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The type of unemployment that occurs when workers' skills become obsolete due to technological advancements or shifts in consumer demand, requiring them to undergo retraining before they can find new jobs, is known as ___ unemployment.
- structural
- Outcome
- 2011-12
- Consumer Price Index (CPI)
Answer: structural
Structural unemployment is a severe, long-term issue caused by fundamental mismatches in the labor market. For example, the invention of AI or automated manufacturing might permanently eliminate thousands of routine clerical or assembly-line jobs. These displaced workers cannot simply apply for new jobs in the emerging tech sectors without acquiring entirely new skill sets, leading to prolonged periods of joblessness.
The Securities and Exchange Board of India (SEBI), which regulates the mutual fund industry and protects investor interests in the capital markets, was given statutory powers through an Act of Parliament in the year ___.
- Veblen
- C2 (or Comprehensive)
- base
- 1992
Answer: 1992
SEBI was initially set up in 1988 as a non-statutory executive body with no real enforcement teeth to curb rampant market manipulation and insider trading. It was only after the massive Harshad Mehta stock market scam that the government rushed through the SEBI Act in 1992, granting it sweeping statutory powers to penalize offenders, regulate stock exchanges, and enforce strict disclosure norms.
The Incremental ___-Output Ratio (ICOR) is a metric used to assess the efficiency of investment in an economy; a lower value indicates that less additional capital is required to produce one extra unit of economic output.
- India Debt Resolution Company Ltd (IDRCL)
- 75
- bracket creep (or fiscal drag)
- Capital
Answer: Capital
ICOR is a crucial indicator of an economy's structural health and technological progress. A high ICOR indicates inefficiency, poor infrastructure, and bureaucratic delays (meaning massive investments yield little growth). Conversely, a low ICOR signifies high capital productivity, advanced technology, and efficient resource allocation, allowing the economy to grow rapidly without requiring unsustainably high savings rates.
When the Parliament is unable to pass the full Union Budget before the start of the new financial year, it grants the executive a temporary authorization to incur essential expenditure, commonly known as a ___.
- government spending (or autonomous expenditure)
- Engel's
- indifference
- Vote on Account
Answer: Vote on Account
A Vote on Account is a constitutional provision (Article 116) that allows the government to withdraw funds from the Consolidated Fund of India for a limited period (usually two months) to keep the administrative machinery running. It only covers the estimated expenditure side and strictly excludes any new taxation proposals or major policy shifts, which are reserved for the full budget debate.
The 'JAM Trinity', which has been instrumental in the successful implementation of Direct Benefit Transfers (DBT) and eliminating ghost beneficiaries in welfare schemes, stands for Jan Dhan, Aadhaar, and ___.
- Nominal
- capital
- Mobile
- India Debt Resolution Company Ltd (IDRCL)
Answer: Mobile
The JAM (Jan Dhan-Aadhaar-Mobile) architecture is the technological backbone of India's welfare delivery revolution. By linking the beneficiary's bank account (Jan Dhan) with their unique biometric identity (Aadhaar) and their registered mobile number, the government can transfer subsidies directly into the intended recipient's account, bypassing leaky bureaucratic intermediaries and saving thousands of crores in public funds.
The 'Effective Revenue Deficit' is a concept introduced in the Indian Union Budget to exclude from the Revenue Deficit those revenue expenditures that actually go towards the creation of ___ assets, such as rural roads or housing.
- Unfunded
- quantitative
- durable (or capital / physical)
- isoquant
Answer: durable (or capital / physical)
Standard Revenue Deficit treats all grants given to states for building rural infrastructure as mere 'consumption' expenditure, which artificially inflates the deficit and makes the government look fiscally undisciplined. The Effective Revenue Deficit corrects this by subtracting grants used for creating durable capital assets. This provides a more accurate picture of the government's truly unproductive, consumption-driven borrowing.
The 'Velocity of Money' refers to the average number of times a single unit of currency is used to purchase domestically produced goods and services within a specific time period, and it is mathematically expressed in the equation MV = ___.
