Investment

1

Consider the following:

  1. Total foreign trade (import + export), as a proportion of GDP is the measure of openness of any economy is the measure of openness of any economy
  2. In the open economy, investors get an opportunity to choose between domestic and foreign assets
  3. In the open economy, workers have the freedom to choose the place and country to work

Which of the above statements is/are true?

A
Only 1
B
1, 2
C
All of the above
D
None of the above
2

Import-substitution means: (Choose the best definition)

A
Increasing supplies by domestic production, reducing imports and making the economy self-reliant through domestic production
B
To increase the export equivalent to imports
C
Double exports of any other item in exchange for the import of a particular item so that there is a profit instead of a loss
D
Ending imports from one country and importing from another country at a more cost-effective price
3

How does import substitution provide protection to domestic industries?

A
Raising tariff on imports
B
Reducing import quotas
C
Both of the above
D
None of the above
4

Which of the following is/are true for Minimum Export Price (MEP)?

  1. It is imposed in view of the rising domestic retail / wholesale price or production disruptions in the country.
  2. The removal of MEP helps farmers / exporters in realising better and remunerative prices and would also help in earning valuable foreign exchange for the country.

Choose the correct option:

A
1 only
B
2 only
C
Both
D
None
5

The Baltic Index is related to ?

A
Movement of goods like iron ore, coal and grain around the world in massive ships.
B
Increasing the Consumption Expenditure.
C
A methedology of Monetery easing
D
Fiscal stimulas
6

Which of the following are types of Preferential Trade Agreements?

  1. Partial Scope Agreement
  2. Customs Union
  3. Free Trade Agreement
  4. Common Market

Code:

A
1 and 3
B
3 only
C
2, 3 and 4
D
All of the above
7

Given the external sector realities with weak global demand and Chinese slowdown, India's external competitiveness has come under pressure. In what ways can India deal with the ongoing stresses?

  1. India can seek recourse in protectionist measures to fuel country's economy through domestic demand.
  2. By strengthening or manipulating exchange rate.
  3. India should strengthen procedures that allow WTO consistent and hence legitimate actions against dumping, subsidization and surges in imports.
A
Only 3
B
1 and 3
C
2 and 3
D
All of the above
8

A: India views Regional Trade Agreement (RTAs) as building blocks in the overall objective of trade liberalization as well as complementing the multilateral trading system under the WTO.

R: India stands for an open, equitable, predictable, nondiscriminatory and rule-based international trading system.

Code:

A
A is true and R is the correct explanation of the A
B
A is true and R is true but R is not the correct explanation of the A
C
A is true but R is false
D
Both A and R are false
9

What is the importance of foreign trade in the Indian economy?

  1. The comparative advantage that the country may have in production of certain goods leads to availability of goods at a lower price
  2. It may lead to invasion of a country's culture.
  3. It increases the scope of market
  4. Helps in importing technical knowledge from foreign countries.
  5. The competition between countries may lead to conflict of interest.
A
1 & 5 only
B
1, 2 & 4 only
C
1, 3 & 4 only
D
All of the above
10

What are the commodities exported from India?

  1. Petroleum products
  2. Precious stones
  3. Electronics
  4. Medical and technical equipment
  5. Machinery
  6. Plastics
A
1, 4 & 6 only
B
4, 5 & 6 only
C
1, 2, 3 & 5 only
D
2, 3, 4 & 5 only
11

The exchange rate at which exchange demand is equal to its supply, is called

A
Foreign Exchange Parity
B
Exchange rate disparity
C
Balanced exchange rate
D
All of the above
12

Trade deficit is measured as:

A
The difference between exports and imports of goods
B
The difference between export and import of services
C
the difference between export and import of capital
D
the difference between all export and import
13

If the value of the exports of the visible items exceeds the value of the imported items of the visible items, the balance is related to

A
The current account of the balance of payments
B
The capital account of the balance of payments
C
Trade Deficit
D
None of the above
14

What is/are true for foreign trade?

