debt or personal loans) and, crucially, agricultural land. This exclusion protects the agrarian sector from predatory corporate lending practices and ensures that farmers' primary means of livelihood cannot be summarily seized by banks.
Engel's Law postulates that as a family's income increases, the percentage of its total income spent on food will:
- Increase proportionately
- Decrease, even if absolute expenditure on food rises
- Remain exactly constant
- Fluctuate randomly based on market prices
Answer: Decrease, even if absolute expenditure on food rises
Engel's Law is a fundamental observation in development economics. Because human caloric needs are biologically capped, wealthier families quickly satisfy their basic food requirements. As their income grows further, the marginal propensity to consume food drops, and they allocate a progressively larger share of their budget to luxuries, services, healthcare, and education.
The 'Misery Index', created by economist Arthur Okun, is a simple macroeconomic indicator calculated by adding the annual rate of ___ to the annual rate of unemployment.
- micro
- inflation
- health and education
- Population
Answer: inflation
The Misery Index is designed to capture the dual economic pain felt by the average citizen. High unemployment causes the distress of lost income and job insecurity, while high inflation erodes the purchasing power of whatever income remains. A rising Misery Index often serves as a potent political indicator of public dissatisfaction with the incumbent government's economic management.
The Soil Health Card Scheme provides farmers with a customized report detailing the macro and micro-nutrient status of their specific farm holding, along with tailored recommendations on fertilizer dosages to optimize yield and reduce input costs.
- True
- False
Answer: True
Indian agriculture has historically suffered from the imbalanced and excessive use of Urea (Nitrogen), degrading soil health. The Soil Health Card scheme tests soil samples every two years to map nutrient deficiencies (like Zinc, Boron, Potassium) and advises farmers on precise, site-specific nutrient applications, promoting sustainable farming and reducing the massive fertilizer subsidy burden.
The Pradhan Mantri Annadata Aay SanraksHan Abhiyan (PM-AASHA) was launched to address the gap between the announced Minimum Support Price (MSP) and the actual market prices realized by farmers. Which of the following is a component of PM-AASHA?
- Direct Income Transfer of Rs. 6000 per year
- Price Support Scheme (PSS) where NAFED procures pulses and oilseeds
- Provision of free solar pumps for irrigation
- Subsidized air freight for exporting perishable horticulture
Answer: Price Support Scheme (PSS) where NAFED procures pulses and oilseeds
While MSP is announced for 22 crops, procurement is heavily skewed towards wheat and rice by the FCI. PM-AASHA was designed to operationalize MSP for pulses, oilseeds, and copra. Under the Price Support Scheme (PSS), NAFED acts as the central nodal agency to physically procure these crops when market prices fall below the MSP, protecting farmers from distress sales.
The ___ Club is an informal group of official creditors (primarily wealthy, developed nations) whose role is to find coordinated and sustainable solutions to the payment difficulties experienced by debtor countries.
- 279A
- Paris
- Kuznets
- increase
Answer: Paris
The Paris Club deals with the restructuring of bilateral sovereign debt owed by developing or distressed nations to other governments. In contrast, the 'London Club' handles debt owed to private commercial banks. When a country faces a sovereign default, it typically negotiates with the Paris Club to secure debt relief, rescheduling, or forgiveness.
The Special Drawing Rights (SDR) basket is reviewed by the IMF every five years to ensure it reflects the relative importance of currencies in the world's trading and financial systems. The Chinese Renminbi (Yuan) was added to this basket in 2016.
- True
- False
Answer: True
The inclusion of the Chinese Yuan in 2016 was a landmark event, marking the first time a new currency was added to the SDR basket since the Euro's creation. It signaled the IMF's recognition of China's growing integration into the global financial system and its efforts to internationalize the Yuan, joining the USD, Euro, Yen, and Pound Sterling.
In the Union Budget documents, 'Gender Budgeting' is presented as a distinct statement to highlight the allocation for women-centric schemes. Which statement number currently represents the Gender Budget?
- Statement 10
- Statement 13
- Statement 16
- Statement 20
Answer: Statement 13
Gender Budgeting is not a separate accounting exercise but a dissection of the existing budget to assess its impact on gender equality. It typically categorizes schemes into two parts: those with 100% allocation for women, and those with at least 30% allocation. In recent budget documents, this critical analytical data is presented in Statement 13.
Introduced in India in 2005-06, ___ Budgeting shifts the focus from the mere allocation of funds to the actual physical and social outcomes achieved by government ministries and departments.
- product
- Outcome
- collusion
- increase
Answer: Outcome
Outcome Budgeting requires ministries to define measurable deliverables (e.g., 'number of households electrified' rather than just 'rupees spent on cables'). It aims to enforce accountability and improve the efficiency of public spending by linking financial outlays directly to tangible developmental results and performance indicators.
Zero-Based Budgeting (ZBB) is a process where every ministry must justify its entire budget request from scratch (zero base) every year, rather than simply adjusting the previous year's budget for inflation.
- True
- False
Answer: True
Unlike incremental budgeting, which assumes past expenditures are necessary, ZBB requires a rigorous cost-benefit analysis of all proposed programs, regardless of their historical funding. While theoretically highly efficient for eliminating wasteful, obsolete schemes, it is extremely resource-intensive and time-consuming, which is why it is rarely implemented in its purest form across entire national governments.