- Current
- PT (or PY)
- InvITs (or Infrastructure Investment Trusts)
- Okun's
Answer: PT (or PY)
Irving Fisher's Equation of Exchange (MV = PT) forms the basis of the Quantity Theory of Money. M is the money supply, V is the velocity, P is the price level, and T is the volume of transactions (or Y for real output). It implies that if velocity (V) and output (T) are stable in the short run, any rapid increase in money supply (M) by the central bank will directly translate into a proportional rise in inflation (P).
The 'Base Erosion and Profit Shifting' (BEPS) project, initiated by the OECD and G20, aims to combat tax avoidance strategies used by multinational corporations that exploit gaps and mismatches in tax rules to shift profits to ___-tax jurisdictions.
- final
- Governing Council
- low (or zero / no)
- Washington
Answer: low (or zero / no)
Multinational corporations often use complex accounting loopholes to artificially shift their taxable profits away from the high-tax countries where the actual economic value is created, and into tax havens where they have little to no physical presence. The BEPS framework introduces 15 actions to close these loopholes, ensure transfer pricing transparency, and mandate that profits are taxed where real economic activities occur.
The 'PM SVANidhi' scheme was launched to provide collateral-free working capital loans of up to Rs. 10,000 specifically to ___ who were severely impacted by the pandemic lockdowns.
- destination (or consumption)
- street vendors
- FEMA
- Current
Answer: street vendors
Street vendors operate in the informal cash economy and lack the credit history or collateral required by formal banks. PM SVANidhi (Street Vendor's AtmaNirbhar Nidhi) provided them with quick, small-ticket loans to restart their businesses, purchase inventory, and sustain their livelihoods without falling into the debt trap of local, high-interest informal moneylenders.
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 technically known as ___.
- countervailing
- Net Factor Income from Abroad (NFIA)
- dumping
- bracket creep (or fiscal drag)
Answer: bracket creep (or fiscal drag)
Bracket creep is a hidden consequence of progressive taxation in an inflationary environment. If tax brackets are not indexed to inflation, nominal wage increases that merely match the inflation rate will push workers into higher marginal tax tiers. This stealthily increases the government's tax revenue while reducing the taxpayer's real disposable income, acting as an automatic, unlegislated tax hike.
The 'Bad Bank' structure established in India to resolve the massive legacy NPAs of public sector banks consists of two entities: the National Asset Reconstruction Company Ltd (NARCL) for acquiring bad loans, and the ___ for managing and recovering them.
- India Debt Resolution Company Ltd (IDRCL)
- lending (or credit)
- Production
- low (or zero / no)
Answer: India Debt Resolution Company Ltd (IDRCL)
This twin-entity structure separates the aggregation of bad assets from their operational resolution. NARCL, which is majority-owned by public sector banks, purchases the stressed assets from banks by issuing Security Receipts. The IDRCL, which is majority-owned by private sector professionals, is then hired to manage these assets, formulate resolution plans, and execute the actual recovery process to maximize the salvage value.
If the cross elasticity of demand between two goods is highly positive, it indicates that the goods are strong ___, meaning an increase in the price of one leads to a surge in demand for the other.
- Lewis
- capital
- substitutes
- FEMA
Answer: substitutes
Cross elasticity measures how the demand for Good A responds to a price change in Good B. If the price of Coca-Cola rises, consumers will switch to Pepsi, causing Pepsi's demand to spike. This positive relationship defines substitute goods. Conversely, complementary goods (like cars and petrol) exhibit a negative cross elasticity, as a price hike in one reduces the demand for both.
The ___ Possibility Frontier (PPF) is a curve depicting all maximum output possibilities for two goods, given a set of inputs and resources, illustrating the concepts of scarcity, choice, and opportunity cost.
- Skewflation
- 2011-12
- Production
- Lewis
Answer: Production
The PPF graphically demonstrates the limits of an economy's productive capacity. Points on the curve represent maximum efficiency (full employment of resources), points inside the curve represent inefficiency or unemployment, and points outside the curve are currently unattainable without technological advancement or resource expansion. The bowed-out shape of the PPF reflects the law of increasing opportunity costs.
The WTO agreement that specifically addresses the sanitary and phytosanitary measures—such as food safety standards and animal/plant health regulations—that countries apply to imports is known as the ___ Agreement.