  1. The money spent by the MNCs to buy assets such as land, building, machines and other equipment is part of foreign trade.
  2. It connects the markets or leads to integration of markets in different countries.
A
1 only
B
2 only
C
Both
D
None
15

What are the factors that have led to globalization?

  1. Improvement in technology.
  2. Liberalisation of foreign trade and foreign investment policy.
  3. Increased awareness of consumers across the world and prevalence of platforms like social media and ITC.
A
1 & 2 only
B
2 only
C
All of the above
D
2 & 3 only
16

What is the impact of globalization on India?

  1. Investments in India by MNCs has increased
  2. Several of the top Indian companies have been able to benefit from the increased competition.
  3. It has created new opportunities for companies providing services.
A
1 & 2 only
B
2 & 3 only
C
2 only
D
All of the above
17

Consider the statements regarding Participatory Notes(PNs):

  1. It is a derivative instrument issued in foreign jurisdiction.
  2. It can be issued by an FII without registering themselves with SEBI.
  3. It can be used as a hedging tool by an FII.

Select the correct code:

A
1 only
B
1 and 2
C
1 and 3
D
1, 2 and 3
18

Why is Real Effective Exchange Rate (REER) more important than Nominal Effective Exchange Rate (NEER)?

A
REER captures inflation differentials between India and its major trading partners unlike NEER.
B
NEER is calculated based on a basket of 6 currencies while REER is calculated based on a basket of 36 currencies.
C
Both (a) and (b)
D
Neither (a) nor (b)
19

Exchange-traded currency futures are permitted in India. Who regulates the conduct of currency futures trading facility?

A
Reserve Bank of India
B
Securities and Exchange Board of India
C
Forward Market Commission
D
Both (a) and (b)
20

Arrange the economic groupings in the increasing order of their economic integration:

customs union, economic union, common market, FTA

A
FTA, common market, customs union, economic union
B
FTA, customs union, common market, economic union
C
Common market , customs union , economic union, FTA
D
FTA, customs union, economic union, common market
21

How is a Free Trade Agreement different from unilateral trade liberalization?

  1. It gives rise to trade creation.
  2. It gives rise to trade diversion.

Select the correct code:

A
1 only
B
2 only
C
Both
D
None
22

Consider the following statements:

  1. The trade flows between countries are inversely proportional to the “size” of the two countries.
  2. The trade flows between countries are directly proportional to the distance between the two countries.

Select the correct code:

A
1 Only
B
2 Only
C
Both
D
None
23

What measures have been taken by India for Trade Facilitation?

  1. Reducing the number of mandatory documents required for exports and imports.
  2. Customs single window initiative.
  3. The facility of 24×7 customs clearance for all imports and exports.
  4. A facility to upload documents in exporter/importer profile.
  5. Online permission from regulatory agencies.

Select the correct code:

A
1, 2 and 3 Only
B
1, 2, 4 and 5 Only
C
2, 3, 4 and 5 Only
D
All of the above
24

Assertion: India views Regional Trade Agreement (RTAs) as building blocks in the overall objective of trade liberalization as well as complementing the multilateral trading system under the WTO.

Reason: India stands for an open, equitable, predictable, nondiscriminatory and rule-based international trading system.

Select the correct code:

A
A is true and R is the correct explanation of the A
B
A is true and R is true but R is not the correct explanation of the A
C
A is true but R is false
D
Both A and R are false
25

Consider the following about the Foreign Currency Convertible Bonds (FCCBs)?

  1. These are convertible debentures.
  2. These are issued through Foreign Institutional Investors ( FIIs).

Which of the statement(s) given above is/are CORRECT?

A
1 Only
B
2 Only
C
Both correct
D
None of the above
26

Recently, the Reserve Bank of India (RBI) is intervening in the forex market; consider the following statements with respect to ‘Forex Reserve’ of India:

  1. Forex Reserve consists of Hard Currency, Gold and SDR (Special Drawing Rights) issued by the World Bank.
  2. India’s Forex Reserve has steadily increased over this year due to large FDI coming in, remittances and fall in price of crude oil.

