Static Quiz 05 April 2023
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Static Quiz 05 April 2023 for UPSC Prelims
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- Question 1 of 5
1. Question
With reference to financial sector of India, consider the following statements:
1. In India, the small finance banks are not covered under the definition of Commercial banks.
2. Bank customers in India are not covered under the definition of ‘consumer’ under the Consumer Protection Act, 2019.
3. Prior approval of RBI is necessary for the NBFCs to make investments in foreign entities.
Which of the statements given above is/are correct?CorrectAnswer: C
Commercial banks include regional rural banks (RRBs); and scheduled commercial banks, which are: government-owned or public sector banks (PSBs); private banks; branches or subsidiaries of foreign banks; and small finance banks.IncorrectAnswer: C
Commercial banks include regional rural banks (RRBs); and scheduled commercial banks, which are: government-owned or public sector banks (PSBs); private banks; branches or subsidiaries of foreign banks; and small finance banks. - Question 2 of 5
2. Question
Consider the following taxes:
1. Tobacco Tax.
2. Tax on plastic bags.
3. Carbon Emission Tax.
4. Basic Custom Duty.
Which of the above tax(es) is/are examples of Pigouvian Tax?CorrectAnswer: B
A Pigouvian tax, named after 1920 British economist Arthur C. Pigou, is a tax on a market transaction that
creates a negative externality, or an additional cost, borne by individuals not directly involved in the
transaction. Externality is an activity that creates a negative effect on others in a society but not
necessarily the person who does that activity.IncorrectAnswer: B
A Pigouvian tax, named after 1920 British economist Arthur C. Pigou, is a tax on a market transaction that
creates a negative externality, or an additional cost, borne by individuals not directly involved in the
transaction. Externality is an activity that creates a negative effect on others in a society but not
necessarily the person who does that activity. - Question 3 of 5
3. Question
In the context of stock exchange, the practice of “Front Running” recently seen in news, occurs when an individual
stockbroker/dealer:CorrectAnswer: A
IncorrectAnswer: A
- Question 4 of 5
4. Question
In recent times it has been observed that the demand for organic fruits and vegetables increased due to the increased levels of income of the consumers and there is a positive correlation between the income levels of the consumers and demand for the organic fruits and vegetables. In the above scenario, organic fruits and vegetables are examples of:
CorrectAnswer: C
A normal good is a good that experiences an increase in demand due to an increase in a consumer’s
income. Normal goods have a positive correlation between income and demand. Examples of normal
goods include food, clothing, and household appliances.
Club goods are sometimes also referred to as artificially scarce resources. They are often provided by natural monopolies. Examples of club goods include cable television, cinemas, wireless internet, toll roads, etc.Public goods are commodities or services that benefit all members of society, and which are often provided for free through public taxation. Examples of public goods include law enforcement, national defense, and the rule of law.
A Giffen good is a low-income, non-luxury product for which demand increases as the price increases and vice versa. They are a rare type of goods for which demand increases as the price increases. This is because people are forced to buy more of the goods as the price increases because they cannot afford to switch to a cheaper alternative. Examples of Giffen goods are scarce staple foods, such as rice or potatoes, in low-income countries where people spend a large portion of their income on these items. Organic fruits and vegetables are not Giffen goods as their demand is not affected by changes in price in this manner.
IncorrectAnswer: C
A normal good is a good that experiences an increase in demand due to an increase in a consumer’s
income. Normal goods have a positive correlation between income and demand. Examples of normal
goods include food, clothing, and household appliances.
Club goods are sometimes also referred to as artificially scarce resources. They are often provided by natural monopolies. Examples of club goods include cable television, cinemas, wireless internet, toll roads, etc.Public goods are commodities or services that benefit all members of society, and which are often provided for free through public taxation. Examples of public goods include law enforcement, national defense, and the rule of law.
A Giffen good is a low-income, non-luxury product for which demand increases as the price increases and vice versa. They are a rare type of goods for which demand increases as the price increases. This is because people are forced to buy more of the goods as the price increases because they cannot afford to switch to a cheaper alternative. Examples of Giffen goods are scarce staple foods, such as rice or potatoes, in low-income countries where people spend a large portion of their income on these items. Organic fruits and vegetables are not Giffen goods as their demand is not affected by changes in price in this manner.
- Question 5 of 5
5. Question
The central bank digital currency (CBDC) and Mobile Money are two different payment systems that have gained popularity in recent times. In this context, how is Central Bank Digital Currency (CBDC) different from Mobile Money?
1. CBDC is issued by the governments, whereas Mobile Money is generated in a decentralized manner through a process
known as “mining”.
2. CBDC is a direct liability of the central bank, whereas mobile money is the liability of commercial banks.
3. Unlike Mobile money, CBDC cannot be used by the consumers for performing retail payments.
Which of the statements given above is/are correct?CorrectAnswer: B
• CBDC is a national digital currency issued by the central bank that is expected to replace or coexist with fiat money and hold the same value.
• Mobile money, on the other hand, utilizes existing commercial banking-based accounting to manage customer wallet balances based on exchange with cash or lines of credit and loans.
• Units of cryptocurrency (not mobile money) are created through a process called mining, which involves using computer power to solve complicated mathematical
• problems that generate coins
• Both CBDC and mobile money wallets are meant to facilitate domestic retail payments.
• While CBDC is a digital version of fiat currency issued by the central bank, and mobile money is a digital payment system that allows users to perform financial transactions using their mobile devices, both are designed to facilitate digital payments within a country’s domestic economy.IncorrectAnswer: B
• CBDC is a national digital currency issued by the central bank that is expected to replace or coexist with fiat money and hold the same value.
• Mobile money, on the other hand, utilizes existing commercial banking-based accounting to manage customer wallet balances based on exchange with cash or lines of credit and loans.
• Units of cryptocurrency (not mobile money) are created through a process called mining, which involves using computer power to solve complicated mathematical
• problems that generate coins
• Both CBDC and mobile money wallets are meant to facilitate domestic retail payments.
• While CBDC is a digital version of fiat currency issued by the central bank, and mobile money is a digital payment system that allows users to perform financial transactions using their mobile devices, both are designed to facilitate digital payments within a country’s domestic economy.