- constant
- stagflation
- SPS (or Sanitary and Phytosanitary Measures)
- Rules
Answer: SPS (or Sanitary and Phytosanitary Measures)
The SPS Agreement acknowledges a country's sovereign right to protect its citizens and agriculture from pests, diseases, and contaminated food. However, to prevent these measures from being used as disguised protectionism (Non-Tariff Barriers), the WTO mandates that SPS regulations must be based on rigorous scientific evidence, applied only to the extent necessary, and not arbitrarily discriminate between trading partners.
The ___ Committee, constituted by the RBI in 1997 and later in 2006, was tasked with laying down a comprehensive roadmap for moving towards Fuller Capital Account Convertibility in India.
- base
- Tarapore
- Green
- multiplier
Answer: Tarapore
The S.S. Tarapore Committee outlined the macroeconomic prerequisites India must achieve before allowing the Rupee to be fully convertible on the capital account (allowing citizens to freely move massive amounts of wealth across borders for asset purchases). It recommended targets like reducing the fiscal deficit, lowering inflation, and building massive forex reserves to ensure the economy could withstand the volatility of unrestricted global capital flows.
In the Balance of Payments (BOP) accounting, the unilateral transfer of funds by Non-Resident Indians (NRIs) to their families living in India is recorded as a credit entry in the ___ Account.
- Production
- Current
- 112
- negative
Answer: Current
Remittances are classified as unilateral (one-way) transfers where no physical good, service, or financial asset is exchanged in return. Because they represent current income flowing into the country and directly impact the nation's immediate purchasing power and consumption, they are strictly recorded in the Current Account, not the Capital Account. India is consistently the world's largest recipient of such remittances.
The proceeds collected from a 'Cess' (like the Education Cess or Health and Education Cess) are strictly earmarked for a specific purpose and, unlike standard taxes, are ___ shared with the State Governments.
- balance (or sum to zero)
- trust (or confidence / faith)
- construction (or real estate / infrastructure)
- not (or never)
Answer: not (or never)
Article 270 of the Constitution mandates that the net proceeds of most taxes collected by the Centre must be shared with the States based on the Finance Commission's recommendations. However, Cesses and Surcharges (under Article 271) are explicit exceptions. The Centre retains 100% of the revenue generated from Cesses and Surcharges, which has recently become a point of friction as the Centre increasingly relies on them, shrinking the divisible pool available to States.
Article ___ of the Indian Constitution strictly mandates that no money shall be withdrawn from the 'Consolidated Fund of India' except under appropriation made by law passed by the Parliament.
- dumping
- 2003
- Governing Council
- 266 (or 266(3))
Answer: 266 (or 266(3))
Article 266 establishes the Consolidated Fund of India, which comprises all government revenues, loans raised, and money received in repayment of loans. Clause (3) of this article is the bedrock of parliamentary democracy and financial control, ensuring that the executive branch cannot spend a single rupee of the public's money without the explicit legislative approval and oversight of the elected representatives.
In the long run, the Phillips Curve is generally considered to be ___ at the Natural Rate of Unemployment (NAIRU), implying that there is no permanent trade-off between inflation and unemployment.
- social
- PCA (or Prompt Corrective Action)
- Nominal
- vertical
Answer: vertical
While A.W. Phillips originally observed a downward-sloping short-run trade-off (lower unemployment equals higher inflation), monetarists like Milton Friedman argued this is an illusion. In the long run, workers adjust their inflation expectations and demand higher nominal wages, nullifying any employment gains from inflation. Thus, the Long-Run Phillips Curve is perfectly vertical at the natural rate of unemployment, meaning monetary policy can only dictate inflation, not long-term job levels.
The total monetary base of an economy, which consists of currency held by the public plus the vault cash and reserves held by commercial banks with the central bank, is technically referred to as ___ Money or Reserve Money.
- India Debt Resolution Company Ltd (IDRCL)
- Paper Gold
- long
- High Powered (or Base / M0)
Answer: High Powered (or Base / M0)
High-Powered Money (denoted as M0 or Reserve Money) is the foundation upon which the entire banking system creates broader money supply (M1, M3). It represents the direct liabilities of the central bank (RBI). Any expansion in high-powered money, achieved through RBI's open market operations or forex purchases, gets multiplied through the commercial banking system to determine the total liquidity in the economy.