Choose the correct code:

A
1 Only
B
2 Only
C
Both 1 and 2
D
Neither 1 nor 2
27

Despite SINO-US trade war, Chinese Export is increasing, what can be the probable cause for the same?

A
Appreciation of Renminbi
B
Depreciation of Renminbi
C
Revaluation of Renminbi
D
Devaluation of Renminbi
28

Due to depreciation of Turkish Lira, Indian Rupee too has depreciated. What could be the probable cause of the depreciation of Indian Rupee?

  1. Mainly, the FIIs (Foreign Institutional Investors) are losing faith in Emerging Economy and thus, they are withdrawing the Dollar from the market.
  2. Mainly the FDI Investors are losing faith in Emerging Economy and thus, they are withdrawing the dollar from the market.
  3. Indian importers are demanding more Dollars due to uncertainty.
  4. Indian exporters are demanding more Dollars due to Uncertainty.

Choose the correct code

A
1 and 4 only
B
2 and 3 only
C
1 and 3 only
D
1, 2, 3 and 4
29

Consider the following statements about “Reserve Tranche”:

  1. It is not the part of Forex Reserve of India.
  2. The difference between a member's quota and the IMF's holdings of its currency is a country's Reserve Tranche Position.

Choose the correct code

A
Only 1
B
Only 2
C
Both 1 & 2
D
Neither 1 nor 2
30

What does lower oil prices mean for oil exporting and importing countries, including India?

  1. Long-term low oil prices could lead to deflation in many countries that are dependent on oil sales revenue.
  2. Economic and financial constraints in these countries could impact on bilateral trade.
  3. Major oil importers will also become more dependent on crude imports.

Choose the correct option:

A
1 and 2
B
3 only
C
All
D
None
31

Which of the following represents the features of external sector development?

  1. Lower trade deficit and modest growth in invisibles resulting in lower Current Account Deficit.
  2. Continued increase in Foreign Direct Investment (FDI) inflows and Non-resident Indian (NRI) deposits.
  3. Net inflow of portfolio investment.

Code:

A
1 and 2
B
2 and 3
C
All of the above
D
1 and 3
32

According to the principle of comparative advantage,

A
Countries should specialize in the production of goods that they enjoy consuming.
B
Countries with a comparative advantage in the production of every good need not specialize.
C
Countries should specialize in the production of goods for which they have a lower opportunity cost of production than their trading partners
D
Countries should specialize in the production of goods for which they use fewer resources in production than their trading partners
33

Consider the following statements regarding Limitation of Benefit (LOB) provision?

  1. It is an anti-abuse provision that sets out where residents of the Contracting States are entitled to the treaty benefits.
  2. It seeks to limit the ability of third country residents to obtain benefits under the said treaty.
  3. With the introduction of LoB and GAAR, India is showing its intent to encourage ‘Treaty Shopping’.

Which of the statements given above is/are correct?

A
I and III
B
I and II
C
I, II and III
D
III only
34

How is China’s economic slowdown likely to impact India?

  1. Massive influx of cheap steel from China hurts domestic Indian steel industry.
  2. Declining consumption of hard commodities by China and prevailing low prices of copper and aluminium is good for India as a consumer for its infrastructure industry.
  3. Weakening demand in China is bad for Indian automobile manufacturers and exporters.
A
1 and 3
B
2 only
C
All of the above
D
None of the above
35

Consider the following statements-

  1. Foreign exchange reserve shows the import covers of the country. It mainly consists of foreign currency assets (FCA).
  2. Import cover is an important indicator of the stability of currency.

Which of the statement given above is /are correct

A
I only
B
II only
C
Both
D
None
36

Consider the following statements: Devaluation results in

  1. Rise in the domestic price of exports
  2. Rise in the domestic price of imports
  3. Fall in the foreign price of exports
  4. Fall in the foreign price of imports

Which of the above statements are correct?

