Static Quiz 19 December 2024 (Economy)
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Static Quiz 19 December 2024 (Economy) For UPSC Exam
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- Question 1 of 5
1. Question
The “Laffer Curve” demonstrates the relationship between:
CorrectAnswer:
A. Tax rates and tax revenueExplanation:
• The Laffer Curve illustrates the relationship between tax rates and the total tax revenue collected by the government.
• It suggests that there is an optimal tax rate that maximises revenue.
• Beyond this rate, increasing taxes further can lead to a decrease in revenue as higher taxes discourage economic activity, such as work, investment, and production.IncorrectAnswer:
A. Tax rates and tax revenueExplanation:
• The Laffer Curve illustrates the relationship between tax rates and the total tax revenue collected by the government.
• It suggests that there is an optimal tax rate that maximises revenue.
• Beyond this rate, increasing taxes further can lead to a decrease in revenue as higher taxes discourage economic activity, such as work, investment, and production. - Question 2 of 5
2. Question
What does the internationalization of the Indian Rupee primarily aim to achieve?
CorrectAnswer:
B. Allowing the Indian Rupee to be used freely in international trade and financial transactionsExplanation:
The primary aim of the internationalization of the Indian Rupee is to allow it to be used freely in international trade and financial transactions.
• This goal seeks to make the rupee a more significant player in global markets, facilitating easier and more direct transactions without the need for intermediary currencies.IncorrectAnswer:
B. Allowing the Indian Rupee to be used freely in international trade and financial transactionsExplanation:
The primary aim of the internationalization of the Indian Rupee is to allow it to be used freely in international trade and financial transactions.
• This goal seeks to make the rupee a more significant player in global markets, facilitating easier and more direct transactions without the need for intermediary currencies. - Question 3 of 5
3. Question
Which organization publishes the “World Economic Outlook”?
CorrectAnswer:
B. International Monetary Fund (IMF)Explanation:
The World Economic Outlook (WEO) is a flagship report published by the International Monetary Fund (IMF). It includes:
• Economic Projections: Future forecasts for global economies, including GDP growth, inflation, and unemployment rates.
• In-depth Analysis: Insights into global and regional economic trends.
• Special Themes: Focus on pressing global economic issues, such as climate change, trade disruptions, or pandemics.
• Policy Guidance: Recommendations for economic reforms and policymaking.IncorrectAnswer:
B. International Monetary Fund (IMF)Explanation:
The World Economic Outlook (WEO) is a flagship report published by the International Monetary Fund (IMF). It includes:
• Economic Projections: Future forecasts for global economies, including GDP growth, inflation, and unemployment rates.
• In-depth Analysis: Insights into global and regional economic trends.
• Special Themes: Focus on pressing global economic issues, such as climate change, trade disruptions, or pandemics.
• Policy Guidance: Recommendations for economic reforms and policymaking. - Question 4 of 5
4. Question
Which of the following best describes the concept of “Dutch Disease”?
CorrectAnswer:
C. Negative economic impacts due to resource wealth causing currency appreciation• Explanation:
Dutch Disease occurs when a country experiences a resource boom (e.g., discovery of oil or gas), leading to currency appreciation.
• This reduces the competitiveness of other export sectors like manufacturing and agriculture, potentially harming the overall economy.IncorrectAnswer:
C. Negative economic impacts due to resource wealth causing currency appreciation• Explanation:
Dutch Disease occurs when a country experiences a resource boom (e.g., discovery of oil or gas), leading to currency appreciation.
• This reduces the competitiveness of other export sectors like manufacturing and agriculture, potentially harming the overall economy. - Question 5 of 5
5. Question
Consider the following markets:
1. Government Bond Market
2. Call Money Market
3. Treasury Bill Market
4. Stock Market
How many of the above are included in capital markets?CorrectAnswer:
B. Only twoExplanation:
Capital markets are financial markets that facilitate the buying and selling of long-term securities, such as stocks and bonds, for raising capital:
• Government Bond Market: Part of the capital market as bonds are long-term debt instruments.
• Call Money Market: Not part of the capital market; it is part of the money market, which deals with short-term funds.
• Treasury Bill Market: Not part of the capital market; treasury bills are short-term instruments and belong to the money market.
• Stock Market: Part of the capital market as it deals with the trading of equities (stocks), which are long-term investment instruments.IncorrectAnswer:
B. Only twoExplanation:
Capital markets are financial markets that facilitate the buying and selling of long-term securities, such as stocks and bonds, for raising capital:
• Government Bond Market: Part of the capital market as bonds are long-term debt instruments.
• Call Money Market: Not part of the capital market; it is part of the money market, which deals with short-term funds.
• Treasury Bill Market: Not part of the capital market; treasury bills are short-term instruments and belong to the money market.
• Stock Market: Part of the capital market as it deals with the trading of equities (stocks), which are long-term investment instruments.