A
1 and 3
B
1 and 4
C
2 and 3
D
2 and 4
37

Trade related aspects of intellectual property rights (TRIPs) cover the following?

  1. Patents
  2. Geographical indications
  3. Copyrights
  4. Carbon Credits

Which of the above statements are correct?

A
2 and 3
B
1, 2 and 4
C
1, 2 and 3
D
1, 2, 3 and 4
38

Consider the following statements in the context of the system of basket of currencies:

  1. In this system the exchange value of a country’s currency is fixed in terms of some major international currencies.
  2. Indian rupee is valued against US Dollar, British Pound, Japanese Yen, French Franc and German Deutsche Mark.
  3. India opted for this system in 1975.

Which of the above statements is/are correct?

A
Only 1
B
Only 2
C
1 and 2
D
1, 2 and 3
39

Consider the following items in the context of India’s manufactured exports:

  1. Engineering goods
  2. Gems and Jewellery
  3. Chemicals and related products
  4. Textiles

Arrange the above items in the ascending order of their percentage in India’s manufactured exports:

A
3, 4, 2, 1
B
3, 4, 1, 2
C
4, 3, 1, 2
D
4, 3, 2, 1
40

In the question below two statements are given as Assertion (A) and Reason (R):

Assertion (A): Government can increase import Custom duty on any goods to protect the interest of domestic goods market.

Reason (R): Due to the increment in import Custom duty, imported goods becomes costlier then the domestic goods. So comparatively demand of domestic goods will increases in the market due to cheaper rate.

In the contest of above statement which of the following option is correct:

A
Both A and R are true and R is the correct explanation of A.
B
Both A and R are true but R is NOT the correct explanation of A
C
A is true but R is false.
D
A is false but R is true.
41

Convertibility of the Indian Rupee means that the rupee can be freely converted into USD, UK pound sterling, Yen, Deutschemark, etc. and vice versa at the market determined exchange rates. Consider the following statements related to convertibility:

  1. The Indian rupee was made completely convertible from 1992 under the “Liberalized Exchange Rate Management” scheme.
  2. Indian currency is fully convertible on the external account.

Which of the above statements are correct?

A
Only I
B
Only II
C
Both I and II
D
Neither I nor II
42

Consider the following statements about IMF quota system:

  1. Openness and economic viability of a country has largest weightage in the quota formula.
  2. Quotas are denominated in Special Drawing Rights (SDRs).

Which of the above statements is/are correct?

A
I only
B
II only
C
Both
D
None
43

Which of the following statements is/are correct?

  1. The acronym SRO, being used in the capital market for various market participants, stands for Securities Regulatory Organization.
  2. The main function of EXIM bank is to help RBI in the regulation of foreign exchange.

Codes:

A
I Only
B
II Only
C
Both I and II
D
Neither I nor II
44

Consider the following statements about the Sovereign Wealth Fund:

  1. The funding for a Sovereign Wealth Fund (SWF) includes fund from the central bank reserves.
  2. All the developed nations have formed SWF.
  3. India has also set up Sovereign Wealth Fund to help companies acquire mineral and energy assets abroad.

Which of the above statements is/are not correct?

A
Only I
B
Only II
C
I and II
D
II and III
45

Which of the following factors is/are correct for rapid increase in foreign exchange reserves after, 1991?

  1. Devaluation of Rupee.
  2. Full convertibility of rupee on current account.
  3. Absorption of dollar supplies by Central Bank.
  4. Easy access to external commercial borrowings.
  5. Availability of foreign exchange from NRIs under various schemes.

Codes:

A
I , II, III, IV and V
B
I, II, IV and V
C
II, III , IV and V
D
I, II, and IV
46

Which of the following action will not be a case of rise in Protectionism?

A
Increase in Import duty.
B
Increase in export subsidy
C
Increase in import quota
D
None of above
47

With reference to Foreign Trade, what is the meaning of the term ‘Counter Trade’:

A
It means any agreement under which exports/imports from/to India are balanced either by direct imports/exports from the importing/exporting country or through a third country under a Trade Agreement or otherwise.
B
It means the obligation to export the product or products covered by the license or permission in terms of quantity, value or both, as may be prescribed or specified by the licensing or competent authority.
C
It means the certificate of registration of goods granted by an Export promotion Council/Commodity Board/Development Authority for export/imports only.
D
Both (a) and (b) are correct.
48

Which of the following statement about India’s international trade is correct?

A
Share of manufacturing and services exports in GDP has stagnated in the last five years.
B
Growth of trade partner countries has helped to boost demand for India’s export
C
Mega-regional trade agreements being negotiated by the major trading nations in Asia and Europe place Indian exports at a competitive advantage.
D
All of the above.
49

The government unveiled the new Foreign Trade Policy (FTP), aiming at giving fillip to exports with an objective to drive economic growth and create more employment opportunities. Which of the following are correct about FTP 2015?

  1. Increase exports to $900 billion by 2019-20 from $466 billion in 2013-14
  2. Raise India’s share in world exports from 2% to 3.5%.
  3. FTP to be aligned to Make in India, Digital India and Skills India initiatives.
  4. FTP will be reviewed annually.

Select the correct answer from the codes given below:

A
I and IV only
B
I, II and III only
C
I, II and IV only
D
All of the above
50

Indian foreign trade is an example of

A
Free trade
B
Regulated trade
C
Laissez faire
D
None of these
51

Consider the following facts about Indian Foreign Trade policy 2015-2020.

  1. FTP 2015-2020 introduces two new schemes, namely Merchandise Exports from Indian scheme (MEIS) and Service export for Indian Scheme (SEIS).
  2. MEIS is meant for export of notified services in place of plethora of schemes earlier.
  3. SEIS will be targeted for export of specified goods to specified markets.
  4. The government aims to raise India’s share in world exports from 2% to 3.5% by 2020.

Which of the above statements are true?

A
1 and 3
B
1, 2 and 3
C
1, 2, 3 and 4
D
1 and 4
52

Which one of the following is/are Transfer Payment(s)?

A
Bonus to employees by the government or enterprises
B
Interest on public debt paid by the government
C
Net factor income earned from abroad
D
Employer’s contribution to contributory provident fund of employees
53

Which of the following countries has recently lifted the ban on import of non-basmati rice from India?

A
USA
B
China
C
Brazil
D
Russia.
54

Consider the following statements regarding the Alternative Dispute Resolution:

  1. Alternative Dispute Resolution in India was founded on the Constitutional basis of Articles 14 and 21 which deal with Equality before Law and Right to life and personal liberty, respectively.
  2. ADR also tries to achieve the Directive Principles of State Policy relating to Equal justice and Free Legal Aid as laid down under Article 39-A of the Constitution.
  3. ADR offers to resolve matters of litigants, whether in business causes or otherwise, who are not able to start any process of negotiation and reach any settlement.

Choose the correct answer from the codes given below:

A
Only I
B
Only II
C
Both I and III
D
All are correct
55

Consider the following statements:

  1. Foreign Direct Investment (FDI) is foreign investment in the internal structures, industries and institutions
  2. Foreign investment in share market is also included in Foreign Direct Investment

Choose the correct answer using the codes given below:

A
Only 1
B
Only 2
C
Both 1 and 2
D
Neither 1, nor 2
56

Consider the following

  1. ADR are issued by the Indian depository for trading in American stock market.
  2. IDR are issued by foreign depository for trading in Indian market.

Which of the statement(s) given above is/are correct?

A
I Only
B
II Only
C
Both I and II
D
None
57

Which of the following is/are true for transfer pricing?

  1. It results in revenue loss and is a drain on foreign exchange reseres
  2. It refers to the value attached to transfers of goods, services and technology between related entities

Choose the correct option:

A
Only 1
B
Only 2
C
Both
D
None
58

In which of the following can National Investment and Infrastructure Fund invest in?

  1. NBFCs/ FIs that are engaged mainly in infrastructure financing.
  2. Funds engaged in mainly infrastructure sectors and managed by AMCs for equity/quasi-equity funding of listed/unlisted companies
  3. Commercially viable projects, both green field and brown field, including stalled projects.

Code:

A
1 and 2
B
1 and 3
C
2 and 3
D
All of the above
59

Why is Foreign direct investment considered an important driver of economic growth?

  1. It leads to productivity enhancement.
  2. It is a major source of non-debt financial resources.
  3. It helps in employment generation.
  4. FDI inflows are critical for sustaining a high growth rate.

Code:

A
2 and 4
B
1, 2 and 3
C
2, 3 and 4
D
All of the above
60

Which of the following recent developments regarding Foreign Portfolio Investment Policy is/are true?

  1. Foreign Portfolio Investment (FPIs) are required to invest in Corporate Bonds having a minimum residual maturity of 3 years.
  2. FPIs are prohibited from investing in liquid and money market mutual fund schemes.
Code:
A
1 only
B
2 only
C
Both
D
None
61

FDI is a source of

A
Demand of foreign currency
B
Supply of foreign currency
C
Both (a) and (b)
D
Neither (a) nor (b)
62

Supply of foreign currency depends on

  1. Exports from the country
  2. Direct purchase by the rest of the world
  3. Money sent by non-residents living in the rest of the world

Codes:

A
Only 1
B
2 and 3
C
1 and 3
D
All of the above
63

Consider the following statements about Indian Depository Receipts (IDRs):

  1. They are denominated in Indian Rupees.
  2. It enables Indian companies to raise funds from overseas securities markets.

Which of the statements given above is/are correct?

A
1 only
B
2 only
C
Both 1 and 2
D
Neither 1 nor 2
64

Which of the following is/are true for a Registered Foreign Portfolio Investor (RFPI):

  1. Foreign Institutional Investor (FII) and Qualified Foreign Investor (QFI) registered with SEBI are subsumed under RFPI.
  2. These entities cannot invest in government securities.

Select the correct code:

A
1 Only
B
2 Only
C
Both
D
None
65

Recently, RBI has released the data related to FDI (Foreign Direct Investment). Consider the following statements:

  1. Singapore tops the list when it comes to the source of FDI in India (2017-18).
  2. Issue related to FDI is dealt by the Ministry of Finance.
  3. OECD has clearly defined the “Tax Havens”.

Choose the correct code

A
1 and 3 only
B
1, 2 and 3
C
2 and 3 only
D
None of these
66

Why does investment play an important role in macroeconomics?

  1. Changes in investment are the main cause of fluctuation in aggregate demand.
  2. It helps the economy to produce higher levels of output.
A
1 only
B
2 only
C
Both
D
None
67

The need for foreign capital in the developing countries is more because:

  1. The domestic savings in developing countries is large thus investment in infrastructure is low.
  2. Foreign capital helps to bridge the gap between potential and actual growth rates.
  3. Leads to surplus in the Current Account.

Which of the above statements is/are correct?

A
Only II
B
Only III
C
I and II
D
II and III
68

Which of the following statements is /are correct?

  1. Commercial Paper is an unsecured money market instrument.
  2. It was introduced in India in 1995.
  3. Only commercial banks are authorised to issue commercial papers.
  4. Commercial Paper’s maximum period for maturity is 6 months from the date of its issue.
  5. Commercial paper can be issued in denominations of Rs 5 lakh or multiples thereof.

Select the correct answer from the following:

A
3 and 4
B
1, 3 and 5
C
1, 2 and 4
D
1 and 5
69

External debt consists of which of the following?

  1. NRI deposits
  2. Multilateral loans, Bilateral loans and Long-term external debt
  3. Commercial borrowings
  4. Trade credit

Choose the correct option:

A
1, 3 and 4 only
B
2, 3 and 4 only
C
1 and 2 only
D
All of the above
70

Consider the following:

  1. Bilateral and multilateral loans to the Government of India.
  2. N.R.I. deposits.
  3. Borrowings by corporate sector from outside the country.
  4. Foreign direct investment.

Which of the above is/are included in External Debt of our country?

A
I only
B
I and III only
C
I, II and III only
D
I, II, III and IV
71

Which of the following is correct about Credit Default Swap?

  1. It is a form of insurance against debt default.
  2. The investor can insure its investment in bonds against default through a third party.
  3. In case of default by the bond issuer the insurer would step in and pay to the investor.

Codes:

A
I and II only
B
II and III only
C
I only
D
all
72

Consider the following statements about Indian Depository Receipts (IDRs):

  1. These are generally instruments denomi-nated in rupees and allow overseas companies to raise funds from the Indian market.
  2. Holders of Indian Depository Receipts (IDRs) cannot convert them into shares of the issuing company.

Which of the above statements is/are correct?

A
I only
B
II only
C
Both
D
None
73

Consider the following.

  1. Equity investment
  2. Retained earnings of foreign companies
  3. Intra company debt transfers
  4. External Commercial Borrowings

Which of these are included in FDI?

A
1, 2, 3 and 4
B
Only 1
C
1, 2 and 3
D
2, 3 and 4
74

Consider the following.

  1. Investment by a foreign form to establish a subsidiary
  2. Investment by a foreign form to take over an existing firm
  3. Investment in shares

Which of these are included in portfolio investment?

A
1 and 2
B
Only 1
C
2 and 3
D
Only 3
75

Which one of the following investment fund buys distressed debt of commercial companies or sovereign nations at a cheap price?

A
Hedge funds
B
Vulture Funds
C
Venture capital companies
D
Leasing companies
76

Consider the following

  1. ADR (American Depository Receipts) are issued by the Indian depository for trading in American stock market.
  2. IDR (Indian Depository Receipts) are issued by foreign depository for trading in Indian market.

Which of the statement(s) given above is/are correct?

A
I Only
B
II Only
C
Both I and II
D
None
77

Consider the following statements regarding Participatory notes (P-Notes)

  1. It is a special type of currency issued by the Stock exchange board of India for the investors who wants to invest in share market.
  2. It is regulated by the Securities and Exchange Board of India (SEBI).

Which of the statement given above is/are correct?

A
I Only
B
II Only
C
Both
D
None
78

Which of the following is incorrect about convertibility?

  1. The exchange rate should be determined by the forces of demand and supply of the currency.
  2. It enables converting of rupee notes into gold and it indicates the strength of the economy in international market.
  3. RBI plays an indirect role in maintenance of convertibility in the economy.

Codes:

A
Only 1
B
Only 2
C
Only 3
D
None
79

Consider the following about Participatory Notes (PNs)

  1. PNs are not covered under the jurisdiction of market regulator SEBI.
  2. Issuing of more PNs is a manifestation of stable market.

Which of the statement(s) given above is/are correct?

A
I Only
B
II Only
C
Both I and II
D
None
80

Consider the following statements-

  1. Custodian of the Foreign exchange reserve in India is RBI. Foreign exchange reserve shows the import covers of the country.
  2. Import cover is an important indicator of the stability of currency.

Which of the statement given above is/are incorrect?

A
I Only
B
II Only
C
Both of them
D
None
81

Consider the following statements about the depository receipts:

  1. It is a physical certificate which allows investors to hold shares in equity of other countries.
  2. Global Depository Receipts facilitate trade of shares in European and American markets.
  3. Standard Chartered PLC became the first global company to file for an issue of Indian depository receipts in India.

Which of the above statements are correct?

A
I and II
B
II and III
C
I and III
D
All
82

Which of the following, if adopted in policy making, would promote ‘fiscal consolidation’?

  1. Increasing FDI in Insurance
  2. Enactment of food security laws
  3. Direct Benefit Transfer.

Choose the correct code(s)

A
II and III
B
I and II
C
II Only
D
I and III Only
83

What is the difference between FDI and FII ?

A
One is invested by domestic investors and other by foreign
B
One is for speculative purpose whereby other is for financial gains only
C
One is invested in physical capital and other in plants and machinery
D
One is invested in physical capital and other is invested in monetary assets
84

What is the impact of Market Status Economy for China on India?

  1. It will limit India’s limit to resort to anti-dumping.
  2. The authorities will have to accept the production costs and selling price in China.

Choose the correct option:

A
I Only
B
II Only
C
Both
D
None
85

Many times RBI intervenes in the foreign exchange market. Which of the following are the objectives of this intervention?

  1. Main objective is to maintain adequate level of reserves.
  2. It intervenes to reduce excess volatility in exchange market.
  3. It aims at preventing the emergence of destabilizing speculative activities.

Which of the above statements are correct?

A
I, II only
B
II, III only
C
I, III only
D
all
86
Consider the following statements:

I. FDI is allowed under the automatic route without prior approval either of the Government or the Reserve Bank of India in all activities/sectors.
II. FDI  activities  not covered under the automatic route require prior approval of the Government which are considered by the Foreign Investment Promotion Board (FIPB), Department of Economic Affairs, Ministry of Finance.
III. The Indian company having received FDI either under the Automatic route or the Government route is required to comply with provisions of the FDI policy, including reporting the FDI to the Reserve Bank.

Choose the correct option from the codes given below:
A
All are correct
B
Both I and III
C
Only II
D
Both II and III
87
Choose the correct statements related to high powered money:

I. Foreign inflow is the source of High powered money.
II. High powered money constitutes deposits held by RBI only.
III. It is the total liability of the RBI.
IV. Total amount of money stock in the economy is much greater than the volume of high powered money.

Codes:
A
Only I
B
Both I and III
C
Both III and IV
D
None of the above.
88

Choose the incorrect one?

  1. Foreign Institutional Investors (FIIs), Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs) are allowed to invest in the primary and secondary capital markets in India.
  2. The ceiling for overall investment for FIIs is 24 per cent of the paid up capital of the Indian company and 10 per cent for NRIs/PIOs.
  3. The Reserve Bank of India monitors the ceilings on FII/NRI/PIO investments in Indian companies on a daily basis.

Codes:

A
Only I
B
Both I and II
C
Only III
D
None of the above.
89

Consider the following:

  1. FDI
  2. FII
  3. External commercial Borrowings

Which of the above is/are the way (s) to counterbalance the Current account deficit so as to avoid a Balance of Payment crisis?

A
1 and 2 only
B
1 and 3 only
C
1 only
D
1, 2 and 3
90

A surge in foreign capital inflows in India would lead to-

A
Sale of foreign exchange by the central bank in order to prevent depreciation of rupee
B
purchase of foreign exchange by the central bank in order to prevent depreciation of rupee
C
Sale of foreign exchange by the central bank in order to prevent appreciation of rupee
D
Purchase of foreign exchange by the central bank in order to prevent appreciation of rupee
91

Which of the following factors affects India’s credit rating and hence results in outflow of foreign investment?

A
High Fiscal Deficit
B
High Inflation
C
Low GDP growth
D
All of the above
92

Recently, Government has withdrawn withholding tax for the Masala Bonds to stabilise Rupee. Consider the following statements vis-à-vis “Masala Bond”:

  1. The term was first used by the RBI to evoke the culture and cuisine of India.
  2. Masala Bonds are the Rupee denominated Bonds that are issued by Indian Borrowers abroad.
  3. The beauty of these bonds is that Depreciated Indian Rupee will not affect the Borrower.

Choose the correct code

A
1 and 2 Only
B
2 and 3 Only
C
1, 2 and 3
D
1 and 3 Only
93

Consider the following regarding disinvestment procedure in India

  1. The proceeds of disinvestment go to National Investment Fund (NIF).
  2. NIF is maintained within Public Accounts of India.

Which of the statement(s) given above is/are correct?

A
I Only
B
II Only
C
Both I and II
D
None

Indian Economy